Revenue from the gasoline tax, the money that goes into building and maintaining roads, continues to decline in Alabama. Cars are using less gas, and Alabama’s state gas tax is collected on a per gallon basis. That means Alabama is collecting less for every mile driven.
Compounding the shortfall is the fact that that the 16 cents per gallon collected by the state (18 cents per gallon if you count the 2 cents per gallon pump inspection fee) is worth less than it was in the early 1990s, the last time the tax was raised.
The Institute on Taxation and Economic Policy counts Alabama as one of 10 states where the gasoline tax rate is at an all-time low in terms of its purchasing power. For a further exploration of the issue, see PARCA’s 2013 report, How Alabama Roads Compare.
At the same time, the national highway fund, fueled by the federal gas tax, is also headed toward empty. The U.S. Department of Transportation announced last week that the fund is expected to run out of money before the end of the fiscal year. In recent years, Congress has had to infuse the highway fund with general revenues on several occasions.
If the fund runs out of money, it could bring road construction projects around the country to a halt.
States around the country have made adjustments to their gasoline taxes to deal with the issue. Some have moved from the per gallon approach to a gas tax that operates more like a traditional sales tax. Others are experimenting with systems that tax drivers according to how much they drive rather than how much fuel they purchase. ITEP’s 2011 publication, Building a Better Gas Tax, explores the issue further. For a comparison of gas taxes around the country, try the American Petroleum Institute’s interactive map of gas tax rates.