An effort to acquire state funding assistance for construction of Omaha's huge, federally mandated sewer separation project stalled Tuesday in the Legislature's Revenue Committee.

The proposal (LB242), introduced by Sen. Brett Lindstrom of Omaha, could have transferred more than $2 million a year in estimated state sales taxes assessed on Omaha sewer fees to the city to help fund the massive sewer improvements.

The Omaha project is expected to cost more than $2 billion.

Committee discussion during an executive session centered on the state's own budget challenges and spending needs.

Under the bill, annual cost to the state in terms of reduced revenue would have steadily increased with the turnback to Omaha increasing from 2 percent of sales taxes on sewer fees in 2019-21 to 3 percent from 2021-2023 and to 4 percent annually after July 1, 2023.

Metropolitan Utilities District estimated that it would experience a $2.4 million return of state sales tax revenue in fiscal 2019-2020 and $2.5 million in fiscal 2020-21. Those figures are significantly higher than Nebraska Department of Revenue estimates. 

Sewer fees have been soaring in Omaha in the wake of the federal mandate issued by the Environmental Protection Agency to halt the passage of raw sewage into the Missouri River and Papillion Creek during periods of heavy rainfall.

That currently happens about 52 times a year. 

The Revenue Committee has scheduled its second evening discussion on major tax reform legislation for Thursday. Its initial evening session a week ago resulted in no votes or amendments to a series of pending bills. 

Reach the writer at 402-473-7248 or dwalton@journalstar.com.

On Twitter @LJSDon.

Political reporter

Don Walton, a Husker and Yankee fan, is a longtime Journal Star political and government reporter.