Alabama drivers saw a 6-cent state gas tax increase this past weekend starting September 1st. This was the first increment of the 10-cent tax approved this year by the legislature and Governor Kay Ivey. Alabama’s Fuel Tax of 18 cents per gallon on gas and 19 cents on diesel was the fifth lowest in the United States and had not changed since 1992. When fully implemented, the increase will generate about $320 million a year for road and bridge projects throughout Alabama. The first 5 state projects have already been announced:
- I-565 resurfacing and widening
- Expansion of I-65 Interchange at Tanner
- U.S. 82 widening in Prattville
- U.S. 82 Tuscaloosa
- U.S. 411 widening in Cherokee and Etowah Counties
Passage of the Rebuild Alabama Act came after years of hard work by industry advocates and state law makers. As President of the American Council of Engineering Companies of Alabama this past year, I was able to see how our organization worked closely with the Alliance for Alabama’s Infrastructure (AAI) and other industry partners to advocate for increased infrastructure funding in Alabama. Our combined advocacy efforts were instrumental in the passage of the Rebuild Alabama Act. We are indebted to bill sponsors Representative Bill Poole, (R) Tuscaloosa, and Senator Clyde Chambliss, (R) Prattville, as well as Governor Ivey for their leadership in getting the bill passed.
In 2016, the American Society of Civil Engineers (ASCE) released a report card on Alabama’s infrastructure system in which Alabama’s roads received a D+. On a local note, the research publication “TRIP, Alabama’s Transportation by the Numbers: Meeting the States’ Need for Safe, Smooth and Efficient Mobility” rated the condition of roads in the Birmingham urban area at approximately 50% in the Poor and Mediocre categories.
The Rebuild Alabama Act will invest more than 3 billion dollars in roads and bridges across the state of Alabama over the next 10 years. Here’s an overview of the Rebuild Alabama Act:
Fuel Tax Increase and Distribution
The state gasoline and diesel tax will be increased incrementally over the next three years:
- 6 cents per gallon increase on September 1, 2019
- 2 cents per gallon on October 1, 2020 (8 cents total)
- 2 cents per gallon on October 1, 2021 (10 cents total)
The revenues raised through these increases in the gas and diesel tax will be distributed as follows:
Additionally, $11.76 million shall be annually distributed by the Alabama Highway Finance Corporation to finance the deepening and widening of the Port of Mobile. This diversion is not perpetual and will end once bonds are paid off.
Fuel Tax Indexing
Beginning on October 1, 2023, and on July 1 of every other year following, the fuel tax will be indexed to the National Highway Construction Cost Index (NHCCI) issued by the Federal Highway Administration and will be implemented as follows:
- The state fuel tax will be adjusted by the percentage change in the yearly average of the NHCCI for the most recent year compared with the yearly average of the base year 2020 and will be rounded to the nearest whole cent.
- The fuel tax cannot be increased or decreased more than 1 cent in years it is indexed.
Electric and Hybrid Vehicle Fees
Electric vehicles (EVs) will now pay an annual registration fee. Battery electric vehicles (BEVs) will pay $200, and plug-in hybrid vehicles (PHEVs) will pay $100.
Local Government Grant and Funding Programs
- The ATRIP-2 Program is directed by an 8-member ATRIP-2 Committee. It requires ALDOT to set aside between $30 and $50 million annually to fund projects of local interest on the state-maintained highway system.
The initial ATRIP-2 Program was announced at $30 million. Counties and cities across the state have submitted applications for projects to the Committee. Those applications were due on August 30. More information on ATRIP-2 can be found on the ALDOT website.
- ALDOT Annual Grant Program – ALDOT will create an annual grant program to total $10 million for which county and city governments can apply. The first round of grants will be awarded by January 15, 2020.
According to the Business Council of Alabama,” the Rebuild Alabama Act is a responsible investment in our state, our business and our people and will yield tangible results in the years to come.” We couldn’t agree more.