State aid sought for municipalities

Nebraska municipalities could apply for state grants for infrastructure projects under a bill considered Feb. 22 by the Urban Affairs Committee.

Under LB821, introduced by Sen. Matt Hansen of Lincoln, the state Department of Economic Development would evaluate grant requests and all cities and villages in Nebraska would be eligible to apply. The bill also states legislative intent to appropriate $15 million annually to DED to fund the grant program.

Funds could be used to pay for construction costs or to pay the principal, interest, premium or issuance cost on infrastructure bonds.

The state discontinued direct aid to municipalities in 2011, Hansen said, and LB821 would restart that effort and provide a way for cities to improve infrastructure.

“Rather than being a set amount each year that goes automatically to [municipalities] it would be incumbent upon the municipality to request grant money for a specific infrastructure project,” Hansen said.

Lynn Rex of the League of Nebraska Municipalities testified in support of the bill. State aid to municipalities was never considered a gift but rather a replacement for lost revenue due to legislative action that limited cities’ ability to levy property taxes, she said.

“Municipalities across the state have really been limited dramatically in what they can do, how they can spend their money and how they move forward,” Rex said.

Jack Cheloha, testifying on behalf of the city of Omaha, also spoke in support. He said Omaha lost about $2.4 million annually in state aid when that funding stream was eliminated, causing the city to raise property taxes and limiting the development projects it could pursue.

No one testified in opposition to LB821 and the committee took no immediate action on it.