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For the first time in 27 years, anyone fueling up at a gas station in Alabama soon will fork out more money in taxes that will go directly to the state.
“Ten cents is a big difference for people,” said Helene Mitchell, as she fueled up at the Clark gas station in downtown Mobile.
The first part of Alabama’s 10-cent fuel tax increase that was approved by the Legislature in March goes into effect Sept. 1. It’s a 6-cent hike, it’s the first such increase since 1992 and it will generate approximately $192 million during the coming fiscal year.
Alabama Gov. Kay Ivey signs 10-cents-a-gallon gas tax increase into law, phased in over 3 years; the Republican found broad support in the GOP-dominated Legislature to raise the existing 18-cent gas tax (from @StatehouseKim) https://t.co/Y1NSj6ba3o— David Eggert (@DavidEggert00) March 13, 2019
Subsequent tax increases include 2 cents on Oct. 1, 2020, and another 2 cents on Oct. 1, 2021. Altogether, the state expects the new cash flow to deliver $320 million annually when all 10 cents of the tax are in force. Each 1 cent is worth $32 million.
“I am like everyone else. I don’t want to pay new taxes,” said state Sen. Clyde Chambliss, R-Prattville, who was the Senate sponsor of the gas tax increase legislation. “But we have some true needs in our infrastructure system and our roads and bridges.”
The campaign to fix that backlog of woes, and build new roads and bridges, is known as Rebuild Alabama. State government, counties, cities and the Port of Mobile are all in line for some of the new dollars.
“When we began on the road to Rebuild Alabama, I promised our state we would see real results, real improvements and a promising future,” Gov. Kay Ivey said in an emailed statement. “On top of the state dollars, all 67 counties and every municipality will receive additional revenue to be used for roads and bridges.”
She added, “Almost 30 years with no added investment to our infrastructure and drivers can certainly feel it. However, being content with the status quo is no longer acceptable. Alabama deserves better, and in the case of our infrastructure system, we are doing more.”
In the coming months, the state will receive $122 million from the 6-cent tax hike. The Alabama Department of Transportation will be doling out money in several big chunks:
- $82 million for state congestion relief and economic development projects that ALDOT has already announced.
- A $43 million widening of U.S. 411 from Turkeytown to Cherokee County Road 20. The project will complete a four-lane access from Centre to I-59 in Gadsden, providing Cherokee County with a four-lane connection to the interstate.
- More than $31 million for expansion of U.S. 82 in Tuscaloosa from Alabama State Route 69 to Rice Mine Road. The section is listed by ALDOT in the top 20 of busiest four-lane U.S. routes in Alabama. Estimated cost of right-of-way acquisition is $750,000, with construction scheduled to begin within the next two years.
- Funds of up to $48 million will be dedicated for county projects. Under the allocation of the overall gas tax revenues, counties are set to get 25%.
In addition, the tax revenue will supply $150 million in matching funds for the Alabama State Port Authority’s ship channel widening in Mobile that is estimated to cost $400 million.
The port hopes to receive a “record of decision” on the project in September, said spokeswoman Judith Adams. The project still needs to go through an engineering and design period, she said.
Port of Mobile (Getty Images)
“The state cost share is for the actual construction, which is anticipated to begin in October 2020 barring no delays to the schedule,” said Adams.
Cities and counties throughout Alabama also levy a gas tax. The most common is a 1-cent levy. The highest city levy is in Montgomery, at 7 cents per gallon. Seven cities have a gas tax levy at 6 cents per gallon: Eufaula, Bayou La Batre, Ozark, Satsuma, Evergreen, Flomaton and Chickasaw.
In the category of motor fuel tax, Alabama ranked No. 35 in per-capita collections, at $125, according to Public Affairs Research Council of Alabama’s analysis. As of 2016, only South Carolina collected less in motor fuel taxes per capita among Southeastern states. South Carolina has since approved a 12-cent fuel tax increase in 2017 that is being introduced in 2-cent increments over six years.
In fact, figures from the Alliance for Alabama’s Infrastructure show that the state’s gas tax revenue had been on a decline since 2008, even as the population had increased slightly.
Nationally, the fuel tax has lost much of its previous punch due to more fuel-efficient vehicles, and improved ride-sharing and mass transit alternatives.