Kay Ivey signs gas tax in law, first increase set for Sept. 1

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Kay Ivey
[Photo Credit: Jake Crandall | The Montgomery Advertiser via AP]

Alabama Gov. Kay Ivey on Tuesday signed a 10-cent-a-gallon gas tax increase into law. She was joined by a bipartisan group of legislators at the bill signing, including bill sponsors Rep. Bill Poole and Sen. Clyde Chambliss.

Ivey’s signature comes roughly two-hours after the Alabama Senate approved the House-passed version of the bill, 28-6.

The bill was fast-tracked for approval in a special session that Ivey called last week. Ivey did this to lowers the threshold for approval of the legislation. In the regular session, bills connected with the state budget must pass with a three-fifths majority. With 105 members of the State House of Representatives, only 53 members needed to vote in support of it. In the 35 member Senate, 18 was all that was required to approve the bill.

It’s all in the details

The state currently imposes a flat excise tax of 18 cents-per-gallon on gas and 19 cents-per-gallon on diesel, without adjusting for inflation and other construction and maintenance costs.

This combined fuel tax revenue generates 80 percent of Alabama’s transportation funding. The plan’s 10-cent increase will be phased in over the next three years: up 6 cents effective Sept. 1, 2019, up another 2 cents, effective Oct. 1, 2020, and up another 2 cents, effective Oct. 1, 2021.

The bill is expected to cost the average Alabama driver roughly $55 a year, or $4.58 a month. That’s according to the Alabama Transportation Institute based on 12,000 annual miles and 22MPG.

New revenue generated by the increase will be dispersed between state, county, and municipal governments in Alabama. According to Ivey, these funds are to be used for transportation infrastructure improvement, preservation and maintenance projects. A separate portion of the revenues will go to pay a bond to be issued to finance improvements to the ship channel providing access to the facilities of the Alabama State Docks.

The state’s gasoline tax was last increased in 1992.