Search on for Nebraska road funds

| 2/24/2011

A plan to address the state?s highway funding shortfall is on the move at the Nebraska Unicameral. Other options to raise revenue rely on the motor vehicle tax and a fuel tax hike.

The Revenue Committee unanimously approved a bill Wednesday, Feb. 16, that relies on the existing sales tax and bonding to get road work done. LB84 now heads to the full Legislature.

The Nebraska Department of Roads must cope with a highway funding gap that is estimated to grow to $9.2 billion during the next 20 years. To help address the situation, Sen. Deb Fischer, of Valentine, offered the bill to take a half-cent of the state sales tax each year for the next two decades and earmark it for highway construction.

?We as a Legislature must step forward and make the commitment. ? It takes long-term planning and long-term financing for government to supply an adequate transportation system for its citizens,? Fischer said in a recent statement.

The switch wouldn?t take effect until 2013. Fischer wants to delay implementation to allow the state to recover from the recession and give the NDOR time to get projects ready.

A projected $125 million a year would be deposited into a newly created State Highway Capital Improvement Fund. The fund would benefit high-priority improvement and reconstruction projects throughout the state.

Counties and cities would get $20 million annually for local projects.

?Local governments are facing the same problems that are at the state level,? Fischer stated.

The committee amended the bill to require at least $15 million of the fund that would be created to be used for construction of the expressway system and for federal designated high priority corridors. As introduced, the bill designated the $15 million solely for expressways.

The system is made up of four-lane highways that link mid-size towns throughout the state with Interstate 80.

In addition, bonds could be used to pay for high-priority projects.

?Bonding would only be allowed if a constitutional amendment is voted on and passed by the people,? Fischer stated.

Fischer has introduced a constitutional amendment ? LR3CA ? to let voters decide if state sales tax revenue should be used to pay highway bonds.

Other options sought

Applying the motor vehicle tax to more automobiles and a fuel tax hike are other options being pursued to boost revenue.

One bill would rely on a 10-cent fuel tax increase to help to boost transportation funding. Sponsored by Sen. Kathy Campbell of Lincoln, LB504 would increase the 7.5-cent fixed portion of the tax by 5 cents during each of the next two years.

According to a fiscal note on the bill, the increase would generate $77 million in annual revenue.

Another bill from Campbell would apply the motor vehicle tax to older vehicles. Nebraska law now requires owners of vehicles up to 13 years old to pay a motor vehicle tax.

The tax is calculated using a base tax tied to the vehicle?s retail value. New vehicles pay the full base tax, while vehicles up to 13 years old pay 7 percent of the base tax. Vehicles that are 14 years and older do not pay the motor vehicle tax.

Vehicles at least 14 years old would be tapped to benefit the Highway Trust Fund. LB327 would add a $10 motor vehicle fee to older cars and pickups.

A separate bill ? LB505 ? would require vehicles ranging from 14 to 20 years old to pay 3 percent of the base tax. One-quarter of one percent of the tax would benefit the State Patrol Retirement Fund.

Sen. Russ Karpisek of Wilbur said drivers of older cars use the roads and should contribute to their maintenance through the motor vehicle tax. The retirement fund allocation is needed to avoid general fund appropriations, he said.

LB327 is in the Transportation and Telecommunications Committee. LB504 and LB505 are in the Revenue Committee.

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

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