If Arkansas and Arkansans are to prosper as it and they should, bold new visionary leadership will be required. Many of these new leaders can be elected in November 2012 when Arkansans have the opportunity to put a majority of pro-growth, pro-success, smaller, smarter government conservatives in the Arkansas House and Senate. New leadership “at the top” can be completed in 2014.
Until then, we can take small steps in the right direction. Supporting the $575 million highway bond program proposed by Gov. Mike Beebe yesterday is one of those steps.
The $575 million bond program set for a November 8 special election replaces a 5-cent diesel tax increase approved for a special election by the Arkansas Legislature earlier this year. State Representative Jonathan Barnett (R-Siloam Springs) and House Speaker Robert Moore (D-Arkansas City) led the fight for a diesel tax increase that would have authorized the State to issue up to $1.1 billion in bonds. The two also gained legislative approval for a state-wide ½-cent sales tax increase that will appear on the ballot in November 2012.
The Arkansas Trucking Association backed out of an agreement to support the 5-cent diesel tax increase earlier this year. The 5-cent increase would have been added to the current 22.5 cents per gallon in state taxes already assessed on diesel fuel sold in the State.
In 1999, Arkansans approved a similar $575 million bond program “for the purposes of constructing and renovating roads and highways” in the State. Act 1027 included an increase of 4-cents per gallon on diesel to be used to pay off the bonds not otherwise paid by federal highway funds.
It appears that Act 1027 did not call for the elimination of the 4-cent/gallon tax increase when the bonds were paid off, in which case the Governor is right when he says that voting against the new proposal “doesn’t increase or decrease anybody’s taxes.”
The proposed bond program will support “grant anticipation revenue vehicles,” otherwise known as “GARVEEs.” These tax-free bonds are debt instruments (a method for borrowing money) that has a pledge of future federal-aid funding. If Gov. Beebe’s proposal is similar to the 1999 program, the bonds will be repaid first from (1) revenues from federal highway assistance funding allocated to the State, (2) revenue from the 4-cent/gallon tax on diesel fuel and (3) to the extent funds from these two revenues are insufficient to make timely payments on the debt service on the bonds, payments will be made from general revenues of the State.
It is important to understand that the State is borrowing money for this bond program – and is therefore borrowing from the future. But in this case, building and maintaining Arkansas’s roads and infrastructure is clearly an investment in the future. Failure to act now will cause severe harm to Arkansas’s vital tourism and agriculture industries, not to mention discouraging the new businesses and industries Arkansas must attract – harm from which it will take decades to recover. While interest on the bonds will make the construction and maintenance technically cost more, it will pale in comparison to the increased costs of construction delayed.
State government cannot create the private sector jobs that produce profit, wealth and prosperity. But it can act to create the economic atmosphere in which small businesses can prosper and create jobs and wealth for Arkansans. It can do that in two fundamental ways:
- It can get out of the way. We are in desperate need of a Governor who will call the heads of the State’s regulatory agencies together and explain that their top priority is to help businesses in Arkansas be successful.
- It can provide, figuratively and literally, roads on which success can travel. That’s a legitimate function of state government and why Arkansans should support this highway bond proposal on November 8
Curtis Coleman is the President of The Curtis Coleman Institute for Constitutional Policy and contributing author to the ARRA News Service.
Please also see: Bell: GARVEE Renewal is the Fiscally Conservative Option on November 8th
Tags: agriculture, Arkansas, Arkansas Highway Department, Arkansas highways, Arkansas Trucking Association, GARVEE, highway bond program, tourism, Arkansas, Government, Business, Curtis Coleman, The New South Conservative To share or post to your site, click on "Post Link". Please mention / link to the ARRA News Service. Thanks!
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