- Associated Press - Wednesday, February 12, 2014

LINCOLN, Neb. (AP) - Nebraska lawmakers were asked Wednesday to take a new approach to roads funding with a bill that would allow the state to finance high-priority projects with bonds.

Nebraska has used a debt-free, pay-as-you-go system for decades, but supporters argued that the state could take advantage of low interest rates while launching more job-creating construction projects sooner. Some members of the tax-focused Revenue Committee questioned the bill in light of the potential debt-service costs and the passage three years ago of a major roads-funding bill.

Sen. Annette Dubas of Fullerton said her legislation would help quicken the pace of projects that have faced years of delay. Bond-funding is frequently used by Nebraska city and county governments to pay for projects, as well as 48 other states.

“Nebraska’s highway system plays a critical role in our citizens’ quality of life and our potential for economic development,” said Dubas, who heads the Transportation and Telecommunications Committee. “Nebraska’s economy is ag-based, and we are a transportation hub - both of which rely heavily on safe and sound roads.”

The bill was introduced three years after Nebraska officials passed a law that will divert an estimated $60 million to $70 million a year in sales-tax revenue into roads projects. Dubas said the state still hasn’t met all of its roads-funding needs, but Nebraska now has a stable revenue source from sales taxes to help pay for them. She pointed to a 2013 Nebraska Department of Roads report that predicted $9.8 billion in needed projects over the next 20 years.

The bill was backed by a coalition of contractors, local chambers of commerce and Nebraska city and county governments. On Wednesday, several argued that would generate immediate cash for the road construction, which grows more expensive over time because of inflation.

Sen. Burke Harr of Omaha voiced concerns that the bill doesn’t require a fixed interest rate for roads projects. He questioned whether an increase in construction work now would reduce the demand for future projects.

Nebraska Department of Roads Director Randy Peters said his agency opposed the bill. Peters argued that Nebraska’s traditional, pay-as-you-go approach has served the state well, and he argued that many projects wouldn’t be ready right away even if immediate funding were available. A typical roads project takes eight years, between early design work and the ribbon-cutting, he said.

The bill would allow the state to use bonds to pay for up to $400 million, as determined by the state’s Highway Commission.

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The bill is LB1092