After days of debate, Nebraska lawmakers last Saturday approved a bill that will divert a slice of the state’s sales tax to finance road projects.
If enacted, the measure will allow the Nebraska State Highway Commission to issue up to $500 million of sales-tax-backed bonds. The commission currently has the authority to issue debt but has not done so since 1969.
Double-A rated Nebraska does not issue general obligation debt.
Legislators approved the measure, sponsored by Deb Fischer, R-Valentine, after two days of sometimes heated debate. The bill comes as Nebraska faces an unprecedented $940 million general fund shortfall in its upcoming two-year budget.
Opponents said it was the wrong time to divert $125 million of annual revenue for road projects. Lawmakers will begin budget hearings next week.
The last time the state government sold debt to finance road capital projects was in 1969. But falling road revenues have prompted lawmakers to give borrowing a fresh look.
The state needs $350 million annually to maintain its transportation system and currently spends $316 million — down from $390 million in 2006.
The transportation budget is currently generated entirely through user fees, including a gas tax and vehicle fees.
The bill would require the commission to issue the bonds between 2013 and 2018, and pay them off by 2038.
Gov. Dave Heineman, a Republican, seemed to indicate he would follow lawmakers’ decision. A local newspaper quoted him as saying: “If the Legislature comes to the conclusion that roads funding is more important, at least $125 million a year worth of funding more important than education and health and human services, then I’ll respect that.”