This story was originally published in the Nebraska Examiner.
LINCOLN — A highway funding bill with Gov. Jim Pillen’s backing could help Nebraska finish a four-lane expressway system that the state has spent four decades building.
But the proposal to borrow money by issuing bonds to fund highway and major road construction would end Nebraska’s decades-old, pay-as-you-go approach to major road construction.
Legislative Bill 706 would speed up construction projects by letting the Nebraska Department of Transportation issue up to $450 million in bonds over 19 years. It proposes to pay them off using a portion of sales taxes already being collected.
The bill’s sponsor, State Sen. Mike Moser of Norfolk, said the measure aims to help manufacturers, agricultural producers and communities situated farther from Interstate 80.
During Wednesday’s public hearing for LB 706, Moser described the expressway system as a “critical” link between western, central and eastern Nebraska.
The expressway system, codified into law in 1988, has struggled for funding and is now slated to be completed by 2035. Bonding could cut years off the wait, Moser said.
“It’s an economic development thing for us, being able to get more quickly to Lincoln or to Omaha or to the Interstate system,” he told the Revenue Committee.
‘Fiscally responsible’ approach
Pillen, who testified that Nebraska needs to be able to issue bonds for highways to compete, said the state “dropped the ball” by opposing proposals to issue bonds for highway construction.
(Courtesy of Unicameral Information Office)
Projects that could have been done in five years took 50, he said. And the work cost Nebraska taxpayers millions of dollars more than they would have because of inflation.
Pillen argued that bonding is a “fiscally responsible” approach when construction inflation runs 10% a year in a good year and is running 20% today.
“Just think of the economic activity that’s been lost waiting for our state to grow,” the governor said. “Our timelines just haven’t cut it.”
Moser’s bill is built off a 2021 bill by Sen. Lynne Walz of Fremont.
The largest expressway sections yet to be built would connect Fremont, Norfolk and Columbus — the governor’s hometown — to the Interstate and Omaha, expressway advocates said.
About a third of the expressway system still needs to be finished, including a section of U.S. 75 between Nebraska City and Omaha that is being widened.
Walz said she was “excited to see the bonding proposal.” She said it would be a “great tool” to finish the expressways and build future projects.
“We should always err on the side of caution,” she said of bonding. “It’s definitely not a one-size-fits-all solution, but it’s a great step.”
The Walz bill stalled two years ago, in part, because then-Gov. Pete Ricketts opposed bonding for roads.
Former governors resisted bonding
None of Nebraska’s last five governors — four Republicans and one Democrat — supported the state using bonding for building highways while in office.
Ricketts and former Gov. Kay Orr, two of Pillen’s top Republican supporters in the 2022 governor’s race, had no immediate comment Wednesday on LB 706.
Both have argued before that they preferred the state not to go into debt to build highways, as did former Govs. Dave Heineman, Mike Johanns and Ben Nelson.
Nelson on Wednesday said he still would rather see Nebraska pay as it goes, unless there is a compelling argument for new economic development tied to a road.
“Borrowing is for growth, for new streets and roads for growth,” Nelson said. “You borrow to buy a house, but not for monthly utilities.”
Heineman, reached Wednesday, said that while he has opposed bonding for roads in the past, he understands why Pillen was taking another look at doing so.
“I think it’s worth a look,” he said, citing the importance rural Nebraskans place on four-lane access. “Nebraskans will want them to take it slow.”
Expressway advocates from Gering to Nebraska City have complained that previous governors did not prioritize spending on the expressway system.
Several pointed to now-U.S. Sen. Deb Fischer, R-Neb., who faced opposition as a state lawmaker when she tried to earmark part of the state sales tax revenue for the expressways.
They say investors are clamoring for safe places to put money and said passage of a federal infrastructure bill means more money to build roads and bridges.
Good infrastructure called vital
Norfolk Mayor Josh Moenning, who helped cities and counties to advocate for completion of the four-lane expressway system for years, applauded LB 706.
He called the state’s previous approach “penny wise and pound foolish.” In 1988, he said, completion of the system was expected to cost $200 million.
Today, the same project would cost more than $2 billion, he said. The longer you wait, he said, the more expensive it gets.
“I’ve seen through business recruitment that good infrastructure access is (vital),” he said. “If you don’t have it, you’re going to get passed by.”
Road builders have said the expressways took so long because the state dedicated little funding beyond the gas tax, which is politically difficult to increase.
LB 706 would cap how much the state could pay for the bonds in a given year, as well, limiting annual debt service on such bonds to no more than $30 million a year.
The bill also would extend the Nebraska law dedicating 1/4 of 1% of state sales tax revenue to the expressway system, priority projects and maintenance.
That sales tax earmark, currently scheduled to sunset in 2033, would be extended to 2042, which advocates said would provide the state with enough revenue to pay off the new bonds.
No new bonds would be issued after June 2029.
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