Kay Ivey Signs Special Session For Gas Tax
Kay Ivey Signs Special Session For Gas Tax

The Rebuild Alabama ACT has passed and has been signed into law.

The Rebuild Alabama Act has officially been released and while the gas tax has been the most talked about issue related to the Act, the bill calls for other increases as well. Check out the list of not only the new fees and taxes you will see but also a break down of how all the money will be used.

New & Increased Fees/Taxes

  • If you drive an EV you will be spending an extra $200 a year to operate the vehicle on Alabama roads.
  • If you drive a plug-in hybrid electric vehicle you will be spending an extra $100 a year to operate the vehicle on Alabama roads.
  • The two fees above can be reduced by the amount of any future additional annual federal surcharge or registration fee placed on a battery electric vehicle. The fees can never go below $150 a year for EV and $75 per year for plug-in hybrids.
  • Beginning on July 1, 2023 and every fourth year thereafter, the additional license tax and registration fee specified in this act shall increase by $3.
  • A floor-stocks tax held in inventory outside of the bulk transfer/terminal system will be an incremental amount of tax imposed under this bill.
  • On August 31, 2019 your gas tax will go up an extra .06 cents per gallon.
  • On October 1, 2020 your gas tax will go up an extra .02 cents per gallon.
  • On October 1, 2021 your gas tax will go up an extra .02 cents per gallon.
  • The law also writes in automatic increases based on the National Highway Construction Cost Index. Beginning October 1, 2023, and on June 1 of every other year thereafter, the excise tax rate provided in this section shall be adjusted by the percentage change in the yearly average of the National Highway Construction Cost Index (NHCCI) issued by the U. S. Federal Highway Administration (FHWA) for the most recent 12-month period ending December 31, compared to the base year average, which is the average for the 12-month period ending December 31, 2020 and rounded to the nearest whole cent. The maximum amount of increase or decrease in the excise tax rate shall not exceed $.01 per net gallon of gasoline or diesel fuel and shall take effect every other year.

Where The Money Goes & How They Can Spend It

  • The first $150 collected from the annual license tax and registration fee on each battery electric vehicle and the first $75 collected from the annual license tax and registration fee on each plug-in hybrid electric vehicle shall be distributed 66.67% to the state, 25% to counties, and 8.33% to cities.
  • The remainder of the EV and plug-in hybrid tax collected will go to the Rebuild Alabama Fund and be used to build a vehicle transportation charging infrastructure up until battery electric vehicles plus plug-in hybrid electric vehicle exceed four percent (4%) of the total annual registrations of all motor vehicles within the state of Alabama, except trailers and semitrailers, for which an annual license tax and registration fee is paid.
  • Once 4 percent of all annual registrations for battery electric vehicles plus plug-in hybrid electric vehicle exceed four percent (4%) the annual fees are reduced to $150 (EV) and $75 (Plug-in). The reduced fees will then be deposited into the Rebuild Alabama Fund and distributed 66.67% to the state, 25% to the counties, and 8.33% to the cities to be used in the construction, reconstruction, maintenance, and repair of public roads, highways, and bridges in the state, and for any other purpose for which moneys in the Rebuild Alabama Fund may be lawfully used. All previously collected but unspent funds dedicated to the Electric Transportation Infrastructure Grant Program shall continue to be used to fund the Electric Transportation Infrastructure Grant Program.

Gas Tax Only

  • The Alabama Department of Revenue will retain 0.25% of the gas tax
  • Up to $750,000 per month from the gasoline fuel tax and up to $230,000 per month from the diesel fuel tax will go to improving the shipping channel for the Alabama State Docks in Mobile .
    • The amount may not exceed $150,000,000 in aggregate principal amount.
  • 66.67%, shall be allocated to ALDOT and deposited in the Rebuild Alabama Fund, to be used for transportation infrastructure improvement, preservation and maintenance projects pursuant to the provisions of this act. The net tax proceeds may be used to match any available federal, state and local transportation funding. The funds allocated to the department shall be audited by the Examiners of Public Accounts in the same manner as all other department funds.
    • The Director of ALDOT, with approval of the Governor, may also pledge a share of the net tax proceeds not to exceed 50% of said proceeds as security for the issuance or refinancing of any loan or debt obligation used for transportation infrastructure improvement, preservation and maintenance of projects pursuant to the provisions of this act.
    • ALDOT shall not use the net tax proceeds for any of the following purposes:
      • Salaries, benefits, or any other form of compensation for state or contract employees except as included as direct project Costs and subject to audit by the Examiners of Public Accounts.
      • The purchase, lease, or maintenance of equipment, other than equipment purchased and permanently installed as a part of a road or bridge project.
      • The maintenance or construction of public buildings or other structures that are not integral to the system of roads and bridges.
    • Beginning on Oct. 1, 2019, (and each October thereafter), ALDOT will allocate $400,000 to each county in exchange for the annual federal allocation of $533,000 which was being distributed to each county on the effective date of this act. Nothing in this act shall prohibit ALDOT from utilizing these exchanged federal funds at its discretion and in a manner consistent with Federal Highway Administration (FHWA) procedures.
      • The $400,000 annual allocation to each county shall be utilized first as matching funds for any balance in the county’s federal allocation not authorized by Sept. 30, 2019. Once these unexpended funds are authorized for an individual county, all remaining and future allocations established herein shall be expended for road and bridge projects on county roads classified as minor collectors or higher and/or for bridge structures on the National Bridge Inspection inventory. 
  • 25% shall be allocated to counties of the state to be used for transportation infrastructure improvement, preservation and maintenance as provided for in this act. It shall be allocated and disbursed among the 67 counties of the state as follows:
    • 45% of the amount shall be allocated equally among the 67 counties of the state.
    • 55% of the amount shall be allocated among the 67 counties of the state on the basis of the ratio of the population of each county to the total population of the state according to the then next preceding federal decennial census or any special federal census heretofore held in any county.
    • The net tax proceeds may be used to match any available federal, state and local transportation funding. The governing body of a county may also pledge its share of the net tax proceeds not to exceed 50% of said proceeds as security for the issuance or refinancing of any loan or debt obligation used for transportation infrastructure improvement, preservation and maintenance.
  • 8.33% shall be allocated and disbursed to the municipalities of the state to be used for transportation infrastructure improvement, preservation and maintenance, as provided for in this act, as follows:
    • 25% of this amount shall be allocated equally among the municipalities of the state.
    • 75% of this amount shall be allocated among the municipalities of the state on the basis of the ratio of the population of each municipality to the total population of all municipalities of the state according to the last and any subsequent federal decennial census commencing April 1, 2010. The population of any municipality incorporated subsequent to the taking of the last federal decennial census shall be deemed to be the population shown by the census for that municipality. Any municipality incorporated after the effective date of this act shall not participate in the distribution provided for in this subsection until the fiscal year next succeeding the fiscal year during which it is incorporated.
    • The net tax proceeds may be used to match any available federal, state and local transportation funding. The governing body of a municipality may also pledge its share of the net tax proceeds as security for the issuance or refinancing of any loan or debt obligation used for transportation infrastructure improvement, preservation and maintenance.
  • The following ALDOT programs will be funded by the ALDOT portion of the gas tax:
    • Congestion Relief Program – The purpose of this program is to add capacity to State, US and Interstate routes in highly congested areas of the state. ALDOT shall develop an assessment and prioritization plan to allocate funds for congestion relief projects on the state’s transportation infrastructure.
    • Economic Development Roads Program – The purpose of this program is to develop and improve transportation infrastructure to enhance economic development efforts in the State of Alabama. ALDOT shall develop an assessment and prioritization plan to allocate funds for economic development road projects with priority given to projects in economically underserved areas of the state.
    • System Preservation – The purpose of this program is to address the ongoing and growing preservation and maintenance needs of the state’s transportation infrastructure.
    • ALDOT shall create an annual grant program of no less than ten million dollars $10,000,000 for use on any classified system of roads and bridges for which any city government or county government may apply. All projects granted under this program are to be bid and let by the respective county or municipality following procedures approved by ALDOT. ALDOT shall develop and publish rules to establish funding criteria and create an application process to receive and select projects for funding by September 30, 2019. The first round of grant applications shall be due by November 30, 2019 and award of the grants shall be made by ALDOT on or before January 15, 2020.
    • Alabama Transportation Rehabilitation and Improvement Program-II (ATRIP-II) to fund projects of local interest on the state maintained highway system, which may also include local roads and bridges essential to such projects. All ATRIP-II Projects shall be developed and let to contract by ALDOT. The ATRIP-II program shall be an annual program beginning in fiscal year 2020 and shall be funded at an amount of not less than $30,000,000 and not more than $50,000,000 which amount shall be at the discretion of the Director of ALDOT.

What Happens Now

There is a Special Session just for the gas tax bill. The Special Session allows it to pass much easier and quickly. Through this week a lot will take place so make sure you follow us on Twitter or Facebook to keep up!

Update: HB 2 has been signed into law by Kay Ivey.

Update: All counties have released their transportation plans for 2020.

Brent Wilson
Brent was born and raised in Huntsville, Alabama and is the founder of BamaPolitics.com.