Nebraska latest state to approve fuel tax increase

By Keith Goble, Land Line state legislative editor | 6/10/2015

Nebraska recently became the seventh state to act this year to approve a fuel tax increase.

The Legislature voted 30-16 to override Gov. Gov. Pete Ricketts’ veto of a bill to increase the state’s fuel tax rate by 6 cents per gallon over four years. A minimum of 30 votes were required for a successful override – four more votes than the bill received on its way to the governor’s desk.

The tax increase is estimated to raise $63.5 million per year by 2019.

Ricketts wrote in a veto message that he has heard from Nebraskans that they want tax relief, not tax increases. Instead, he suggested improvements can be made in operations at the state’s 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,” Ricketts wrote.

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.

LB610 will increase the state’s fuel tax rate to 31.6 cents per gallon by 2019.

Sen. Curt Friesen of Henderson said it was time to take action.

“In the last 22 years our gas tax has only increased by 1 cent. It’s time to catch up on our road and bridge maintenance funding needs,” Friesen wrote in a recent legislative column.

The fixed rate will increase 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 will be earmarked for the Department of Roads. The other penny increase each year will be divided between cities and counties for local projects.

Other states to approve fuel tax increases since January are Georgia, Idaho, Iowa, Kentucky, South Dakota and Utah.

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

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