Newsletter, April 10, 2015
LB 610 barely advanced to the second round of floor debate last week on a vote of 26-10 with 8 abstaining and 5 absent. I was one of the 10 no votes. I don’t like the idea of increasing gas taxes.
The average price of a gallon of gasoline in Nebraska this week is $2.353 which saves the average household about $100 every month. I don’t believe lower gas prices are an excuse to raise taxes. Most of us like lower gas prices because of the positive impact on our budgets which allows us to spend more on groceries and other necessities.
LB 610 would increase the fixed motor fuels tax rate by 1.5 cents every year for four years until January 2019 when the total fixed rate motor fuels tax would be 16.3 cents per gallon.
There are two components of the fixed rate and the proposed increases. The portion allocated to the Nebraska Department of Roads would increase 1/2 cent every year, from 7.5 cents to 9.5 cents beginning January 1, 2016 until a tax increase of 2¢ per gallon is reached on January 1, 2019. The portion allocated to cities and counties would increase one cent every year from 2.8 cents to 6.8 cents beginning on January 1, 2016 until a tax increase of 4 cents per gallon is reached on January 1, 2019.
For the Nebraska Department of Roads this generates $6,350,000 per year over the base year and is expected to raise an additional $25.4 million per year by FY2019 and beyond. The fiscal impact for cities and counties is based on one cent of the fuel tax generating $12,700,000 per year over the base year. This is expected to raise an additional $50.8 million per year by FY2019 and beyond.
The funding to counties is distributed as follows: Rural Population (20%), Total Population (10%), Lineal Feet of Bridges (10%), Rural Motor Vehicle Registrations (20%), Total Motor Vehicle Registrations (10%), Miles of Local Roads (20%), and Value of Farm Products Sold (10%). The funding for cities is distributed as follows: Total Population (50%), Total Motor Vehicle Registrations (30%), and Miles of Traffic Lanes of Streets (20%).
The Build Nebraska Act, effective July 1, 2013, already designates one quarter of one percent of general fund sales tax revenue for Nebraska roadways which raises about $70,000,000 per year. Eighty-five percent is allocated to the state highway system and fifteen percent to local roads and streets. The local share is distributed based on the factors listed above.
Certainly I believe it’s important to have good highways, roads and bridges in our state. I’m particularly concerned that those improvements reach rural Nebraska where counties face real challenges making much needed upgrades to aging bridges.
Overall, our state highway system gets high rankings when compared to conditions in other states. I think the emphasis should be focused on priorities closer to local needs. However, I’m not totally convinced that under the current Department of Roads planning that will happen.
With a new governor in office, we will have a new Director of the Department of Roads in place soon. I think we should wait to increase the gas tax for public infrastructure until the new director is in place and he/she has had an opportunity to analyze how the department is currently spending their tax revenue.