Nevada County Picayune and Gurdon Times Newspaper Archive

Voters to Decide Fate Of State's Highway System

Voters in Arkansas will be asked to decide the fate of the state's highways in a special election on Jan. 9, 1996.

Arkansas Highway Commissioner John Lipton, Friday at the meeting of Arkadelphia's Rotary Club, discussed what the issues are and how the state could be affected.

Gov. Jim Guy Tucker has proposed a five cent per gallon tax increase on gasoline, and another nickel per gallon tax hike on diesel. In addition, the voting public is being asked to approve a one-half cent sales tax to fund the majority of the $3.5 billion measure.

Lipton said the original amount for highway construction in the state was $10 billion, but no one believed the people would allow going that much into debt.

The state will secure bonds in order to get the money up front, with the issue to be paid off in 25 to 30 years.

Currently, Lipton said, the state is on a pay-as-you-go basis. This means construction must be paid for as it is done.

He said with vehicles, including diesels, getting better mileage, this means less money coming in to pay for the work. It also translates into less work being done on Arkansas' highways and interstate system.

According to Lipton, the General Assembly identified the deteriorating highway and interstate systems as one of the state's most pressing needs.

However, he said the state needed a stream of money to pay for these upgrades. Increasing the wholesale tax on gasoline and diesel by a nickel each wouldn't provide enough cash, Lipton said.

"Fuel efficiency of new cars are not good for a growth curve," he said.

Another problem was the state wanted to get construction underway in seven years and have the improvements finished in nine, but Arkansas doesn't have the $3.5 billion to do this.

Therefore, he told the Rotarians, a bond issue is needed to fund the project(s). "We'll have to borrow the money," Lipton said. "We (the state) will borrow the money through a general obligation bond, but we need to get the people's approval." This is why a special election is being held Jan. 9, 1996.

Actually, the state is not asking for a flat nickel per gallon increase on wholesale gasoline and diesel fuel. Instead, it is seeking a 6.5 percent excise tax on the fuels, which currently equals five cents.

The excise tax, though, will only generate about $15 million per year from the sale of diesel fuel as semi tractor-trailer rigs are getting between eight and 10 miles per gallon, in comparison to years ago when five mpg was considered good.

The gasoline tax would only generate $48 million annually.

Combined, the taxes wouldn't generate enough money to pay the bond issue, which could affect the state's future credit in case of a default.

Lipton said the state needs to generate about $100 million a year for each $1 billion in bond monies.

This is why the state is also looking at a dedicated one-half cent sales tax to go along with the excise taxes on fuels.

"We looked at alternative ways to get money," he said, "and the only real producer (of capital) is a sales tax. The half-cent will generate enough to cover the $3.5 billion bond issue."

Lipton said the sales tax will cost each person in Arkansas about $37 per year, or a dime-a-day, and will allow the state to do $4.8 billion in construction because of interest the bond issue will generate.

But, he continued, cities and counties will not be left out. The issue is structured so the state collects 70 percent of the funds generates, municipalities and counties get 15 percent each to do road projects in their areas. These funds will continue for the life of the bond issue, Lipton said.

He quoted statistics from the Department of Commerce, saying the measure will create 190,000 new jobs in the state and will create an $11 billion economic base as well.

"There's also the safety factor," Lipton said. "Lives will be saved (because of better highways and interstates)."

Currently, Arkansas is a "donor" state. This means the state is paying in more money to the federal government than it receives. This also affects how much work can be done.

While some are skeptical about the highway commission getting a sales tax, saying it will take funds away from education, Lipton said just the opposite. He said education will, in fact, get more money if the issue passes because more revenue will be generated from the sales tax, and more federal money could be available as well.

And, he said, the highway commission will no receive one cent from the state's general fund because the sales tax portion on the measure is dedicated solely for the bond issue. It will not dip into the general revenue fund and affect any other agency or entity.

Lipton also discussed the "NAFTA Corridor," also known as the I-69 project. He said the North American Free Trade Act is a done deal. I-69 will run from Canada through Michigan, down to Tennessee, then to Mississippi, over to Arkansas, through northern Louisiana, across Texas ending at Laredo.

"We will be the funnel for the entire nation," he said of the corridor. "If we had to match federal funds to do this, we couldn't do it now. We don't have the $200 million to match it," he said.

"This (Jan. 9 election) will allow the people to determine the future of infrastructure in Arkansas. We're competing with the West Coast markets, and if we don't have a system in place, we lose our window of opportunity."

According to Lipton, this window closes in three hours.

Under proposals in the highway and interstate construction plans, four-lane roads would be upgrade, super two-lane roads would be created and more passing lanes would be added.

This, he said, would open Arkansas up and allow access to major arteries when it's in place.

Following his speech to the Rotary Club, Lipton went to State Rep. Percy Malone's office downtown.

While there, he discussed 6.8 miles of construction which will be done on the Amity Road, bringing Highway 8 all the way to Arkadelphia. He said construction on this project should begin in March with the letting of bids.

He said Highway 182 in Gurdon will be let for bids shortly after the first of the year.

Lipton said the highway bond issue will primarily accelerate the 1991 highway program, allowing it to be completed quicker and cheaper, as inflation won't be a factor if the measure passes. He said the issue would remove funds from the '91 plan and place them in the '95 deal and everything will go faster, as far as construction goes.

Lipton said there are 16,238 miles of roads in Arkansas, making it the 16th largest in the nation. In fact, he said Arkansas compares to California in state roads it must maintain.

However, Arkansas ranks 37th or 38th in revenue to keep the highways maintained. "We're graduall