Bill would index Alabama gas tax to price in effort to boost road funding

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September 10, 2015

MONTGOMERY, Ala. — The Alabama House on Thursday added to the lengthy list of revenue measures set to be voted on during the second Special Legislative Session by voting in committee on a bill to increase the gasoline excise tax by $0.05 in 2015 and “index” the tax so that it would rise and fall inversely with the price of gas. If the price of gasoline increases quicker than its 10 year average, the tax would go down. If the price of gasoline decreases, the tax would go up.

The tax increase, sponsored by Rep. Mac McCutcheon (R-Huntsville), would raise an estimated $104 million in fiscal year 2016 for the Alabama Department of Transportation.

The revenue in FY2017 would be even higher, at an estimated $156 million.

Currently, Alabamians pay a state gas tax of 16 cents per gallon in addition to the federal tax of 18.4 cents per gallon. Some municipalities add their own tax of up to 6 cents as well.

Nationally, North Carolina pays the most with a total of 57.55 cents per gallon, while mutual neighbor Georgia pays the least, at 25.9 cents per gallon.

The tax could be adjusted by up or down by 2 cents every year based on the consumer price index-adjusted average price per gallon of the previous ten years.

Should Rep. McCutcheon’s bill make it through the House it faces an uncertain future in the Senate. Sen. Gerald Dial (R-Lineville) is expected to carry the bill, which has the vocal backing of Senate President Pro Tem Del Marsh (R-Anniston) and several members of the Senate Republican caucus.

While the Senate GOP has drawn a hard line against most tax increases, some Republicans view the gasoline tax as more of a “user fee” which impacts individuals in proportion to the amount they use the state’s roads. Advocates also taught the economic development advantages of improving the state’s infrastructure.

But opponents say the bill is nothing more than a tax increase that will hit every driver in the state at a time when the economy continues to sputter.

Correction: an earlier version of this article said the funds would be split between the Department of Conservation and Natural Resources, the Alabama Law Enforcement Agency, the Alabama Department of Transportation, and Local Governments as is indicated by the Fiscal Note.