Incremental fuel tax increase of 1.5 cents vetoed

Lawmakers passed a bill May 7 that would increase the fixed fuel tax by 1.5 cents annually for four years. It was vetoed later that day by Gov. Pete Ricketts.

Currently, the fixed fuel tax appropriated to the state Department of Roads is 7.5 cents on each gallon of gasoline, while cities and counties are allocated 2.8 cents.

LB610, introduced by Papillion Sen. Jim Smith, would increase the tax allocated to the department by one-half cent per gallon annually for four years and to cities and counties by one-cent.

In his veto letter to the Legislature, Ricketts said that LB610 would increase the state’s gas tax by 23 percent, giving Nebraska the 16th highest gas tax rate in the country and surpassing the national average.

He recommended that the state look for more creative and innovative ways to address roads funding issues.

“Last week, I appointed a new director [to the state Department of Roads],” Ricketts wrote. “I intentionally selected a forward-thinking leader who will take a fresh approach to our state’s road construction needs. This is an area that is vital to our continued economic growth. I cannot, however, support raising taxes as the first solution to this issue.”

The increase to cities and counties would total $4.2 million in fiscal year 2015-16, $16.9 million in FY2016-17, $29.6 million in FY2017-18 and $42.3 million in FY2018-19.

The proposed change to the fixed fuel tax would increase revenue to the department by $2.1 million in FY2015-16, $8.5 million in FY2016-17, $14.8 million in FY2017-18 and $21.2 million in FY2018-19.

Senators passed the bill on a 26-15 vote. Thirty votes are needed to override a veto.