Bills to increase fuel tax find road tough in Nebraska

| 2/2/2005

The Nebraska Legislature’s Revenue Committee has shot down one bill to hike the state’s fuel tax and left another hanging.

Because funding for state highway repairs and other projects in Nebraska has not kept pace with demand, Sen. Tom Baker of Trenton offered two proposals related to the cost of fuel.

The packaged legislation would increase the state’s fuel tax by as much as 4 cents per gallon, with much of the additional revenue being directed to cities. Tucked into the bills is a provision barring cities from levying occupation or business taxes related to fuel.

Baker’s initiatives could increase revenue to cities and counties across the state by $37.5 million annually, the Lincoln Journal Star reported.

Members of the committee discussed the legislation at a hearing Jan. 27. Senators made it clear they were not interested in any action that would boost the fuel tax.

They opted to kill LB253, which called for increasing the portion of the state fuel tax dedicated to cities and counties from 2 cents to 4 cents per gallon.

The remaining measure appears destined for doom. LB252 would raise the state’s fuel tax by 2 cents per gallon. Revenue from roughly half the increase would go to cities and counties. The remaining portion would go to the state Department of Roads, which estimates it will have $1.3 billion less than it needs to pay for road repairs over the next 20 years.

According to the newspaper, an increase of 1 cent per gallon brings in about $12.5 million annually, roughly one-fifth of the $1.3 billion shortfall when multiplied over 20 years.

Baker said afterward the anti-tax sentiment was a bit surprising and should send a signal to fellow lawmakers.

“I thought there would probably be more discussion,” of the bills than there was, Baker told the newspaper. “I think it was the first indication to people that if you have a bill that raises taxes, don’t plan on it getting out of committee.”