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The American Automobile Association estimates 41.5 million people will hit the roads this Memorial Day weekend. Your family may be included in that total, attending community events, family get-togethers, or enjoying the three day weekend away from home. With the average price of a gallon of gas in Nebraska rising almost 16 cents per gallon from April to May, you may feel the impact of rising costs on your wallet this holiday. As you fill up at the pump, it is also a good time to keep track of your total tax bill by taking into account the portion of the $2.86 per gallon average that is going to fund state and local government.
Based on current prices, approximately 10% of the cost of every gallon of gas you buy this weekend is state and local taxes. The current “gas tax” in Nebraska is 28.4 cents per gallon. In 2017 total gas taxes collected by the state of Nebraska totaled over $363 million. Of that almost $75 million is directed to the cities and counties to spend, while the remaining 80% is spent by the state Department of Transportation.
The gas tax rate changes from year to year depending on variation in two of the three components that determine the tax. The fixed component is 14.8 cents per gallon, with 9 cents directed to the state and 5.8 cents per gallon designated for cities and counties. In 2019, that will rise to 16.3 cents as a result of a gas tax increase passed in 2015. That legislation increased the fixed portion 1.5 cents per year for the next four years. Two smaller components change from year to year. The wholesale portion, currently at 8.7 cents per gallon, is calculated to be 5% of the six month average of wholesale fuel prices. As prices go up, so does the tax rate–an interesting double whammy to consumers. The variable portion, currently 4.9 cents per gallon, is determined by the state DOT to match their expenditures.
The federal government also collects an additional 18.4 cents per gallon, for a total of 46.8 cents in local, state, and federal taxes per gallon of unleaded gas. Thus, for every 20 gallons you fill up in your car while travelling this weekend, you are paying $9.36 in taxes.
If you spend time away from home this weekend in a hotel, you will pay another tax to fund local and state government: the lodging tax. The amount of tax you pay depends on the cost of your room. The more expensive the room, the larger the tax you pay. The state lodging tax is 1% of the total charges of any hotel room in the state. County lodging taxes add up to an additional 4% to the bill.
During 2017, counties collected almost $21 million in lodging taxes. Those dollars are split equally between the County Visitors Promotion Fund and the County Visitors Improvement Fund. The state of Nebraska collected almost $5.5 million in lodging taxes, which are under the discretion of the Nebraska Tourism Commission.
It is worth noting that over $26 million in lodging taxes collected annually are not managed by elected representatives. The Nebraska Tourism Board is an appointed board, and the Tourism Department is a “non-code agency”, not under the direction of the Governor or any other elected official. In 2016 a state audit found considerable problems with the oversight and use of Tourism funds, leading to the termination of the agency’s director. Most counties have a similar set-up with Convention and Visitors Bureaus spending lodging tax revenue.
With the official start summer travel season comes increased traffic and increased tax revenue. As you keep your running total of your family’s financial support of state and local government in Nebraska, make sure to include your gas and hotel receipts to add to the total. The sum total of each of those pit stops and overnight stays is $390 million in expenditures by state and local governments every year.