Connectivity Bill Supporters Will Finish Nebraska’s Expressways Faster
This story was originally published in the Nebraska Examiner.
LINCOLN. A highway funding bill backed by Gov. Jim Pillen could help Nebraska complete a four-lane expressway system the state has spent four decades building.
Governor Jim Pillen testifies Thursday, February 2, 2023 at the State Capitol. (Paul Hammel/Nebraska Examiner)
But a proposal to borrow money by issuing bonds to finance highway and major road construction would end Nebraska’s decades-long pay-as-you-go approach to building major roads.
Legislative Bill 706 will accelerate construction projects by allowing the Nebraska Department of Transportation to issue up to $450 million in bonds over 19 years. It is proposed to repay them at the expense of part of the sales taxes already collected.
The bill’s sponsor, Norfolk State Senator Mike Moser, said the measure is intended to help growers, agricultural producers and communities further away from Interstate 80.
During a public hearing on LB 706 on Wednesday, Moser called the expressway system a “critical” link between western, central, and eastern Nebraska.
The expressway system, made into law in 1988, is struggling with funding and is now scheduled to be completed by 2035. The merger could cut waiting times by years, Moser said.
“Economic development is important to us because we can get to Lincoln, Omaha or the Interstate system faster,” he told the Revenue Committee.
“Financially responsible” approach
Pillen, who testified that Nebraska must be able to issue highway bonds to compete, said the state “missed the ball” in opposing highway bond proposals.
State Senator Mike Moser (Courtesy of Unicameral Information Office)
According to him, projects that could have been implemented in five years took 50 years. And that job cost Nebraska’s taxpayers millions of dollars more than they could have gotten from inflation.
Pillen argued that bonding is a “financially responsible” approach, with construction inflation at 10% per annum in a good year and at 20% today.
“Just think of the economic activity that was lost in anticipation of our state’s growth,” the governor said. “Our deadline just didn’t fit.”
Moser’s bill is based on a 2021 bill by Senator Lynn Walz of Fremont.
The largest sections of expressways yet to be built will connect Fremont, Norfolk, and Columbus—the governor’s hometown—to the Interstate and Omaha, according to expressway advocates.
About a third of the expressway system remains to be completed, including the section of US 75 between Nebraska City and Omaha that is being expanded.
Waltz said she “was thrilled to see the connection offer.” She said it would be a “great tool” to complete the expressways and build future projects.
“We should always err on the side of caution,” she said of the connection. “It’s definitely not a one-size-fits-all solution, but it’s a great move.”
The Walz bill stalled two years ago, in part because the then governor. Pete Ricketts opposed road tying.
Former governors resisted unification
None of Nebraska’s last five governors – four Republicans and one Democrat – have backed a state that uses bonds to build highways while in office.
Ricketts and former Gov. Kay Orr, two of Pillen’s top Republican supporters in the 2022 gubernatorial race, did not immediately comment on LB 706 on Wednesday.
Nebraska GOP gubernatorial candidate Jim Pillen speaks after the public endorsement of former Nebraska Gov. Kay Orr (left) and then-Nebraska Gov. Pete Ricketts. (Rebecca S. Gratz for the Nebraska Examiner)
Both have previously said they would rather the state not go into debt to build highways, as former governors did. Dave Hyneman, Mike Johanns and Ben Nelson.
Nelson on Wednesday said he would still prefer Nebraska to pay on a pay-as-you-go basis unless there is a strong case for new road-related economic development.
“Borrowing for growth, for new streets and roads for growth,” Nelson said. “You take out a loan to buy a house, but not for monthly utilities.”
Heineman, who was contacted on Wednesday, said that while he has opposed road tying in the past, he understands why Pillan has taken a fresh look at it.
“I think it’s worth looking at,” he said, noting the importance Nebraska residents place on four-lane access in rural areas. “The people of Nebraska will want them to take their time.”
Expressway advocates from Gering to Nebraska City have complained that previous governors did not prioritize spending on the expressway system.
Some have pointed to current U.S. Senator Deb Fisher, of Nebraska, who faced opposition as a state legislator when she attempted to carve out a portion of the state’s highway sales tax revenue.
They say investors are demanding safe places to put their money, and they say that the passage of the federal infrastructure law means more money for roads and bridges.
Good infrastructure is called vital
Norfolk Mayor Josh Manning, who has helped cities and counties campaign for the completion of the four-lane expressway system for years, welcomed the LB 706 project.
Norfolk Mayor Josh Manning speaks during the ribbon cutting for Nebraska’s largest solar power plant. (City of Norfolk/photo provided)
He called the state’s previous approach “wise by the penny and stupid by the pound.” In 1988, he said, the system would have cost $200 million to complete.
According to him, today the same project will cost more than $2 billion. According to him, the longer you wait, the more expensive it becomes.
“During the recruitment process, I became convinced that good access to infrastructure is (vital),” he said. “If you don’t have it, you’ll be let through.”
Road builders say the highways have taken so long to build because the government has provided little other than a tax on gas, which is politically difficult to increase.
LB 706 will also limit the amount the government can pay for bonds in a given year by limiting the annual debt service on such bonds to no more than $30 million per year.
The bill would also expand Nebraska’s law, which would direct 1/4 of the state’s 1% sales tax revenue to the freeway system, priority projects, and maintenance.
That earmarked sales tax, currently scheduled to expire in 2033, will be extended through 2042, which proponents say will provide the state with enough revenue to pay off the new bonds.
No new bonds will be issued after June 2029.
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