Highway Finance: New Revenue Subcommittee – October 14, 2009
Posted on October 14th, 2009
Date & Time: Wednesday, October 14, 2009 at 10:30 AM
Location: Room 272, State Capitol
Committee Information: Members on Committee
Agenda: http://www.arkleg.state.ar.us/assembly/2009/Lists/Meetings/Attachments/12249/I7846.pdf
Attachments: none
10:32 am – The meeting was called to order by the chairman, Jim McKenzie.
10:33 am – Mark McBryde gave an update on progress. He has volunteered his staff at Stephens to develop a computer model for alternatives analysis. Bill Lynch and Mark McBryde have also volunteered to develop a Policy Brief on Public Private Partnerships and Tolling.
10:37 am – We are currently reviewing draft policy briefs concerning revenue adjustment factors for the next 10 years. These include vehicle miles traveled predicted and the impact of new CAFE standards.
10:41 am – Based on the Subcommittee’s discussion at its September meeting, Policy Briefs are being developed on the following sources: Gasoline Excise Tax, Diesel Excise Tax, Removal of Sales Tax Exemption on Motor Fuels, Indexing Motor Fuel Taxes, Carbon Tax on Motor Fuels, Vehicle Miles Traveled Tax, Weight Distance Tax, Public Private Partnerships/Tolling, General Sales Tax, and Income Tax. I will try to get these briefs made availiable to you as I can.
10:44 am – In the adjustment factors brief, the AHTD predicts the Vehicle Miles Traveled (VMT) to grow at a rate of 1.7% per year.
10:46 am – We are currently reviewing the Carbon Tax on Motor Fuels Brief. It is listed as an advantage that the carbon tax is a new tax and would only require a simple majority of the General Assembly to adopt or increase. An example of a disadvantage is that the carbon tax, like the fuel excise tax, is inelastic. In order to retain its purchasing power over time, the carbon tax would have to be raised periodically by automatic indexing or periodic rate increases.
10:49 am – Mr. Mark Lamberth is making the point that the revenue potential of the Carbon Tax would be $21 million and hardly makes it worth it. The chairman made the point that this is only a unit measure and the rate could be adjusted up and down to produce the desired amount of revenue. In otherwords, 2 units of this tax would produce $42 million.
10:52 am – Mr. Bill Lynch is asking about how these would apply to an all electric vehicle. The chairman pointed out that these might be handled by the VMT tax.
10:55 am – Mr. Charles Dains makes the point that the carbon tax is not a use tax and has nothing to do with the use of highways and feels that it is a political tax and would prefer to stay completely away from this. [I have to give Mr. Dains the common sense award of the year with that statement.]
10:56 am – There is some discussion about “leaving this on the table” and Mr. Lynch desired that we not take anything off the table.
10:57 am – We are now covering the Sales Tax on Motor Fuels Policy Brief. Unlike the fuel excise tax that we currently put on motor fuels, which is collected on a per gallon basis, a sales tax is collected as a percentage of the price of gasoline. There is some debate on if this tax will require a super majority to pass. This appears to be presented in two forms. One essentially includes a tax on the excise tax. Mr. Bill Fletcher said that we don’t won’t to do that because “they” will beat you up on that. He said that we need look at what other states are doing and that we need to watch out how we do this because there will be resistance from the oil marketers.
11:03 am – [One thing I have noticed about these discussions about what tax to increase is that taxes are often discounted based upon the strength of the opposition coming from a particular group that is opposed to the tax. In some ways, these proceedings appear to a search to find the weakest constituency group to molest.]
10:07 am – Apparently there will be a presentation this afternoon on indexing.
11:08 am – Mr. Dains asked that new sales taxes on new and used vehicles be to those taxes being considered. He said most people do no know what they are paying on that anyway. The chairman pointed out that the Revenue Transfer Committee may be considering this.
11:09 am – The committee is adjourned.
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