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State Finds a Way to Move Highway Projects Forward

BY STATE SENATOR LARRY TEAGUE –

LITTLE ROCK – When Congress approved a federal highway funding bill, it was good news not only for the Arkansas Highway and Transportation Department but also for those in numerous states across the country.

The measure guarantees federal transportation funding levels for the next five years, so state highway departments can budget for long-term projects. Over the past year Arkansas highway officials had to postpone hundreds of millions of dollars worth of highway projects because of uncertainty about federal funding.

Traditionally, federal highway bills have set funding levels for multi-year periods, but for the past decade or so Congress had been approving patchwork funding bills. Some were for only a few months.

For the past year Arkansas highway officials have been monitoring the state’s cash flow to make sure federal funding was sufficient to complete projects scheduled for bidding. During the first half of 2015 they decided to postpone 87 projects worth an estimated $411 million because of uncertainties about federal funding. However, in September the state was able to move forward on 30 of the 87 postponed projects.

The director of the Arkansas highway department said his agency was happy about Congressional passage of the highway funding bill because it removes uncertainty for five years.

Many highways in Arkansas are maintained and improved with a combination of federal and state funds, with federal money amounting to 80 percent of the payment for some road projects.

Now that Congress has acted, it is up to the states to provide matching funds. If Arkansas comes up with matching funds we could increase our share of federal funding by about $50 million a year for the next five years.

The governor has said he would outline his plan for state highway funding early next year. He appointed a working group last year to develop funding options. Its recommendations would generate $160 million a year, of which 15 percent would be distributed to cities and 15 percent to counties for local road and bridge projects.

The budgets of highway departments throughout the country have suffered because of a decline in purchasing power from one of their major sources of revenue – the motor fuels taxes levied on gasoline and diesel. That’s because cars and trucks have steadily improved in fuel efficiency, and are getting many more miles per gallon than they used to.

For example, since 1993 the amount of motor fuels tax revenue collected by Arkansas has increased by 16 percent for gasoline and 22 percent for diesel. Over the same period, the cost of highway construction has gone up 181 percent.

According to highway officials, the “shrinking” of the motor fuels tax dollar means that now Arkansas can afford 70 percent less in overlay and 59 percent less in widening of highways than it could in 1993.

The trend is expected to continue because consumers want better gas mileage. Automobile manufacturers now produce and market hybrid vehicles and 20 years ago they were still mostly in the planning and development state.

The governor’s working group on highway funding listed several alternatives to motor fuels taxes as possible sources of new revenue for highways.

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