Highway bonding proposal considered

The state could use bond proceeds to speed completion of Nebraska’s expressway system under a bill heard Feb. 22 by the Revenue Committee.

LB706, introduced by Sen. Mike Moser of Columbus, would authorize the state highway commission, upon recommendation of the state Department of Transportation, to issue up to $450 million in bonds between 2023 and 2029 to accelerate completion of highway construction projects under the Build Nebraska Act.

The act, passed by the Legislature in 2011, dedicates one-fourth of 1 percent of state sales tax revenue to road projects, including the expressway system, between 2013 and 2033.

Moser introduced an amendment that would extend the act’s sunset date to 2042, which he said would allow the department to use the dedicated sales tax revenue to retire any bond debt. In certain situations, he said, LB706 would allow the department to complete segments of the expressway system in less time than it otherwise could.

The amendment also would increase the authorized amount of annual debt service from $30 million to $35 million.

Any bonds issued would be special obligations of the state payable only from the State Highway Capital Improvement Fund and any other funds specifically pledged by the commission. They would not be a general obligation or debt of the state and would be exempt from state income tax. All bonds would be paid off by June 30, 2042.

LB706 would require that at least 75 percent of the bond proceeds be used for construction of the expressway system and federally designated high-priority corridors. The remaining proceeds would be used to pay for surface transportation projects of the highest priority, as determined by the department.

Gov. Jim Pillen testified in support of the proposal, saying it would allow the department to complete needed highway projects on a “much faster timeline.” He said Nebraska has sacrificed economic growth and public safety by using a pay-as-you-go method to fund the long-delayed expressway and other highway projects.

“I believe we’ve really missed the boat as a state,” Pillen said.

Also in support was Vicki Kramer, director of the state Department of Transportation. She said issuing bonds when interest rates are lower than the rate of inflation on construction costs would allow the department to speed completion of approved projects.

“Because NDOT has been fiscally responsible in the past,” Kramer said, “we can be selective about when we issue bonds and only use the authority when conditions are right and the benefits of issuing the bonds and accelerating projects outweigh the costs of using the funding method.”

Bryan Slone testified in support of LB706 on behalf of the Nebraska Chamber of Commerce and Industry. He said expanding Nebraska’s highway network is critical to the agriculture, manufacturing and transportation industries, which make up approximately 30 percent of the state’s GDP.

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