Alabama Legislature

Gas Tax Bill Means Millions for Birmingham Area

Source: Matt RF Webb CC BY-SA 4.0

Alabama’s more than 400 cities and towns currently share about $22 million a year from the statewide gas tax. They would get an additional $26 million a year under a proposed 10-cent-a-gallon increase.

Alabama’s counties now receive a combined $176.5 million; if House Bill 2 becomes law, they would receive an additional $80 million.

“It’s enormous,” said Greg Cochran, deputy director of the Alabama League of Municipalities, about the potential impact of the gas tax.

That local impact was used by proponents to sell Alabama House members on the tax hike that’s expected to general $320 million a year. Representatives passed the bill on an 84-20 vote Friday evening. It moves to the Senate, where at least some Republicans say they want changes.

Money for Local Governments

About 66 percent of new revenue from the gas tax would go to the state. But a different distribution formula means municipalities would get more of the new money than they do with the current 18-cent tax. Each town and city would get a base amount of $14,109, then additional money based on population.

“Some communities don’t receive $14,000 now,” Cochran said. “(The tax increase) will give small communities some money to pool for local projects.”

Birmingham, Huntsville, Montgomery and Mobile all would get more than $1 million in new money.

Rep. Neil Rafferty, D-Birmingham, voted yes for the bill after talking with some of his constituents over the past few days.

“I took a lot of time to reach out to my constituents and correct a lot of the misinformation that’s been floating out there about this bill, so I wanted to call them up and explain and clear some stuff up with them before I made a final decision,” Rafferty said.

The bill would dedicate about $11.7 million a year in gas tax revenue to improvements and expansions at the Port of Mobile. The state money would be used to match even more federal dollars.

The infrastructure plan is Gov. Kay Ivey’s No. 1 priority, and last week she called a special session of the Legislature to fast-track the bill and make it easier to pass.

House Bill 2 also would place an annual fee of $200 on electric vehicles and $100 on plug in hybrid vehicles.

The increase would be phased in over three years and then in 2023, it could increase or decrease by 1 cent every two years based on construction costs.

Rep. David Wheeler, R-Vestavia Hills, voted no for the house bill because he also did not like the possibility of future increases.

“There were several things that I was concerned with but the reason I voted no was because of the indexing.,” Wheeler said.

Some lawmakers and groups have advocated for a tax cut somewhere else to offset the gas tax increase.

“It is the poor and middle class that will bear the brunt of the gas tax increase,” said Phil Williams, director of policy at the institute. “Why don’t we offer them a modest reform to offset it and to show them that we care about them in the process?”

Late last month, the Alabama Republican Party passed a resolution opposing any gas tax increase.

Also in the bill are:

—An annual allocation of at least $10 million in grants for which cities and counties could apply. That’s for projects that are beyond local governments’ abilities to address, Harris said.

—A congestion relief program that would require ALDOT to develop a prioritization plan to allocate funds to increase capacity on crowded state, U.S. and interstate routes. Tony Harris, a spokesman for ALDOT, said I-565 in the Tennessee Valley is an example of a potential project.

—An economic development roads program requiring ALDOT to develop a prioritization plan to allocate funds for economic development road projects “with priority given to projects in economically underserved areas.”

“We believe there are about a dozen counties that do not have a four-lane route to an interstate highway,” Harris said. “So we want to address that.”

—An annual allocation between $30 million and $50 million for “projects of local interest on the state-maintained highway system, which may also include local roads and bridges essential to such projects.”

The bill also says the new revenue can’t be spent on salaries, equipment or property.

This year, ALDOT had total appropriations of about $1.5 billion. About $785 million comes from state revenue; $720 million comes from federal and local sources, according to the Legislative Fiscal Office.

The bill will be in a Senate committee Monday afternoon.