Higher fuel tax talk in Alabama expected to heat up

By Keith Goble, Land Line state legislative editor | 11/20/2015

Talk continues in Alabama about a possible fuel tax increase to improve the state’s transportation infrastructure.

The Yellowhammer State now charges 19 cents per gallon on diesel purchases and 18 cents on gas. The tax rates have remained unchanged for more than 20 years.

A bill failed to gain passage earlier this year that sought to remove the state from the list of about a dozen states with fuel tax rates below 20 cents.

Rep. Mac McCutcheon, R-Huntsville, offered a bill that called for increasing the state’s tax rates by 5 cents per gallon to 24 and 23 cents, respectively. The bill also authorized the fuel tax to be increased by 2 cents per gallon each March.

McCutcheon’s bill was estimated to raise $70 million in the first year and $100 million by the second year.

The effort’s failure was attributed to intense negotiations to patch a $200 million state budget shortfall.

Fresh off his re-election early this month, Gov. Robert Bentley said that he believes more lawmakers could give strong consideration to a fuel tax increase during the upcoming regular session.

At a recent speaking event in Gulf Shores, Ala., Bentley said he is in favor of a tax increase and that he believes residents around the state are willing to pay extra as long as they are assured the money will be used for better roads and bridges.

McCutcheon is expected to introduce a similar piece of legislation during the regular session that begins Feb. 2, 2016.

Multiple states acted this year to raise fuel tax rates. Among the states with rate changes in the coming weeks is Utah. Starting Jan. 1, the state’s excise tax rate of 24.5 cents per gallon on gas and diesel purchases is going up by 5 cents.

The state of Nebraska will implement the first of a four-step increase over the next four years. At the beginning of the New Year the state’s 25.6-cent-per-gallon fuel tax will increase by 1.5 cents. Additional 1.5-cent increases will kick in each year through January 2019 when the fixed rate reaches 16.3 cents.

Meanwhile, North Carolina is instituting a slight price break at the pump. On the heels of a 1.5-cent dip in the state’s 37.5-cent fuel tax rate last spring an additional penny cut will take place on Jan. 1, and again on July 1, 2016, when the tax rate reaches 34 cents.

The price cuts precede a new fuel tax formula slated to take effect Jan. 1, 2017. The new formula will be based on increases in state population and a consumer energy price index.

To view other legislative activities of interest for Alabama, click here.

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