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Legislation mandating Arkansans pay more at the gas pump easily passed out of the Senate Revenue and Tax committee on Wednesday (Feb. 20). SB336 by Senator Terry Rice (R – Waldron) would create a new tax at the wholesale level on gas and diesel. With a formula based on the price of gas, it would result in about a 14% increase per gallon in the first year for gas and a 24% increase for diesel. The new tax is formulated to increase each year but would be capped at 1/10th of one cent per gallon. If gas prices fall, the previous year’s rate would be used. In the first full year of implementation it is estimated to bring in over $86 million in new taxes and fees for road maintenance and repair.

The legislation would create new registration fees of $100 for a hybrid vehicle and $200 for an electric car raising around $2 million per year in new revenue. Several representatives of the Sierra Club spoke against this provision of the law, calling it unfair, punitive, and against the people who are trying to improve the environment by driving fuel efficient vehicles.

Several questions by committee Chairman Jonathan Dismang (R – Beebe) highlighted how the use of general revenues and revenue from casino gaming would be used to fund roads. There is a guaranteed $35 million per year dedicated to highways under the bill, pulling from casino gambling revenue. If casino gaming revenue does not equal the $35 million, then the remaining would be pulled from general revenues such as the restricted reserve fund or other funds the Governor chooses.

According to Paul Gehring with the Arkansas Department of Finance and Administration (DFA), it is estimated that casino gaming would bring in $22.5 million by fiscal year 2028 that could be put towards that $35 million guaranteed number. These estimates are based on only three casinos operating in Arkansas, rather than the four approved by the people of Arkansas in the November 2018 general election. A casino in Pope County seems unlikely at this time as newly elected officials for Pope County Judge and Russellville’s Mayor were elected by opposing the casino proposal. A casino requires letters of local support from one of these elected officials before being approved for a license.

Randy Zook of the Arkansas State Chamber of Commerce spoke in favor of the legislation and promised to also support the proposed constitutional amendment that would extend a half cent sales tax increase that is currently set to expire. That proposed amendment (HJR1018) will be heard separately from the gas tax increase bill. The amendment is estimated to raise taxes by nearly $300 million for the state, cities, and counties in addition to the over $100 million from SB336 earmarked for roads.

Rice stated that the Governor’s highway plan was “substantial, prudent, and long-term” when presenting the bill. The legislation passed on a voice vote with Senator Trent Garner (R – El Dorado) the only audible no vote. Garner opposed the bill due to the tax increase but supported use of general revenue for roads.

The bill will now go to the full Senate Floor where a majority of the Senators are co-sponsors of the legislation.

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2 thoughts on “Highway Tax Hike Easily Passes Senate Committee

  • February 21, 2019 at 6:29 pm
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    All you people at the state level and waste our money as it is and every year want more and more money. You just don’t seem to ever let the low wage people get ahead, You will find a way to get every little penny you can. Wages are going up for the first time in years and now you are ready to take it. You with your high paying jobs at the state government , Don’t know & don’t care , if people in this state struggle to live.Stop wasting our money and learn how to live on a budget , Just like the people have to all the time. You hurt the people more who are on social security and the disable. I’m disgusted with the people who are suppose to look out for the people who work and get such a small wage in Arkansas !!1

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  • February 20, 2019 at 1:42 pm
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    I have no problem with it as long as all the money goes to road improvement ! I live in the western part of the state and little or no money has been spent on I-40 from the Oklahoma line east to Ozark ! I travel I – 40 every year to Little Rock and they are always spending money from Russellville. Now it’s time for the western part of the state to benefit !

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