Secure Arkansas and some Tea Party organizations want the Highway Commission to answer some basic questions about the proposed bond issue voters will be asked to approve on November the 8th.
appears that the primary funding source to pay off these bonds is the money we
would otherwise get from the federal highway trust fund. If for any reason the federal government
fails to deliver the expected monies from this fund over the next 15 years
would the state and its taxpayers be expected to make up any shortfalls needed
to pay off the bonds?
Editor's note: we have found that the answer to this question is YES.
federal gasoline tax is the primary means the federal government uses to
replenish the federal highway trust fund which appears to be the primary source
you are relying on to pay off these bonds.
Is the tax “permanent” or is it a tax that has to be renewed from time
to time? Since it was first levied in
1956, has this tax ever lapsed or been diverted to purposes other than the
federal highway trust fund?
Editor's note: we have found that the tax has been diverted to deficit reduction twice since 2000, and that the tax does have to be renewed. It may actually be technically lapsed right now. It was supposed to end September 30th unless renewed, and I can't find anyplace in the news where it was renewed.
question before us seems to be whether we simply spend the federal highway money
as it comes in, or borrow against those expected revenues and get as much money
as we can up front. We understand that
the loan amount we can get is $575 million dollars, but we don’t know the other
amounts. How much money did we get from
the federal highway trust fund each year over the last five years, and how much
revenue did we get from the four cent diesel tax that is also dedicated to bond
repayment? How many total dollars from
these sources do you expect to take in over the next 15 years?
Editor's note: Those numbers appear to be about $58 million each year from the feds and $15 million from the diesel tax, so we are giving up roughly $73 million in annual revenue over the next fifteen years ($1.095 billion) to get the $0.575 billion early. We would get about $300 million, or over half the money from the issue, simply by letting the money come in over four years.
how many dollars will be paid in interest for this $575 million? How many dollars will be paid in bond fees,
brokerage fees, and commissions? How
many dollars will be allocated to pay legal fees necessary when floating a bond
firms will be retained to broker the bond deal and provide the legal work for
the bond deal? Also, how were these
firms selected (were these jobs ever competitively bid)?
is currently a four cent a gallon diesel tax which was brought into existence
to pay off the last round of GARVEE bonds.
It seems to us the dedicated revenues would have “nowhere to go” should
we finally pay off these bonds. While
it is not a “new tax”, it is a tax created for and devoted to paying off these
bonds. So while no “new tax” would be needed to engage in another round of
borrowing, it seems to us that an existing tax could be ended. Should
there be no bonds, isn’t it true that the legislature could simply end this tax
without a loss of state fuel tax money going to your department? If the legislature redirected this fuel tax
to your department instead of to bond repayment, isn’t it true that your
department would receive more dollars from state fuel taxes than they do
now? If so, how many cents could the
legislature take off of the state’s gasoline tax and still break even in fuel
provide us with the total number of road dollars you intend to spend in each
congressional district with this bond money.
is confusion about what this money is to be spent on. Some officials are saying that new
construction will be associated with this project. Some say that the plan is only going to fix
what we already have. Others say that
it is a two-phase program with some of each.
Could you provide us with a map that shows where you intend to do
what? Also, a definition of what the
terms mean. For example, does “improve”
simply mean that you resurface a road, or are you permitted to add lanes,
on-ramps, exits, new bridges, and the like?
of us are concerned about money paid in gasoline taxes being diverted to
subsidizing mass transit and alternative locomotion whose users “free ride” on
vehicle users. We feel that the free
market should determine the mix between mass transit and private vehicle
use. Can you guarantee us that no money from this
program will be spent on facilities or infrastructure for mass transit,
trollies, light rail, bicycle paths, or recreational trails?
are rumors that this plan will borrow money before the Highway Commission even
needs it to fund road work. As this
rumor has it, they plan to turn the money over to financial traders who will
use it to speculate on various investments with the idea that they can make
money trading until they spend it. If
true, we feel this is a volatile time to try such a scheme, and that there is
an unacceptable risk of them losing money and leaving us to make good what they
lost, plus the interest on what they borrowed to speculate. The only ones sure to win in such a plan is
the financial firm that does the trading and rakes in the commissions.
do you do with funds that you get off the bonds but have not yet spent? What is the maximum amount of time between
the day you expect to raise bond money and the day you expect to spend it? If there is a plan like this in the works,
how much do you estimate it will cost you in payments over the life of the
program to the investment bankers who will manage this program? Also if it is true, what firm are you going to
use and how were they selected (was the job competitively bid)?