Senators will debate bill to increase fuel tax to help pay for roads

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BY NANCY HICKS / Lincoln Journal Star

A proposal that may raise the state’s fuel tax about 3 cents a gallon next year will be debated this spring.

The Revenue Committee voted 6-1 to send a bill (LB846) to the full Legislature that creates a new fuel tax, based on the wholesale price of fuel.

The bill likely will be the only tax measure on the floor designed to address state Department of Roads funding problems, said Sen. Deb Fischer of Valentine, sponsor of the measure.

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Roads Department Director John Craig has pointed out that construction material costs have risen an average of 11 percent each year, reducing his agency’s buying power. In addition, the agency expects federal funding to decrease.

The bill faces several roadblocks, including the predictable hesitancy of senators to increase any tax. Gov. Dave Heineman has said now is not the right time for a tax increase, but he has not said he would veto the measure.

Senators who agreed to send the bill to the floor talked about the need for more money to keep up with the state’s highway needs.

“The Department of Roads is short on funds, and we have a lot of unfinished highways needs,” said Sen. Ray Janssen, chairman of the Revenue Committee and one of the senators who voted to send the bill on to the full Legislature.

Some construction is going to come to a standstill if the state doesn’t find another funding avenue, Janssen said.

The Roads Department has said the agency will only be able to maintain the highway system and move ahead with building a six-lane interstate under current funding estimates. Without any increased funding, it will not be able to work on ongoing four-lane expressway projects.

Opponents don’t like the possible increase in the fuel tax and fear the new excise tax will make it easier for senators to avoid responsibility for raising the fuel tax.

The bill maintains the state’s variable fuel tax, which goes up and down to make sure the state raises enough money to fund the budget set by the Legislature. Senators also can reduce the state road budget to try to make sure the variable doesn’t go up.

Estimates about the effect of the bill assume a steady fuel tax, rising slowly over the next three years based on the new excise tax.

Opponents fear future senators will rely on the rising excise tax revenue and pay less attention to their ability to control the fuel tax through the variable.

Tying a portion of the tax to the price of fuel allows the Legislature to let the fuel tax move up without taking responsibility for it, said Omaha Sen. Tom White, the Revenue Committee member who voted against moving the bill from committee.

“I do support getting more money for roads,” he said.

But he said he had not gotten sound numbers on the funding issues from Roads Department leaders, and he said he’d like to look at alternatives to the fuel tax for raising money to pay for road maintenance and construction.

Many of his constituents are struggling with high fuel prices already, he said.

There should be debate about other possibilities, including toll roads and requiring trucks to pay additional taxes because they are harder on roads, White said.

“I don’t think there has been a proper discussion of other alternatives,” he said.

Fischer, chairman of the Transportation and Telecommunications Committee, said she introduced the fuel tax bill after being asked by other senators last year to find a solution for the funding problems.

The excise tax on fuel is “compatible with how we fund roads in this state” based on taxing users, she said.

It also maintains the variable portion of the fuel tax, which allows the Legislature to control the fuel tax, she said.

Reach Nancy Hicks at 473-7250 or nhicks@journalstar.com.