GOP governor vetoes gas tax hike

Nebraska Gov. Pete Ricketts (R) has vetoed a proposal to increase gas taxes in his state to help pay for transportation projects. 

The proposal, which was approved by the Nebraska state legislature, called for increasing the state’s current 25.6 cent-per-gallon gas tax by six cents per gallon. 

Ricketts said he vetoed the measure because the increase would have made Nebraska gas taxes the 16th highest fuel levy in the nation. 

{mosads}“The number one issue I hear about from hardworking Nebraskans is the need for tax relief,” Ricketts said in a statement announcing his veto. 

“Whether they are farmers and home owners seeking relief from high property taxes or businesses being held back by our second-highest-in-the region income tax rates, the message is clear:  Nebraskans want and deserve tax relief,” he continued. “LB 610 would do the exact opposite by imposing a $75 million per year tax increase.  The new tax would be added to the 25.6 cents Nebraskans are already paying in state gas tax per gallon of gasoline.  This is a 23 percent increase.” 

The additional money transportation backers were seeking would have been collected on top of an 18.4-cent-per-gallon federal gas tax that is charged to all drivers in the U.S. to fill the federal government’s transportation funding coffers. 

The American Petroleum Institute says the gas tax increase would have brought the total amount of money that drivers in Nebraska were charged at the pump to nearly 51 cents per gallon. 

As it stands now, the state drivers are paying almost 45 cents per gallon extra at the pump, according to the group. 

Nebraska was the latest in a series of states to try to increase their local gas tax in recent years as federal transportation funding has dried up.

Lawmakers are currently facing a May 31 deadline for the expiration of federal transportation funding, and they are struggling to come up with a way to pay for an extension of the measure. 

Prior to Ricketts’ veto, transportation advocates in Washington have pointed to the willingness of Republican states like Nebraska to raise their own gas tax as evidence that a national hike would be politically palatable this year. 

Conservative groups in Washington have made clear they would consider an increase in the federal fuel levy a tax hike, however.

The gas tax has been the main source of transportation funding for decades, but it has not been increased since 1993, sapping its buying power.

While the tax hike has backing from business associations and unions, opposition from conservative groups, such as Heritage Action and the Club for Growth, led GOP leaders in the House to call it a nonstarter.

The federal government typically spends about $50 billion per year on transportation projects, but the gas tax will only bring in $34 billion annually without an increase.  

The Department of Transportation has said that its Highway Trust Fund will run out of money in late July or early August if Congress does not come to an agreement on an extension in the next couple of weeks.