Gas-tax hike likely for road funds

LINCOLN — Higher state gasoline taxes and a bond-issuing plan are among the ideas being pushed by some lawmakers to steer Nebraska out of its crisis in financing road maintenance and construction.

State Sen. Arnie Stuthman of Platte Center says the Legislature should raise the gas tax by 5 cents per gallon.

That would bring in about $60 million a year in new money to jump-start completion of the state expressway system and other improvement projects, Stuthman said.

“We need more money, and it should come from a user fee. In my opinion, that's the gas tax. That's as simple and as plain as it ought to be,” said Stuthman, who is entering his final year in the Legislature.

A hefty tax increase during an economic downturn, and in a year when 24 of the 49 legislative seats are up for re-election, would provide plenty of fireworks in the 2010 session, which begins Wednesday.

Two other lawmakers say a gas-tax hike is not the answer.

Sens. Tim Gay of Papillion and Kathy Campbell of Lincoln are calling for a bond-issuing “infrastructure bank.”

Such a bank of $50 million would help counties and cities, in partnership with the state, borrow up to $250 million to widen roads and replace bridges, Campbell said.

It would be a type of bond financing that is commonly used by counties and cities.

Thirty-two states authorize infrastructure banks to help finance road construction. Nebraska has issued road bonds only once, in 1969, to complete Interstate 80.

The traditional workhorses in financing road construction are taxes on gasoline and other fuels. But revenue is declining because of more fuel-efficient vehicles and because gasoline sales have been dropping.

The state gas tax — 19th highest in the nation at 27 cents per gallon — brought in $315 million in 2008-09, $17 million less than two years earlier.

That reflects the decline in gas sales, which were 50 million gallons fewer than four years earlier.

Campbell said a bonding plan could help build multimillion-dollar projects like the South Beltway around Lincoln and the proposed Missouri River bridge south of Bellevue and the roads to connect to it.

The big problem is how to fund an infrastructure bank. Campbell and Gay said they are looking at possible funding methods that don't involve increases in gas taxes or fees.

Gov. Dave Heineman, in a recent interview, said he's always been skeptical of borrowing money to build roads. That's because, in the end, you still need to find a revenue stream, just like the state's current “pay-as-you-go” system of funding roads.

But Heineman opened the door slightly to the idea of bonding.

“I'm a little bit more open-minded about it today than I was a year ago,” he said.

An interim study by the Transportation Committee, which took testimony in eight cities last fall, came to a dreary conclusion. Unless new revenue is found, “Nebraska's highway system will fall into disrepair and expansion of the (highway) system will come to an end.”

In other words, some popular projects — like completing the last 174 miles of the state expressway system and finishing the widening of Interstate 80 — wouldn't happen.

State Sen. Deb Fischer of Valentine, who heads the committee, said “bold'' steps are needed to fix the state's ailing road-funding program. But she's waiting until 2011 to introduce her proposals.

Fischer said it isn't feasible to pass the major overhauls needed in a 60-day legislative session and during a re-election year.

“It's a big undertaking when you're talking about highway funding. You're talking about hundreds of millions of dollars,” she said. “That's too big for a short session.”

This year, Fischer said, will be a session to educate and discuss.

She said she isn't unsympathetic to those who want to raise the gas tax.

A major theme repeated at the public hearings last fall, Fischer said, was that Nebraskans are willing to pay more in fees and gas taxes to preserve and improve state roads.

Larry Dix, executive director of the Nebraska Association of County Officials, said local governments can't wait for a solution.

Those entities lost $14 million in state aid to fix roads last year after the Legislature changed the way gas taxes are levied.

Dix said many county officials are up for election in 2010, too, and are fielding complaints about the poor condition of local bridges and roads.

“They're facing the battle of why can't things be repaired,” Dix said.

Stuthman said the simplest solution is to raise the gas tax.

During the public hearings, he said, some people advocated for up to a 10-cent per gallon hike in gasoline taxes.

Overall gasoline prices, Stuthman said, can vary by a nickel per gallon or more, depending on which gas station you patronize or which day you buy gas.

That, he said, makes his 5-cent hike proposal “minor” by comparison.

Contact the writer:

402-473-9584, paul.hammel@owh.com

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