LITTLE ROCK — Gov. Asa Hutchinson said Tuesday he will cancel his plans for a special session on highway funding if the Legislature fails to fund his Medicaid expansion plan during the fiscal session that begins Wednesday.

In a news conference at the state Capitol where he was joined by members of the Arkansas Highway Commission and several state legislators, Hutchinson said that if the Legislature does not approve funding for Arkansas Works, which would continue and modify the program now known as the private option, then his plan to boost highway funding will be impossible.

"If Arkansas Works is not funded, that means there is no ability to utilize surplus and take more money from general revenue to fund highways," he said. "That is the bottom line. That is a real-life consequence."

Since its creation in 2013, the private option has used federal Medicaid money to subsidize private health insurance for more than 267,000 low-income Arkansans and has reduced uncompensated care costs at hospitals across the state. The plan received approval in a special session last week, but the votes it received fell short of three-fourths majorities that will be needed in both chambers to fund the program.

The governor’s highway plan calls for transferring $40 million in surplus and rainy day funds to highways in fiscal 2017, phasing in a transfer of some annual sales tax revenue from new and used vehicles to highways, and directing up to 25 percent of each year’s unallocated budget surplus to highways starting in fiscal 2018.

The plan is projected to generate $750 million over the next decade and allow Arkansas to provide matching funds for about $2 billion in federal highway money over the same period.

Hutchinson said Tuesday that ending Medicaid expansion would create a budget hole of more than $100 million in the fiscal year that begins July 1, so the option to use surplus funds and general revenue for highways would disappear.

"The only other way to have a highway plan is to raise taxes," Hutchinson said, telling reporters he did not believe there would be enough support in the Legislature for a tax increase to justify calling a special session to consider one.

Asked if his announcement was a sign he was concerned that an appropriation for Arkansas Works might fail, Hutchinson said, "Certainly you’ve got nine or 10 on the Senate side that indicate they are going to vote no on funding. We continue to have discussions with them, we continue to look for discussions. But they have not indicated they are going to vote yes on the funding."

Nine senators voting against an appropriation bill would be enough to block a three-fourths majority in the 35-member Senate.

The governor’s news conference came a day after House Speaker Jeremy Gillam, R-Judsonia, a supporter of Arkansas Works, released an alternative budget proposal detailing cuts he said would be needed if Medicaid expansion is not funded. Hutchinson released a statement Monday warning that the state’s foster care system would face a $10.9 million cut and have to eliminate 255 positions if Arkansas Works is not funded.

Opponents have accused Hutchinson of trying to scare people.

"This week’s budget announcement is an attempt to say ‘the sky is falling’ and scare citizens into supporting the continuation of Obamacare’s Medicaid expansion," David Ray, Arkansas director of the conservative advocacy group Americans for Prosperity, said in a statement Tuesday.

Hutchinson said Tuesday, "The objective is not to worry people, to scare people. The objective is to inform people as to the decision point that we have to make and the consequences of that decision."

Sen. Bart Hester, R-Cave Springs, an opponent of Arkansas Works, said Tuesday regarding the plan’s supporters, "When you can’t get what you want, you go to scare tactics and pressure."

Hester said he believes that "$2.6 billion a year is adequate funding for highways in Arkansas" and said cuts could be made in other areas besides foster care. He suggested cutting state funding for public television station AETN, War Memorial Stadium in Little Rock and "corporate welfare" in the form of state incentives provided to new or expanding businesses.

"It’s very easy for somebody that doesn’t have a foster child in their home and doesn’t deal with foster care issues every day to use foster care as a political bargaining chip," said Hester, who is a foster parent.

Ray also argued in favor of cutting economic-development incentives.

"Arkansas has spent more than $750 million over the past decade in corporate giveaways. We should be putting that spending on the chopping block instead of funding to our foster care system," he said.

Hutchinson said he did not think targeting AETN and War Memorial Stadium were realistic proposals and said that "I think we need those economic incentives," but he said he would look at any alternative budget legislators propose.

Hester said opponents of Arkansas Works will present an alternative budget during the fiscal session.