Lawmakers in Alabama and Arkansas have passed legislation that will increase fuel taxes in both states.
Alabama Gov. Kay Ivey signed into law this week a law that will increase diesel fuel taxes by 10 cents over the next three years to help pay for infrastructure improvements in the state. Arkansas Gov. Asa Hutchinson, also this week, signed into law a highway funding bill that will increase diesel fuel prices by six cents.
Alabama’s fuel tax increase applies to both diesel and gasoline. The first increase will take effect on Aug. 31 this year with a 6 cents-per-gallon increase. It will also increase by 2 cents on Oct. 1, 2020 and on Oct. 1, 2021. The increases will bring the state’s diesel tax to 29 cents for diesel and 28 cents for gasoline.
Following the 10-cent increase over the next three years, the law ties the state’s fuel tax to the Federal Highway Administration’s National Highway Construction Cost Index, which could adjust fuel taxes in Alabama by no more than one cent every other year.
In order to help fund highway improvements in Arkansas, diesel taxes will increase by 6 cents to 28.5 cents-per-gallon, while gasoline taxes will increase 3 cents to 24.5 cents-per-gallon.
Arkansas’ fuel tax hike will take effect Oct. 1. The tax increase is part of a highway funding package that will generate an estimated $95 million annually for the state. Arkansas voters will decide next year on the other part of the infrastructure funding – a half-cent sales tax that produces $205 million a year – for a total of $300 million a year in infrastructure funding.