Bill to curb wheel fee advances

LINCOLN — A bill to outlaw Omaha's controversial wheel fee on commuters charged out of the starting gate Thursday.

After hearing the pros and cons, a legislative committee voted 7-0 to advance the bill for debate by all lawmakers.

It was a strong show of distaste for a fee that nonresidents of Omaha complain is “taxation without representation.”

“Omaha has not addressed their budget issues. They're trying to do it by taxing people outside of their community,” said State Sen. Abbie Cornett of Bellevue, who has many constituents who will be paying the new wheel fee.

City of Omaha officials argued that the need for more road maintenance funds had inspired what they call a “user fee.”

They said about 45 percent of all people who work in Omaha live outside its boundaries, and those commuters should share in the costs of the streets they use.

“There's no reason why nonresidents of Omaha should get free use of the streets,” said Tom Mumgaard, a deputy city attorney, saying it was unfair to Omahans to shoulder all of the costs.

Commuters' tempers flared last fall after Omaha not only raised its long-running wheel tax on city residents from $35 to $50, but levied it on all non-residents who work in the city.

Omaha businesses recently began collecting the $50-a-year fee from non-resident employees.

That inspired Cornett, chairwoman of the Revenue Committee, to introduce Legislative Bill 81. The bill, as amended Thursday, would prohibit charging the wheel tax on non-residents.

It goes even further. It would ban the practice of levying the wheel tax on non-Omahans living within the city's zoning jurisdiction — a three-mile zone beyond the city limits in Douglas County.

Omaha expects to gain an additional $5.7 million in revenue through the new commuter fee. But if the bill is approved by the Legislature, the city also would lose hundreds of thousands more if the wheel tax boundary is dialed back to the city limits.

“We've got our work cut out for us,” the City of Omaha's lobbyist, Jack Cheloha, said of the bill.

The Revenue Committee includes Sen. Pete Pirsch of Omaha, who voted to advance LB 81 but said he was undecided on the bill's merits.

“I'm trying to decide where a fiscal conservative would come down on this issue,” Pirsch said. “I'm not sure this is a matter of more expense or less expense — it's who appropriately should be paying for the expense.”

The Greater Omaha Chamber of Commerce, a coalition of Sarpy County mayors and three Omaha-area residents testified in support of LB 81.

Other than three City of Omaha officials, no one testified against the bill.

An Omaha chamber representative said collecting the new tax from employees was confusing and a burden on businesses.

Cornett said levying wheel taxes on nonresidents could result in a confusing patchwork of taxation, where a Sarpy County family could be paying wheel taxes to two or three communities at once.

Mumgaard, however, said he doubted other cities would go to the trouble of collecting wheel taxes on non-residents. He said Omaha's large size, and the large number of commuters into the city, makes it unique.

City Finance Director Pam Spaccarotella said Omaha needs new revenue to pay for street maintenance and that funding has not kept pace with asphalt resurfacing needs.

One major source for street construction in Omaha — gasoline tax revenue — has declined by $4 million over the past two years, to $27 million, she said. The wheel tax brought in $16.5 million in 2009.

Cornett and other lawmakers on the committee said Omaha should consider raising property taxes if it needs more money for streets.

“It's just a lack of courage on their part,” said Sen. Dennis Utter of Hastings.

Cheloha and other city officials argued that the commuter wheel fee was no different from state gasoline taxes, which are paid by non-residents, and the state income tax, which is levied on non-Nebraskans who work in the state.

Contact the writer:

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

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