Alabama Legislature

Cities, counties disagree on how to share possible gas tax increase

Alabama county and municipal leaders will push the Alabama Legislature this year to approve a statewide gasoline tax increase to fund road improvements, but they disagree about how any new money should be split among local governments.

The distribution of funds is one of several possible sticking points for the gas tax legislation that is expected to be a major issue of the 2019 legislative session.

While many lawmakers recognize the need for the first gas-tax increase since 1992, some also want more “skin in the game” from the majority of counties that haven’t enacted their own gas taxes to fund their local road needs.

Meanwhile, there is the issue of the transfer of existing money from the gas tax to other state agencies. More than $63 million of existing money from the tax is pulled from the Alabama Department of Transportation each year and transferred to other agencies.

A plan to increase the gas tax and improve infrastructure is a priority in the upcoming session for Gov. Kay Ivey, but details, including a proposed amount, haven’t yet been released. The session begins March 5.


“There’s nothing concrete right now,” House Majority Leader Nathaniel Ledbetter, R-Rainsville, said recently about any written legislation. “Our infrastructure is falling apart, and we’re trying to keep it up on something that’s almost 30 years old.

Legislation that would raise taxes has to start in the House of Representatives. Previous gas-tax bills went first to the Transportation, Utilities and Infrastructure Committee, which is chaired by Rep. Lynn Greer, R-Rogersville. Greer said he hasn’t yet seen a written proposal.

“I’m just hoping someone can come up with something sensible for us to look at,” Greer said. “There is no doubt there is a need (for more revenue for roads). The question is, do we want to take care of it, or push it back?”

County and city split

Under a failed plan in 2017 that would have raised the gas tax by 9 cents a gallon, about half the revenue would have gone to the state and half would have been divided 80/20 between counties and municipalities, with counties getting the larger portion.

“We think we reached an agreement in 2017,” Sonny Brasfield, executive director of the Association of County Commissions of Alabama, said recently. “If cities aren’t willing to go with that agreement, I don’t know what we do.”

The Alabama League of Municipalities agreed in 2017 for its municipalities to accept 20 percent — if it meant getting the increase approved then.

“But if it didn’t, we wanted to come back and continue our negotiations,” Greg Cochran, deputy director of the league, said.

The league now wants a 50/50 split of local governments’ share of new revenue.

Cities’ populations and road needs have grown since the gas tax distribution formula was established decades ago, the organization argues.

Several officials recently said a possible 12-cent-per-gallon increase has been proposed, but higher and lower amounts also have been suggested.

The state’s current gas tax is actually three separate levies totaling 18 cents per gallon and has been in place since 1992. In 2017, they brought in $430.5 million.

Cochran said cities get only about 10 percent of that total amount. If the tax was increased by 12 cents per gallon, Cochran said, the league is asking that cities and counties each get 2 cents, with the state getting 8 cents.

Meanwhile, Brasfield said it would take $390 million a year just to get counties’ existing roads on a 15-year repaving schedule.

“Our needs are so great, they’re so staggering when you put them on the table, I worry about them being overwhelming to lawmakers,” Brasfield said.

Local taxes

Alabama’s 67 counties are responsible for more than 8,600 bridges, 45 percent of which are 50 years old or older, Brasfield said.

But most counties don’t collect a local gas tax to support their roads and bridges. According to the Alabama Department of Revenue, only 27 do. Jefferson County has a 1-cent gas tax, and Shelby County levies no gas tax.

Meanwhile, 324 municipalities and police jurisdictions collect a local gas tax. There are 462 municipalities in the state.

A list of municipal gas taxes is here, and a list of county taxes is here.


Four-term state Sen. Arthur Orr, R-Decatur, said communities need to invest in their infrastructure needs.

“The locals need to have skin in the game, via local tax collection,” Orr said. “They seem to want Montgomery to fund their roads, but aren’t willing sometimes to fund them themselves through a local gas tax.

“… I think there ought to be a stipulation that they have some local (taxes) in place before they can participate in any funds that are created by a new statewide gas tax.”

Greer agreed.

“Some counties have a greater need for road money than others do, but they need to be willing to face the issue and address it rather than coming to the Legislature to fix it,” he said.

Cities can raise a gas tax via votes by their councils. Counties have to first get permission from the Legislature.

Orr has twice unsuccessfully sponsored legislation to allow county commissions, by a majority vote, to propose a local gasoline tax increase of up to 5 cents per gallon, subject to approval by the voters in their county.

Brasfield said the ability to more easily raise local taxes might have been a solution 10 years ago, but infrastructure needs are now so great that they are a statewide issue.

“I understand the theory that every county should raise money and take care of themselves, but we crossed that line when we allowed municipalities to cross county lines,” Brasfield said.

$63.5 million taken from ALDOT each year

For nearly a decade, state officials when crafting the annual General Fund budget have pulled about $63.5 million from ALDOT to support other state agencies.

To do that while raising taxes to repair roads seems disingenuous, Orr said, and lawmakers need to have the wherewithal to address the General Fund’s needs.

The money diverted from ALDOT currently goes to the court system and the Alabama Law Enforcement Agency.

Ledbetter said that transfer will be part of the gas-tax discussion.

“Does something need to be done to correct it? Yes, it does,” he said. “What it is, I don’t know.”

Meanwhile, Orr said he’ll sponsor legislation this year that says any transfer of $10 million or more of earmarked money from one agency to another has to be approved by a legislative vote of two-thirds or more. Currently, budgets need only a simple majority for approval.


“Somebody’s got to bite the bullet, and I think the day has come in Alabama,” Greer said about a gas tax. “How much, we’ll have to see, but the issue is out there and not going away.”