ISSUE 1 Not About Highways; It’s About Wasting Tax Money Elsewhere
Issue 1 will be on your ballot. If approved, it will impose a one-half percent (0.50%) sales tax for highways and roads after an existing sales tax expires. It is being SOLD as “Arkansas Good Roads.” But Issue #1 is not really about good roads.
Issue 1 is about protecting wasteful spending elsewhere.
Two plans were proposed in 2019 to provide more funding for highways and roads.
- ELIMINATE WASTE PLAN. Lieutenant Governor Tim Griffin and fiscally conservative legislators opposed passing more taxes until wasteful spending is eliminated from the state budget. Griffin said: “I believe we need to address challenges like this with reform first, not tax increases.”[i] A group of legislators proposed legislation to shift existing revenue to highway.
- TAX-AND-SPEND PLAN. Governor Asa Hutchinson insisted the legislature not cut any part of the state budget and instead pass taxes for more highway.
Hutchinson’s Tax-And-Spend Plan won the day and two tax bills were passed. First, the gasoline and diesel fuel taxes were increased. Second, legislation was passed putting Issue #1 on your ballot. If approved, it’s sales tax will go into the Arkansas Constitution where it will be nearly impossible to ever modify or repeal.
Big spenders insinuated the budget was already lean, but we soon found out that was not true.
When governors shut down the economy because of COVID-19, tax revenues fell far short of what Arkansas had budgeted to spend. Hutchinson quickly called the legislature into special session to move some reserve funds and SLASHED THE STATE BUDGET.
Despite the big cuts there was no huge outcry by citizens to restore state spending levels or for more taxes to support spending. Why? Because the fat in the state budget helped cushioned the blow.
The COVID-19 budget cuts showed us two very important things.
- FIRST, the state budget can be cut without causing chaos. That means Griffin and other conservatives were right, highways can be funded with existing tax revenue without passing Issue 1 or other taxes.
- SECOND, emergencies do happen, and we need flexibility to shift tax revenue where it is most needed at the time. That critical flexibility is the opposite of adding a dedicated tax in the Construction that can’t be changed when the money is needed elsewhere.
We hope the people will not be stampeded into putting a tax in our Constitution. Our preference is for politicians to do their jobs and reform the budget first, before considering more taxes.
But, if politicians are bound and determined not to reduce wasteful spending and to keep Arkansas’s sales tax one of the highest in the nation…. the legislature still has plenty of time to come back next year and pass a sales tax by a simple law and have the tax go into effect at the same time Issue 1 would have. We do not want more tax, but passing one by a simple law that can be changed is better than passing a tax in the Constitution that can never be changed.