Highway bonds hit slow going, water controversy brews in legislature

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March 13th, 2014

Omaha, NE — Three years ago, the Legislature set aside part of state sales tax collections for road construction, in the so-called Build Nebraska Act.
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Now, Sen. Annette Dubas, who chairs the Transportation and Telecommunications Committee, wants to pledge part of those funds to borrow up to $200 million.

“Taking those existing Build Nebraska Act funds, and then maximizing the use of those by using that dedicated funding source as a way to pay back those bonds, will allow us to move projects forward; will allow us to speed up some of the projects; will allow us to take advantage of historically very low interest rates,” Dubas said.

Dubas said the state would pay about 3 percent interest on borrowed funds, while road construction costs are rising 5 to 7 percent a year, so borrowing money to do projects earlier makes sense. Her proposal ran into philosophical opposition from North Platte Sen. Tom Hansen.

“There’s two rules in road-building. Only two rules. Number one: pay as you go. Number two: refer back to rule number one,” Hansen.

Opponents argued if part of roads funding is required to repay bonds, and federal funds dry up, the state would have to cut maintenance on existing roads or raise gas taxes to make up the difference. But Norfolk Sen. Jim Scheer said the risk is worth it.

“Every day, every time we take a vote we take a leap of faith that what we are doing is in the best interest of constituents and the population of the state of Nebraska,” Scheer said. “This is one of those times just like any other. It is a leap of faith. You have to believe in our state. You have to believe in the people. And I do.”

Omaha Sen. Ernie Chambers called the bill unnecessary.

“The Department of Roads does not need this and beyond that, is opposed to it. Where are the experts, where is the expertise on road building? All of the aspects of it: letting contracts, laying out the road, getting engineering done. And they are the ones that say ‘Don’t do it.’”

Omaha Sen. Health Mello said the department’s attitude reflects Gov. Dave Heineman’s opposition, and that could change with a new governor next January.

Lincoln Sen. Bill Avery said the proposed borrowing is relatively small, but would be helpful.

“It is my hope and expectation that this bill will make possible the completion of the south beltway around Lincoln, which now has been delayed until 2020. Most cities around the country the size of Lincoln have had beltways long ago – I mean, many, many years ago and they’re in the process of additional beltway construction. We need that for Lincoln,” Avery said.

But Sen. Greg Adams of York said he fears spending could escalate.

“Do we politicize the road construction choices to the point where ‘Okay, Adams, you want yours. And Avery wants his, and Hansen wants his road built. And you know what, we can’t do it without bonding, there isn’t enough money. And we were going to go a hundred million but you know, as long as those guys want their roads built, why don’t we fit ‘em in?’ And we all walk away happy,” Adams said.

As debate stretched on, Sen. Ernie Chambers tried to prevent further consideration of the bill for the rest of the year. Senators voted 27-14 against doing that, before moving on to other subjects. Adams, speaker of the Legislature, said he will schedule it for further debate, but not in the next couple of days.

Meanwhile, controversy is brewing over proposed spending on water projects. Senators have given first-round approval to spending $31 million on water projects, like dams and reservoirs.

Meanwhile, Omaha Sen. Steve Lathrop has proposed requiring that every river basin in the state have a plan to reach a sustainable level of water use in the next 30 years, or face a state takeover of water management. Lathrop said it makes no sense to spend money on water projects if underground water supplies continue being depleted by overuse, and suggested he would oppose that spending if his proposal is sidetracked.

“I probably would have a problem with $31 million in water projects if we can’t move a bill that calls for sustainability statewide within 30 years,” Lathrop said.

Holdrege Sen. Tom Carlson, who has championed spending on water projects, said he thinks requiring plans for sustainability is a good idea. But Carlson said threatening water project funding is “unfortunate.”

“To lay out a gauntlet and say ‘If this doesn’t happen, then I will fight the funding’ — I hope that doesn’t happen. I don’t think that’s good,” Carlson said. “I really believe that the only way we can get to water sustainability is if we have a continual source of funding and we’re going to have to even increase that through the years. So , this is a great start and I don’t want to see it blown because maybe we can’t come to an agreement on one bill.”

Lathrop’s bill is scheduled for a special public hearing in front of the Natural Resources Committee next Tuesday.

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