Last week, Alabama Governor Kay Ivey (R) signed the “Rebuild Alabama Act” (AL HB 2) into law, which will increase the state’s fuel tax by 10-cents-per-gallon. Under the new law, once the increase is phased in over three years, the state’s gas tax will become indexed to the National Highway Construction Cost.
As we’ve reported previously, non-election years are a popular time to raise new revenue for transportation infrastructure investments. In 2017, our most recent non-election year for most states, seven states passed substantial road funding measures. While the Trump Administration and Congress have yet to deliver on a promised injection of infrastructure funding, over half the states — 26 in total — have raised fuel tax rates since 2013 to invest in roads and bridges.
The Alabama measure follows the trend set by many other recent infrastructure funding measures, which include a major increase in fuel taxes paired with increases in vehicle registration fees and new annual fees for electric or hybrid vehicles (a more recent trend). Alabama's 10-cent fuel tax increase falls within the range of 6 to 12 cents that other states have used, and the law includes a new annual registration fee for electric and hybrid vehicles of $200 and $100, respectively.
State lawmakers appear to have settled on a similar package of user-fee revenue raisers that Republicans, who still control most statehouses today, can embrace. Oklahoma lawmakers passed a small gas tax increase last year. In 2017, Montana, Indiana, West Virginia, Tennessee, and South Carolina joined liberal-leaning California and Oregon in hiking gas taxes to pay for investments in the states’ roads and bridges.
How many states will follow Alabama’s lead in 2019? New governors are leading the push for infrastructure investment in their states. Ohio Governor Mike DeWine (R) is asking for an 18-cent increase in the state’s gas tax, and lawmakers are debating legislation on the subject now. Governor Tony Evers (D) is asking for an 8-cent increase in Wisconsin, and Michigan Governor Gretchen Whitmer has proposed tripling the state’s gas tax to "fix the damn roads."