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State gas tax to increase 2 cents on Oct. 1

A 2-cent gas tax increase taking effect on Oct. 1 brings direct benefits to Pike County.

The increase is the second phase of Alabama’s 10-cent gas tax increase authorized in 2019 to help fund road and bridge repairs on state and local levels.

Russell Oliver, Pike County engineer, said the benefits of the additional tax are best seen in the record number of roads resurfaced during the 2020 fiscal year.

“The fact that the county commissioners were able to have a new revenue stream to finance a loan for road repairs helped us break a record this year for miles resurfaced,” he said on Friday. “Leveraging the revenue in this way has been huge.”

The Legislature passed the 10-cent tax in 2019, implementing the first 6-cent increase in 2019, with a 2-cent increase taking effect Oct. 1, 2020, and the final 2-cent increase taking effect Oct. 1, 2021. The tax was the first increase to the state’s gas tax since 1992 and will bring the state’s total gas tax to 26 cents per gallon. 

After Oct. 1, 2023, the total gasoline and diesel excise tax will be adjusted annually based on the National Highway Construction Cost Index.

For Pike County, the first year of the gas tax generated more than $411,000 in new revenues. “We were worried about the negative effects with the pandemic, but it wasn’t as bad as we expected,” Oliver said.

Budget forecasts predict the tax will generate $650,000 in FY2021 and $800,000 in FY2022.

Using the projected revenues, commissioners were able to borrow about $5 million to fund more than 63 miles of resurfacing and repair projects this fiscal year. “We also had some other resources, such as industrial access money, block grant money and economic development funds, and when we combined that the total resurfaced was about 73 miles in one year.

“That’s a record … and that’s a tremendous amount of work, even without a pandemic and two major storms.”

Oliver said the county still has more than 55 miles of roads in poor condition. Pike County includes 467 miles of paved roads and 294 miles of dirt roads.