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Alabama considering gas tax hike

Alabama considering gas tax hike
© Greg Nash

Alabama is considering a plan to increase the amount of money drivers in the state will have to pay at the pump to help pay for transportation projects as federal road funding dries up, The Alabama Media Group reports

The Alabama Legislature's Permanent Joint Transportation Committee meet this week to discuss an increase in the state’s approximately 21 cents per gallon gas tax, according to the report. 

An Alabama state House committee voted last year to approve legislation that would increase the state’s gas tax by 5 cents, but the measure was not passed into law by the state's legislature. 

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Alabama state Rep. Mac McCutcheon (R) is planning to reintroduce legislation increasing the state's gas tax when the Legislature reconvenes for 2016 on Feb. 2, according to the report. 

Any new Alabama fuel levy will be collected on top of an 18.4 cents per gallon federal gas tax that is charged to all drivers in the nation to fill the federal government’s transportation funding coffers. 

The American Petroleum Institute says the gas tax increase will bring the total amount of money that drivers in Alabama are charged at the pump to more than 44 cents per gallon. 

Alabama is the latest state to consider increasing its own gas taxes in recent years as Congress has resisted a federal hike. Six states implemented such hikes on July 1 of last year. 

Transportation advocates had pushed lawmakers to increase the federal gas tax during a debate about a multiyear highway funding bill last year, but lawmakers adopted instead to turn to other areas of federal budget to pay for a five-year, $305 billion highway bill instead of asking drivers to pay more at the pump. 

Supporters of increasing the gas tax pointing to the willingness of states like Alabama to raise their own fuel levies as evidence that a national hike would be politically palatable this year.

Conservative groups in Washington have made clear that they would consider a federal increase to be a tax hike, however, and Republican lawmakers ruled it out even as they were searching for ways to pay for a new highway bill.

The national gas tax has been the traditional source of transportation funding since its inception in the 1930s. The tax has not been increased since 1993, however, and improved fuel efficiency has sapped its purchasing power. 

The federal government typically spends about $50 billion per year on transportation projects, but the gas tax only brings in approximately $34 billion annually at its current rate. 

Lawmakers turned to other areas of the federal budgets to close the $16 billion per year gap last year, but transportation advocates have said the federal gas tax will have to eventually be increased or replaced with a more sustainable funding source to keep pace with rising costs for infrastructure projects. 

The Congressional Budget Office has projected that it will take about $100 billion, in addition to the annual gas tax receipts, to pay for a six-year transportation funding bill. 

Lawmakers relied on a package of approximately $70 billion of offsets from other areas of the federal budget to help pay for the recently completely highway bill, which lasts until 2021.