Case Study #2: Nebraska – The Perfect Storm

Nebraska Road Map

This week we continue our series on efforts in other Republican-led states to fund transportation infrastructure.

Nebraska has a unicameral legislature with 35 Republicans, 13 Democrats and 1 Independent and a Republican Governor, Pete Ricketts. The call for repairing and modernizing Nebraska’s transportation infrastructure started with complaints to lawmakers from constituents. Potholes and otherwise damaged roads were becoming unbearable. To make matters worse, the state had 3,000 structurally deficient (and therefore dangerous!) bridges and $10 billion of deferred maintenance and delayed highway construction. With federal funding becoming less reliable, the need for state action became apparent.

Senator Jim Smith, Chairman of the Transportation and Telecommunications Committee in the Nebraska Legislature, led the charge to increase the gas tax. According to Sen. Smith, “It’s a perfect storm. And we have to address this. And we have an opportunity to address it the right way with this user fee gas tax, or we’re going to be coming back year after year and dipping into the general funds to try to find money to meet these needs.” With competing demands from education and health care, finding the dollars for road maintenance and construction from the general fund was going to be a tall order.

Like so many other states, including Arizona, Nebraska’s gas tax had not kept up with inflation. In fact, the gas tax, which was 25.6 cents per gallon, had only increased by one cent over the past 22 years. Nebraska’s legislative leaders recognized they were falling behind neighboring states of Iowa and North Dakota that had recently increased their gas taxes by 10 cents and 6 cents respectively.

Legislative Bill 610 was designed to provide a fair and equitable solution to Nebraska’s transportation woes. The bill raises the gas tax by 1.5 cents per year over a four-year period for a total increase of 6 cents per gallon. That puts the new rate at 31.6 cents per gallon. It is expected to generate around $25 million annually for state roads and $51 million for cities and towns when fully implemented. As a user fee type of tax, those who use the roads more pay a higher share of the cost to maintain those roads.

The bill, which originally passed with 27 Senators voting in favor and 9 abstaining, was not supported by everyone. Governor Pete Ricketts was an outspoken opponent and quickly vetoed the bill claiming that Nebraskans could not afford any tax increases at this time. However, legislative champions managed to over-ride the Governor’s veto 30-16 by convincing some of the Senators who had abstained to join their cause.

The pressing need for more funding was made all the more apparent with a study released this week for the Omaha City Council. This new analysis found $54 million in annual needs for new transportation projects just in the city of Omaha, not including maintenance. Right now, the city allocates around $15 million to new transportation projects annually.

While increasing taxes is never politically easy, an analysis by Transportation for America found that in the most recent election cycle, 98 percent of lawmakers who voted in favor of increased transportation funding won the primary following their vote. The same analysis found no evidence that any lawmaker lost an election as a direct result of their vote for transportation. We’ll keep an eye on Nebraska as the tax rolls out this summer.



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