Nine percent of revenue generated from state sales tax would fund road projects under a bill advanced from general file March 25.
Under LB84, introduced by Valentine Sen. Deb Fischer, 0.5 percent of the state’s 5.5 percent sales tax would be dedicated to roads from fiscal year 2013-14 through FY2032-33. As introduced, the bill would direct 83 percent of these funds to 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 Revenue Committee amendment expanded the use of the fund to cover federally designated high-priority corridors.
The 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.
Fischer said providing an ongoing commitment to fund roads would foster long-term economic development. In addition to providing needed infrastructure for the state, she said, the roads projects funded by the bill would create 40,000 construction jobs.
Holdrege Sen. Tom Carlson spoke in support of the bill. LB84 provides the best immediate solution to fund roads, he said, but other funding mechanisms based on miles driven and vehicle type could be examined.
Omaha Sen. Jeremy Nordquist filed a motion to recommit LB84 to the Revenue Committee, saying it would reduce revenues available for general fund obligations by $260 million each biennium and would result in either a tax increase or decreased appropriations for education and human services. Current revenue projections by the Legislature’s fiscal office assume 5.2 percent growth in the next biennium, he said, adding that it would take 8 to 8.5 percent revenue growth to fund LB84.
“I don’t want to build a budget on hopes, dreams and prayers,” Nordquist said. “I want to build a budget based on the best numbers we have available to us.”
Lincoln Sen. Danielle Conrad said earmarking $260 million per biennium will lead to even deeper cuts than are being made to meet the current budget shortfall of more than $900 million.
“Until we have some sort of clear indication [of revenue growth] that provides a level of comfort for the largest earmark in state history, we can’t [pass LB84],” Conrad said.
Amendments were pending to remove the bonding portion of the bill, change the allocation of sales tax revenues and cap the total amount of sales tax directed to roads under the bill, but a motion to invoke cloture, adopted 36-12, precluded their consideration on general file. A cloture motion ceases debate and prompts votes on only motions and amendments before the Legislature.
After defeating Nordquist’s motion to recommit the bill on a 8-37 vote, the Legislature adopted the Revenue Committee amendment 38-8 and advanced LB84 from general file 32-8.