Nebraska fuel tax to increase

| 4/14/2008

The Nebraska Legislature has voted to override a veto from Gov. Dave Heineman that allows the state’s fuel tax to increase by about a penny a gallon. The increase is expected to put the state’s per-gallon tax at 26.7 cents.

The increase will generate about $14.5 million for the Department of Roads next year. The funds will be used to cover the agency’s rising salaries and health insurance costs without dipping into construction funds.

Heineman previously vetoed the portion of the state budget – LB959 – that required a fuel tax increase of about 1.2 cents per gallon starting July 1, 2008. In the days following the veto, senators took up pursuit of the 30 votes needed to override the governor. The override attempt passed on a 34-15 vote.

Facing a projected $14 million shortfall in federal highway funds this year, supporters said the tax increase is needed to maintain current funding for road work. They also pointed out that the current fuel excise tax is expected to remain flat while construction costs continue to escalate.

The governor was critical of the legislative action.

“With gas and diesel prices at record highs and predicted to go even higher, food costs increasing and health care costs soaring, now is not the time to increase the (fuel) tax,” Heineman said in a written statement.

Support for the override was firmed up once lawmakers were assured consideration of a second fuel tax increase would be abandoned. Sponsored by Sen. Deb Fischer of Valentine, the measure could have added another 3.3 cents per gallon at the first of the year.

Instead, senators will be asked to set aside $15 million in cash reserves during the next three years. The funds would be used for federally earmarked road projects.

The money would be used to match about $75 million in federal funds that have been earmarked for specific projects.

To view other legislative activities of interest for Nebraska, click here.

 – By Keith Goble, state legislative editor