Alabama one step closer to increasing fuel tax rates

By Keith Goble, Land Line state legislative editor | 3/28/2016

Truckers and others fueling in Alabama could soon pay more than what they are used to paying in state fuel taxes.

The Yellowhammer State now charges 19 cents per gallon on diesel purchases and 18 cents on gas. The tax rates have remained unchanged for nearly one-quarter century.

One bill moving through the state’s House would raise the tax rates to help pay for improvements to the state’s transportation infrastructure

The House Transportation, Utilities and Infrastructure Committee voted to advance a bill to raise the tax rates based on an average of the existing state rates in Florida, Georgia, Mississippi and Tennessee. Specifically, the tax rates in Alabama would increase by 6 cents per gallon to 25 cents and 24 cents respectively.

Sponsored by Rep. Mac McCutcheon, R-Huntsville, HB394 includes adjustments in 2019, 2023 and 2027. The fuel tax rate increases would be based on the average of Alabama’s neighboring states.

Alabama’s state fuel taxes accounted for $414 million in revenue a year ago. The revenue is split between the state Department of Transportation and counties.

According to a state fiscal note, the bill would initially raise revenues by $160 million and grow to $192 million annually by 2018.

The House committee also advanced a Senate-approved bill, SB180, to continue to route money from tax rate increases to roads and bridges.

Gov. Robert Bentley has said he is in favor of a tax increase. 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.

HB394 would also permit local governments to pursue local fuel tax rate increases of up to 2 cents per gallon, but only after a voter referendum.

Another provision in the bill would add a $100 surcharge for electric and alternative fuel passenger vehicles and $150 for equivalent commercial vehicles.

The bill awaits further consideration on the House floor. If approved there, it would move to the Senate before it could head to the governor’s desk.

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

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