Extras on Excise: Nebraska Attempts to Join the Parade of States Raising Gas Taxes, But Governor Says No

Update: On May 14, 2015, the Nebraska Senate voted 30-16, with three senators abstaining, to override the governor’s veto.

Bucking the recent trend of states raising gas taxes to fund needed transportation upgrades, Nebraska Gov. Pete Ricketts (R)  vetoed a bill that would have increased his state’s gas tax rate mere hours after he received it from the legislature.

Meanwhile, Iowa, South Dakota, Utah and Georgia  enacted gas tax increases, while North Carolina and Kentucky have each enacted legislation that significantly reduced gas tax decreases that were scheduled to take effect.

In Iowa, the gas tax increased by 10 cents per gallon while the increase is 6 cents per gallon in South Dakota. In Utah, the gas tax will increase by 5 cents per gallon in 2016 and the state has also transitioned to a variable-rate gas tax from a fixed-rate tax. Under the variable-rate tax, increases will be more frequent because the rate is tied to gas prices.

In Georgia, Gov. Nathan Deal (R) recently signed a massive transportation bill that calls for a gas tax increase of 6 cents per gallon. The law goes into effect on July 1 and is the state’s first gas tax increase since 1971, according to the governor.

Before the legislature took action, Kentucky was facing a 5.1 cents per gallon decrease of the gas tax on April 1 after already absorbing a 4.3 cents per gallon decrease on January 1. Under the amended law, the gas tax only decreased by 1.6 cents per gallon.

Similarly, in North Carolina, enacted legislation reduced a scheduled 7.9 cents per gallon decrease in the state’s gas tax by more than half.

In Nebraska, L.B. 610 would increase the state’s gas tax rate by 6 cents per gallon over a period of four years. According to the governor’s veto message, once fully implemented, the increased gas tax would yield an additional $75 million in revenue each year. He adamantly argued against the tax increase, calling the gas tax a regressive tax that will most severely impact the state’s low-income residents. Ricketts further highlighted his recent appointment of a new Director at the Department of Roads and requested that the legislature give his appointee an opportunity to consider and address the state’s road construction needs.

Clearly rejecting the governor’s request, the bill’s sponsor has filed a motion to override the governor’s veto, which would require 30 votes. The bill passed the Senate on a 26-15 vote with eight senators abstaining, so it is unclear whether there are enough votes to override the governor’s veto.

Continue the discussion on Bloomberg BNA’s State Tax Group on LinkedIn: Are gas tax increases the most effective way to pay for transportation improvements?

For more information about state tax issues, sign up for a free trial of the Bloomberg BNA Premier State Tax Library.

by Jequetta Byrd