Highway Finance: New Revenue Subcommittee – December 16, 2009
Posted on December 16th, 2009
Date & Time: Tuesday, December 16, 2009 at 10:00 AM
Location: Room 272, State Capitol
Committee Information: Members on Committee
Agenda
10:06 am – Meeting called to order by Chairman Jim McKenzie. The minutes from the previous meeting were adopted as distributed.
10:08 am – We are currently reviewing the new policy briefs. The first one is an increase in Income Tax. In this policy suggestion, the so-called advantages are: “It is elastic and responds well to inflation without legislative adjustment. It is progressive, taxing those with a higher ability to pay at a higher rate. The so-called disadvantages are: “It is weak with regard to economic efficiency (it is inequitable) because it separates the users from the payers. The traditional recipients of general fund revenue have in the past strongly resisted using those revenues for transportation. The revenue potential is limited.” This tax requires a 75% supermajority of both houses to raise.
10:13 am – Now we are talking about a Gasoline and Diesel Excise Tax. The so called advantages. The so-called advantages are: “The gasoline and diesel excise taxes are a user fee and are the traditional way of funding roadway improvements. It is consistent with the user pay principle that has been the foundation of America’s highway system. Administration costs are low.” The so-called disadvantages are: “The motor fuel excise taxes are inelastic, therefore their purchasing power will decrease over time. Construction costs are projected to rise more rapidly than in the past two decades, eroding purchasing power more quickly. New federal fuel efficiency standards will reduce the productivity of the gasoline excise tax at an increasing rate as the next decade progresses. As alternative fuel vehicles, particularly plug-in hybrids and electric vehicles become more prevalent, motor fuel excise taxes will be unable to fairly capture the costs of these vehicles to the road network. Diesel fuel taxes may not be set at a rate that fairly captures the costs of heavy trucks to the road system.” This tax would require a 75% majority of both chambers to raise this tax.
10:21 am – The policy brief of Public Private Partnerships/Tolling was covered very very briefly even though it is one of the longest. The thought is that it is only applicable and successful in large metropolitan areas.
10:23 am -There is alot of discussion about the policy brief called the “Equitable Share for Heavy Trucks.” The policy brief claims trucks pay 6 cents/mile. Trucking industry records shows that they pay nearly 15 cents/mile.
10:28 am – Rep. Jon Woods sitting here beside me. He said, “If half the state knew what we were discussing today, the capitol would be overwhelmed with calls.” I agree. That is why I am doing this.
10:30 am – It seems that there is a lean toward some type of sales tax. Mr. Mike Wilson suggest that we may need to consider temporarily withdrawing from the streamline sales tax agreement. The phase in process hits snags due to the SSTA.
10:32 am – We are currently reviewing a computer model that demostrates the results of the revenue generating taxes. This is a spreadsheet that I should be able to get into my little fat fingers. I am wondering if there are any dynamic adjustment factors in the model. If I get the opportunity I will ask.
10:37 am – This model uses as a baseline of $290 million and includes purchasing power in the future out to 2020.
10:42 am – There is a model about the carbon tax. It was modeled as being phased in over 4 years of .25 cents per standard measure of carbon in the fuel being used.
10:49 am – Amost everyone is talking about significant inflationary increases. I wonder if that is because they know the impact of massive federal deficit spending. If so, they are not saying it.
10:52 am – One of the “advantages” of a carbon tax is that it is a “new” tax and can get through the Constitutional loop hole created by an unelected judge. New taxes only need to be passed by a simple majority rather than the supermajority required to pass or increase a tax. If the TEA Party is looking for something to get behind, a constitutional amendment to the state constitution to restore the original intent would be a great idea to consider.
10:57 am – There seem to be alot less willingness to speak up in support of new taxes these days like there were when we first started this committee. The chairman called for support and suggestions for any of the proposal. He was met with silence and someone said, “Don’t everybody speak at once..”
10:59 am – Mr. Mike Wilson suggests that instead to deciding which to promote why don’t they start eliminating a few of they do not think will work.
11:01 am – The point was made that Arkansas ranked like 8th nationallly in income taxes and perhaps that would not be one that should be considered.
11:05 am – Rep. Pennartz asked for a single table for the amount raised by each tax and the amount of the tax itself.
11:10 am – Committee adjourned.
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