Gov. Pete Ricketts has vetoed a bill to increase Nebraska’s fuel tax rate by 6 cents per gallon over four years. The tax increase was estimated to raise $63.5 million per year by 2019.
The state’s fuel tax now is 25.6 cents per gallon. The tax rate includes a fixed component set at 10.3 cents. The state Department of Roads claims 7.5 cents per gallon of the fixed rate while cities and counties get 2.8 cents.
The Legislature voted 26-15 to send to the governor a bill to increase the tax rate. Eight lawmakers did not cast a vote on the bill, LB610.
Ricketts wrote in a veto message that he has heard from Nebraskans that they want tax relief, not tax increases.
“While proponents of a tax increase have raised important concerns about the state of Nebraska’s roads and bridges, there has not been a compelling case made that a gas tax increase is the solution to construction project needs,” he wrote. “There are alternatives our state should first explore. Raising taxes should never be the first course of action.”
He suggested improvements can be made in operations at the Department of Roads.
“Other states have achieved success by using public-private partnerships, working to improve operations, lowering administrative overhead costs that cut into construction funds, and increasing flexibility within the agency’s regulatory framework.”
The Unicameral could decide to pursue a veto override to increase the state’s total fuel tax to 31.6 cents per gallon. At least 30 of the state’s 49 senators would need to vote to override for the bill to become law.
If approved, LB610 calls for increasing the fixed rate by 1.5 cents per gallon on Jan. 1, 2016. Additional 1.5-cent increases would kick in each year through January 2019 when the fixed rate reaches 16.3 cents.
Each penny increase is estimated to raise $12.7 million annually for road and bridge work throughout the state.
One-half cent of the annual rate increases would be earmarked for the Department of Roads. The other penny increase each year would be divided between cities and counties for local projects.
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