LITTLE ROCK — Arkansas voters appeared to be on their way to approving a statewide half-cent sales tax increase in Tuesday’s general election to pay for a $1.8 billion bond issue to build a four-lane link connecting all parts of the state.
At 10 p.m., the sales tax proposal, Issue 1 on the ballot, had 59 percent of more than 412,000 votes counted, with 41 percent voting against the proposed constitutional amendment.
A second proposed constitutional amendment appeared headed to defeat. Issue 2 would have authorized local governments to create development districts with tax money.
The highway bond program, Issue 1 on the ballot, will raise the state sales tax from 6 percent to 6.5 percent for 10 years to finance a $1.8 billion bond issue to build a statewide system of four-lane highways. The tax is to take effect July 1.
“During this election the Move Arkansas Forward Committee and a lot of volunteers worked very hard to make it clear to Arkansas voters that this is a great opportunity to create jobs and improve our economy,” Highway Commission Chairman Madison Murphy said Tuesday night. “I think more than any other function of government, building highways and improving county roads and streets provides the type of return on investment that every Arkansan will benefit from.”
Murphy said the road projects will relieve traffic congestion and improve safety and taxes will not be raised on groceries, medicine, gasoline or diesel fuel.
State Highway Director Scott Bennett has said the half-cent sales tax increase could generate more than 40,000 jobs and fund a number of large expensive projects across Arkansas, such as the replacement of the Interstate 30 bridge over the Arkansas River between Little Rock and North Little Rock, widening I-40 between Little Rock and Conway, and widening U.S. 67-167 between Jacksonville and Cabot.
Two lanes of the proposed Bella Vista bypass also could be completed in Northwest Arkansas, and in the south, U.S. 82 between Magnolia and El Dorado could be widened, along with a number of other heavily traveled highways across the state, according to Bennett.
Under the amendment, the state Highway and Transportation Department will receive 70 percent of the proceeds from the tax, about $160 million annually, while cities and counties will split the remaining 30 percent, about $35 million each annually.
The proposal also creates a permanent state-aid street fund, similar to one already existing for counties, which cities could use for street projects.
Madison said Tuesday night he was not surprised that the tax increase was passed, even with voters appearing to favor fiscally conservative candidates who oppose new taxes.
“I think it is the nature of the issue,” he said. “This is a temporary tax. It will be abolished by the constitution when the last bond is paid off. It goes to specific projects, and it does not grow government jobs, but it does create and support 40,000 private sector jobs.”
Issue 2, which would have authorized cities and counties to create special economic districts and issue bonds for retail projects, had received 44 percent of the vote by 10 p.m., with 56 percent of the voters opposing the measure.
The measure, sponsored by Sen. Jake Files, R-Fort Smith, during the 2011 session and recommended to voters by the Legislature, would have:
• Created Sales Tax Anticipated Revenue (STAR) districts for development or redevelopment projects.
• Given cities and counties the ability to issue bonds to retire unfunded liabilities of closed police and fire pension plans, and the ability to ask voters to raise taxes to pay the bond debt.
• Allowed special revenues to pay principal and interest payments on short-term debt obligations.