Arkansas to Vote on Half-Cent Sales Tax Hike for Road Projects

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A proposed constitutional amendment on Arkansas’s ballot this November would add a half-cent to the state’s 6-cent sales tax to raise money for transportation.

Seventy percent of the revenue generated by the half-cent increase would pay for new four-lane highways around the state. The remainder would go to counties and cities to spend on roads.

The half-cent levy would expire after 10 years.

Although the state’s sales tax is 6 cents, cities and counties often have sales taxes of their own, which are as high as 3.5 cents in some areas.

If the half-cent ballot measure is approved, it would be the first time the state has used sales tax revenue for roads, said Lane Kidd, president of the Arkansas Trucking Association.

The association is taking a neutral stance on the ballot measure.

“There were some on the board that had a philosophical difference of opinion on what types of tax revenues should be spent on highways,” Kidd said.

Historically, the association has believed that the fuel tax and vehicle registration fees are the “purest highway user structure” for maintaining highways and bridges, he said.

“And while there are some on the board who thought that using another source of revenue might be smart, there were also opinions . . . that if our industry would oppose fuel tax revenue being used for general revenue purposes, then why wouldn’t the same be true going the other way?”

Under the terms of the proposed amendment, the state would use its portion of the new sales tax revenue to back road-building bonds worth $1.3 billion.

The ballot measure is drawing heavy support from officials and business groups in northwest Arkansas, one of the fastest growing areas in the country and home to Wal-Mart Stores Inc. in Bentonville and Tyson Foods Inc. in Springdale.

Wal-Mart ranks No. 4, and Tyson ranks No. 9 on the Transport Topics Top 100 list of the largest private fleets in the United States, Canada and Mexico.

Nearby Lowell is home to J.B. Hunt Transport Services, which ranks No. 5 on the Transport Topics Top 100 list of the largest U.S. and Canadian for-hire carriers.

“It’ll create a lot of revenue for roads and bridges, and it’s easily understandable why northwest Arkansas wants it,” Kidd said.

Business leaders there are anxious to fund the completion of the Bella Vista Bypass, which would take trucks off U.S. Highway 71, the winding two-lane highway that connects Interstate 540 in Arkansas to Interstate 49 in Missouri. The Missouri portion of I-49 which stretches to the Kansas City area, is to fully open in December.

If the ballot measure does not pass, the state would have to find another way to pay for bypass as well as other highway projects, Kidd said.

“Our position will be in January, if it does not pass, that we’re going to go back to the legislature and attempt to convince them that the fuel tax is the most viable cost-effective way to pay for roads and that we’re willing to support an increase,” Kidd said.

In 2011, the trucking industry convinced state legislators and Gov. Mike Beebe (D) to put a measure before the voters that would have added 5 cents to the state’s 22.8-cent diesel tax to pay for road improvements.

The state’s 21.8-cent gasoline tax would not have been affected, but when polls showed that voters would not support the diesel increase offered by the truckers, the industry pulled back the proposed ballot measure.

If the half-cent tax increase fails, Kidd said that truckers will not ask in January for a ballot measure and instead will ask legislators to vote on the 5-cent diesel tax increase truckers are offering to pay.

“It’s time we got beyond the word ‘tax’ and did what’s right,” Kidd said.