Gas tax hike starts Sunday; Council ensures city’s take

Motorists in Demopolis are joining those around the state this weekend as they top off their gas tanks ahead of the first phase of the Alabama 10-cent excise tax on gasoline and diesel fuel, what is being called Rebuild Alabama.

The Demopolis City Council in a called meeting Friday made sure the city will receive some of that tax money by passing a resolution setting up a separate fund for monies received from the new tax.

Gas prices will jump six cents per gallon beginning Sunday, the first change in Alabama’s gas tax since 1992. That will bring the state’s rate to 24 cents for a gallon of gas and 25 cents per gallon of diesel.

The tax increase is the first of three set forth in the legislation passed this year. A two-cent rise will go into effect Oct. 1, 2020, and another two cents per gallon will be imposed a year later.

Then, beginning Oct. 1, 2023, and on July 1 of every year after that, the excise tax rate will be adjusted by the percentage change in the yearly average of the National Highway Construction Cost Index, rounded to the nearest whole cent. The legislation states the change in the excise tax will not exceed a penny per gallon,

Each cent of the tax is expected to be worth $32 million in new revenue, with the proceeds going mostly to road and bridge projects across the state. The first part of the increase is expected to generate some $192 million during the coming fiscal year.

Demopolis expects to receive some $38,664 during the first fiscal year of the tax, with increasing allocations for each year after that.

The resolution passed by the Council stipulates the funds from the new tax will be used for pothole repair and maintenance and improvement of streets, avenues and bridges designated by the city.

Gov. Kay Ivey, who championed the legislation, has vowed that all of Alabama will receive funding through the Rebuild Alabama program. Funding is being earmarked for state congestion relief and economic development projects already announced by ALDOT as well as being sent to cities and counties under the Alabama Transportation Rehabilitation and Improvement Program, called ATRIP II.

Grants totaling $10 million will be awarded for local assistance that can be applied to any road or bridge project within the state. Another $48 million is dedicated for county projects. Under the allocation of the overall gas tax revenues, counties are set to get 25 percent. Municipalities will receive 8 percent, for a total of $15.4 million.