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The predicament of funding roadsTell North Platte what you think

Although gas prices have decreased this last week, the prior few weeks have been rough on Nebraska drivers.

Due to refineries in Indiana and Illinois shutting down for routine maintenance and the unexpected maintenance shutdowns of refineries in Kansas and Wyoming, gas prices in Nebraska increased dramatically, and for a time Nebraska had the fifth highest average gas price in the nation, trailing only Hawaii, North Dakota, Minnesota, and Illinois.

While the high prices were largely due to regional supply issues, they do raise the question of what affect government policy has on the prices, specifically, gas taxes.

The federal gas tax is set at 18.4 cents per gallon (cpg); Nebraska's is set at 24.6 cpg - plus an accompanying 0.9 cpg fee on gas for a total of 25.5 cpg - to be divided between state highways, city and county roads, and the Highway Trust Fund. Nebraska's total gas tax is the 24th highest in the nation and higher than any of the neighboring states. Iowa and Colorado both have fuel tax totals of 22 cpg, South Dakota and Wyoming are both at 24 cpg, Kansas has the closest at 25 cpg, and Missouri's is only 18.8 cpg.

When combined with the federal 18.4 cpg rate, Nebraskans pay a total of 43.9 cents for each gallon they buy at the pump.

Still not enough

While gas taxes are widely understood to be a user fee for using government roads, they are no longer able to fully fund roads.

A recent study by the Tax Foundation showed the amount Nebraska receives from "Fuel Taxes, Tolls, and Other User Taxes and Fees" only covered approximately 31.8 percent of road spending.

This shortcoming is only being exacerbated as cars become more fuel efficient, resulting in less gas being purchased and therefore less revenue.

This reality has resulted in some policymakers, most notably Virginia Gov. Bob McDonnell, to advocate eliminating the gas tax altogether, replacing it with sales tax.

The idea to use sales taxes to pay for roads is not a new one, and has even been partially implemented in Nebraska.

In 2011, the Legislature passed LB 84, earmarking 0.25 percent of the revenue from the state sales tax for roads projects from fiscal year 2013-14 until FY 2032-33. Since its passage, this bill has been targeted for repeal twice because it sets aside nearly $65 million annually and $1.3 billion over 20 years from the general fund to various roads projects.

Simply raising the gas tax will not solve road funding problems, but increasing other taxes isn't a solution either.

When it comes to roads funding, more innovation is needed that is both fair to consumers and effective in covering infrastructure costs.

The Platte Institute for Economic Research is a research and educational organization headquartered in Omaha.

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The North Platte Bulletin - Published 6/25/2013
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