Financial assistance proposed for municipal infrastructure projects

Municipalities could apply for financial assistance to address federally mandated infrastructure projects under a bill considered by the Revenue Committee Jan. 29.

Omaha Sen. Heath Mello introduced LB760, in part to deal with Omaha’s combined sewer overflow project. He said the project could be the largest infrastructure project in the history of the state.

“Local governments regularly face unfunded mandates,” he said. “The sheer size of this project, combined with strict U.S. Environmental Protection Agency timelines, make the project troublesome.”

The bill would create two separate funds to address the costs of municipal infrastructure projects. Municipalities would be eligible for assistance under only one fund, not both.

The Combined Sewer Overflow Infrastructure Fund (CSOIAF) would allocate to municipalities overseeing a combined sewer overflow project 90 percent of the state sales tax collected on increased monthly sewer use fees.

CSOIAF also would create a board to review and approve applications for state assistance. Membership would include the director of the state Department of Environmental Quality (DEQ), the CEO of the state Department of Health and Human Services and the state fire marshal.

Assistance under CSOIAF would be conditional on the municipality using local option sales tax revenue collected from sewer use fees for the project. Municipalities would be barred from using the local option sales tax revenue to fund the general operations of the city.

Marty Grate, environmental services manager for the city of Omaha, supported the bill, saying residents would begin to feel negative financial impacts of the sewer project without assistance.

“Through 2018 we, as a community, should be able to afford the increases to keep pace with the compliance schedule,” Grate testified. “We need to begin working now to find some way to reduce the burden [on citizens]. This won’t solve the problem, but it will help us chip away at the costs.”

Nebraska Association of Industrial Manufacturers representative James Timmerman also testified in support of LB760. He said many of the Association’s members were facing potential water fee increases of 50 to 100 percent.

“Businesses face tough decisions regarding whether to keep operating or expanding in Omaha,” he said. “Although we remain the largest class of rate payers for this project, we are committed to finding solutions. This would create another revenue stream to help fund the project.”

The remaining 10 percent of sales taxes collected on sewer use fees would be distributed under the Unfunded Federal Mandate Infrastructure Assistance Fund (UFMIAF). DEQ would administer grants to political subdivisions not receiving assistance under CSOIAF. Any subdivision receiving assistance under UFMIAF would be required to provide a 10 percent match of funds received from the state.

The state tax commissioner would be authorized to audit approved applications to determine the amount of state sales tax revenue available for projects.

No one testified in opposition to the bill and the committee took no immediate action on it.