Dedicating Web taxes to highway funding called no 'magic solution'

Aug. 22--SOUTH SIOUX CITY, Neb. -- Two of the three governors meeting here Tuesday gave a cool reception to a proposal by Siouxland-area leaders for dedicating state Internet sales tax revenues to road-building projects.

Nebraska Gov. Dave Heineman questioned why those taxes should be earmarked at all, and if they were earmarked, why that money should go to roads rather than other needs, such as education, economic development or medical research. 

South Dakota Gov. Mike Rounds said it is unclear whether the federal government will even allow states to collect taxes on sales made over the Internet, despite a multiyear effort by the states to create a framework for taxing such transactions.

Plenty of other interests have asked for any revenues that might result, Rounds said.

"I would be less than honest with you if I said the magic solution for us would be to use the streamlined sales tax (from Internet sales) for roads," Rounds said.

Iowa Gov. Chet Culver called the proposal, outlined by Sioux City, Iowa, lawyer Lance Ehmcke, "interesting" and said it should be considered along with other creative ideas for boosting roads funding.

Improving the main highways through northeast Nebraska, northwest Iowa and southeast South Dakota was among the regional priorities presented at this year's Tri-State Governors Conference.

The conference was the 11th put together by regional business and community interests to help promote cooperation in a metropolitan area that stretches over multiple state, county and municipal boundaries.

Ehmcke said it's vital to the area's growth to find money to turn Nebraska Highway 35, which runs between South Sioux City and Norfolk, and U.S. Highway 20, which runs from Sioux City east across northern Iowa, into four-lane expressways. That growth would provide tax revenues to meet other needs, he said.

As expressways, those highways could connect the area with regional and national destinations and provide an east-west alternative to Interstate 80.

"Ask citizens is it important to have roads, is it important to have jobs, and can you have all the rest without roads and jobs?" he argued.

Another priority is landing a $10 billion energy and technology center proposed by Hyperion Resources, the governors were told.

J.L. Frank, a company representative, said the Dallas-based firm is considering a "technologically and environmentally advanced oil refinery" north of Sioux City, near Elk Point, S.D. The site is one of several possible Midwestern locations.

If all goes well, Frank said, construction could begin in 2009, and the refinery could start producing by 2013. It would employ 4,500 workers during construction and create 1,800 permanent jobs.

Before construction can begin, however, the company has to clear numerous federal, state and local reviews.

South Dakota's Rounds said the company has not asked for any special treatment under state environmental or local zoning regulations. Nor has the company asked for economic incentives.

"I made it clear we don't cut corners. We don't change laws," he said. "It's up to Hyperion to do the legwork to put this together."

Rounds said public support from Nebraska and Iowa would help. Both Heineman and Culver said the project represents a real opportunity for the region because of the jobs and additional business it would generate.

Public support also will be critical, Rounds said, because zoning matters are decided locally.

Some area residents at the conference said they were not sure of the company's intentions or the state's desire to make sure the refinery would meet environmental standards and respect local residents.

"There's no such thing as a green refinery," said Carolyn Carlson, a resident of Clay County, S.D., and potential neighbor of the project.

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