Nebraska lawmakers try to avoid fuel tax hike by dipping into reserve

Fifteen million dollars would be taken from the state’s cash reserve to avoid another fuel tax hike, under a compromise agreed to Tuesday by state lawmakers. Nebraska lawmakers voted 28-0 to create a new fuel tax mechanism that would be based on the wholesale price of gasoline. They hope the new mechanism might stabilize future highway construction funding, even if fuel consumption declines.

In advancing LB846, lawmakers also agreed to lower the state’s current motor fuel tax enough that the new taxing mechanism wouldn’t take any more money from consumers’ pockets than they already are scheduled to start paying this summer. LB846 originally called for a tax increase of about 3 cents a gallon to help raise about $16 million more for road construction. But worries about piling onto record-high gas prices caused senators to change course.

Instead, $15 million will come from the cash reserve, if the bill wins final approval. The money would be used to begin work on $76 million in projects already given some money by Congress. That work would include Kennedy Freeway projects in Sarpy County, the Lincoln South Beltway and the Heartland Expressway across the Panhandle.

Sen. Deb Fischer of Valentine came up with the plan and said it is supported by Gov. Dave Heineman. The new gasoline tax would not take effect until July 1, 2009.