Arkansas’ Governor on Tuesday signed a $95 million highway funding bill that will raise fuel taxes for the first time in 20 years, setting up an election year fight over a plan to ask voters to keep paying a half-cent sales tax for road needs.
The legislation signed into law by Republican Gov. Asa Hutchinson imposes a new wholesale tax on fuel that will raise gas prices by 3 cents a gallon and diesel by 6 cents. The new law also taps into at least $35 million in expected revenue from casinos voters approved last year, and imposes an additional registration fee on electric and hybrid vehicles. The tax and fee increases will take effect in October.
“This is a balanced plan. There’s never been a highway plan balanced in this fashion,” Hutchinson said.
The proposals are part of a $300 million highway funding planHutchinson and legislative leaders unveiled last month. Another part of the plan, a proposal to permanently extend a half-cent sales tax for roads, goes to voters next year. The Legislature last week gave final approval to putting the half-cent tax extension on the ballot, but that doesn’t require the governor’s signature.
Voters approved the half-cent tax in 2012 and it’s set to expire in 2023. Groups that backed Hutchinson’s highway plan, including the state Chamber of Commerce and the Arkansas Trucking Association, said they’re prepared to campaign for the extension next year.
Shannon Newton, president of the Trucking Association, said she expected the campaign would likely need more money than the $1.6 million that was spent in favor of the half-cent in 2012. It’s unclear what organized opposition the proposal will face, though it drew complaints from some Republicans in the Legislature who said the state should instead look at using existing revenue for roads.
A spokesman for Americans for Prosperity, which opposed the highway plan, said all options were on the table when asked if it would campaign against the measure.