The Alabama Senate passed the 10-cent a gallon gas Tax on Tuesday and Gov. Kay Ivey signed it into law the same day.
The new law will gradually raise the state’s tax on gasoline and diesel fuel by 10 cents a gallon over three years. The tax will go up by 6 cents this year, 2 cents in 2020 and 2 cents in 2021. Future increases of a penny are possible every other year after that, depending on inflation.
The tax is estimated to generate about $320 million a year dedicated to infrastructure improvements.
Revenue from the increase would pay for improving roads and bridges throughout the state. Alabama last raised its gas tax in 1992, and Ivey and other state leaders argue those collections long ago stopped keeping pace with infrastructure needs.
The legislation puts a $200-a-year fee on electric vehicles and a $125-a-year fee on plug-in hybrid vehicles. It dedicates 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 federal dollars.
Municipalities would receive an additional $26 million a year under the new law, bringing their total to $48.7 million. Counties would receive an additional $80 million a year, bringing their total to $256.4 million.