Fuel tax increase proposed

Members of the Revenue Committee heard testimony March 6 on a bill that would increase the fixed fuel tax.

Currently, the fixed fuel tax appropriated to the state Department of Roads is 7.5 cents on each gallon of gasoline. LB610, introduced by Papillion Sen. Jim Smith, would increase the tax by one-half cent annually for four years, starting in 2016. Smith said that the success of the state is dependent upon the nearly 100,000 miles of roads and 20,000 bridges in Nebraska.

“Businesses and industries recognize that a well maintained road infrastructure is absolutely critical to our state,” he said. “We’re operating at a relatively low cost per mile, but our [road and bridge] conditions have suffered possibly as a result.”

The proposed change to the fixed fuel tax would increase revenue to the department by $2.1 million in fiscal year 2015-16, $8.5 million in FY2016-17, $14.8 million in FY2017-18 and $21.2 million in FY2018-19.

The bill also would increase the fixed fuel tax distributed to cities and counties from 2.8 to 3.8 cents per gallon for four years, starting in 2016.

Cities and counties would see increases of $4.2 million in FY2015-16, $16.9 million in FY2016-17, $29.6 million in FY2017-18 and $42.3 million in FY2018-19.

Lancaster County Engineer Pam Dingman spoke in favor of the bill. She said that funding has not kept up with the need for new and repaired roads and bridges.

“As our roads and bridges continue to deteriorate, so does the quality of life for [our citizens],” she said. “Our infrastructure must become a priority for our economy to prosper.”

Larry Hudkins, representing the Nebraska Farm Bureau, also supported the bill, saying that maintaining roads and bridges is essential to farmers and ranchers.

“The key to competing is to keep the shipping of the components low for our farmers and ranchers, who each year, face more global competition,” he said.

Americans for Prosperity Executive Director Matt Litt opposed the bill. He said the increase represents a regressive tax hike on low- and middle-income families.

“Our taxes are too high and the government must act to lower that burden,” he said. “This bill doesn’t fit with the priorities of our state government.”

The committee took no immediate action on the bill.