Bond financing would be employed to accelerate the completion of highway construction projects under a bill heard by the Revenue Committee Feb. 12.
LB1092, introduced by Fullerton Sen. Annette Dubas, would authorize the State Highway Commission to issue up to $400 million of bonds to fund the accelerated completion of highway construction projects under the Build Nebraska Act. At least 25 percent of the bond proceeds would be dedicated to construction of federally designated high priority corridors and the expressway system through Chadron, Alliance and Scottsbluff.
Dubas said relying on revenue from the state’s gas tax is no longer a stable funding source for road improvements.
“Nebraska’s highway system plays a critical role in our citizens’ lives and our state’s economic development,” she said. “We’ve operated as a pay-as-you-go state for decades but because of changes in travel habits and more fuel-efficient vehicles, those revenues have been declining.”
The bonds would be repaid with revenue from the State Highway Capital Improvement Fund, which currently receives .25 percent of the state sales and use tax. LB1092 also would pledge the revenue from all fuel taxes, registration fees and other highway user fees for the purpose of bond repayment.
The bill would limit the annual debt service to $30 million, not to exceed 19 years. No bonds could be issued after June 30, 2020, and all bonds must be paid off by June 30, 2033.
Nate Eckloff, managing director of RBC Capital Markets, testified in support of the bill, saying it would provide a more stable funding source for needed improvements.
“Bonding gives the option to the state of Nebraska to bond against an already existing revenue stream for already identified projects at a low interest rate,” he said. “There’s a strong multiplier effect for putting money into the economy through highway construction.”
State Department of Roads Director Randy Peters testified in opposition to the bill, saying the traditional pay-as-you-go funding system has served the state well.
“Bonding authority by itself would not enable projects that have not been designed yet to be conveniently ready for construction years before they were ready,” he said. “It would be desirable to have state funds unfettered by debt service to maintain maximum flexibility.”
The committee took no immediate action on the bill.