Sales tax sought to fund roads

A half-cent of the state’s sales tax would be devoted to roads projects under a bill debated on general file March 24.

LB84, introduced by Valentine Sen. Deb Fischer, would deposit 83 percent of the revenue generated from 0.5 cents of the sales tax in a new State Highway Capital Improvement Fund, 85 percent of which would be dedicated to roads projects prioritized by the state Department of Roads. The remaining 17 percent would go to the Highway Allocation Fund.

At least $15 million of the improvement fund would be used for construction of the Nebraska Expressway system. A pending Revenue Committee amendment would expand the use of the fund to cover federally designated high-priority corridors.

Fischer said LB84 is needed to provide sufficient funding for roads projects. The state is slipping toward a crisis situation due to inadequate revenues derived from the state’s gas tax, she said. With LB84, she said, the state can use additional sales tax resulting from the economic recovery to make needed investments in road infrastructure.

Gas tax revenues currently provide for $317 million of the $350 million in highway maintenance needs, Fischer said, estimating that needs will increase to $483 million next year.

“We are looking at shortfalls,” she said. “We are looking at a crisis.”

Sen. Mike Flood of Norfolk spoke in support of LB84, saying it could provide funding to help complete the expressway system proposed in 1988 so cities like Norfolk, Columbus and Scottsbluff could be connected to cities with interstate access.

“This is a lot bigger than a road; this is connecting a town like Norfolk to the rest of the state,” Flood said.

The original bill would authorize up to $500 million in bonding by the State Highway Commission for road construction recommended by the department. No more than $25 million from the fund could be used to service bonds, which would be issued before Jan. 1, 2019, and paid off by Jan. 1, 2038.

The bill’s bonding requirement would rely on voter approval of LR3CA, a proposed constitutional amendment that would permit the use of state sales taxes to service road bonds.

A pending amendment offered by Fischer would remove the bonding provisions.

Lincoln Sen. Danielle Conrad offered a motion to bracket the bill until Jan. 4, 2012.

Conrad called LB84 a significant departure from the current gas tax funding mechanism and said the bill could result in reduced revenues for K-12 education, state colleges and human services. The $125 million that would be set aside for roads each year would equal the operating budget of 39 state agencies, she said.

“LB84 may be the largest earmark in Nebraska history,” Conrad said. “Are you prepared to start eliminating agencies when we don’t have the money in two years?”

Omaha Sen. Jeremy Nordquist spoke in support of Conrad’s bracket motion, saying the Legislature’s Appropriations Committee already can allocate funds for roads. Devoting part of the sales tax to roads would create a “perpetual budget crisis,” he said.

Lincoln Sen. Tony Fulton opposed Conrad’s bracket motion and spoke in support of LB84, saying the alternative to the bill would be an increase in the state’s gas tax. The last increase of the gas tax by 1.3 cents resulted in a public outcry, he said, adding that it would take a 28-cent increase in the tax to provide for roads needs.

“We have to recognize that Nebraska’s gas tax is no longer adequate to fund our roads,” Fulton said.

Conrad’s motion to bracket the bill was defeated 9-28. A motion to recommit the bill to the Revenue Committee offered by Omaha Sen. Jeremy Nordquist and several other floor amendments are pending.

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