Nebraska roads funding law goes into effect

Grant Schulte, Associated Press
Associated Press

LINCOLN, Neb. (AP) -- A new Nebraska law that sets aside an estimated $65 million a year in sales tax revenue for roads went into effect on Monday, clearing the way for at least 17 major projects over the next decade.

Officials had delayed work on several projects due to a lack of funding. But six Nebraska Department of Roads projects are now either under way or scheduled to start before July 2014, and 11 others will take place through 2023.

The law, which departs from Nebraska's decades-old practice of using revenue from gas taxes and motor vehicle fees to pay for roads, dedicates one-quarter of a cent out of the state's current 5.5-cent sales tax for 20 years for state road upgrades and maintenance for counties and cities.

A coalition of business, local government and economic development groups kicked off a three-city tour on Monday to promote the projects. Nebraska Highway Commissioner Rodney Vandeberg, who represents a southeast corner of the state, said the projects will improve public safety and promote economic development.

Without the law, Vandeberg said the Nebraska Department of Roads lacked the money to move ahead with many of its high-priority projects.

"We would have soon suffered the nasty consequences of deteriorating roads and bridges, and I promise you that would have been devastating to our entire state," Vandeberg said.

Supporters had argued the law would spur economic growth, while opponents in the Legislature warned that it could prove unaffordable over the long term and draw money out of health care, education and public safety.

State officials are expected to spend about $597.8 million over a 10-year period on the 17 projects, and if sales tax receipts surpass expectations, the department may start work on other projects.

Of the estimated $65 million set aside for roads annually over 20 years, 60 percent will go toward capital improvement projects that the state designates as a high priority, 25 percent will go toward federally designated high-priority corridors and 15 percent will get distributed to cities and counties.

Three of the first six projects are taking place in Omaha, one is under way near Blair and two projects are slated to divert heavy truck traffic around Kearney and Wahoo.

Future roads projects are planned for roads around Lincoln, Fremont, Plattsmouth, Bellevue, Nebraska City, Hastings, Alliance and Grand Island.

The department has started early work on the Lincoln South Beltway project, which will use $158 million in state sales tax revenue plus $40 million in local revenue. The south beltway will link U.S. Highway 77, southwest of Lincoln, with Nebraska Highway 2 on a route to the Iowa-Nebraska border.

Backers said the project will reroute an estimated 8,000 to 18,000 vehicles away from Nebraska Highway 2 through Lincoln, which in turn will improve road safety in town and reduce the need for maintenance.

Former state Sen. Deb Fischer penned the new law. The now-U.S. senator has said the law was intended to meet a persistent funding shortfall for state and local highways in Nebraska.

In a letter released Monday, she said the law seeks to fulfill a core duty of government without tax raising taxes.

"I believed this bill was a model for other states," Fischer said. "Rather than raising taxes to solve a problem, the state government lived up to its duty by using only existing resources."