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Alaska Legislature

Alaska Senate votes to raise gas tax, but additional highway funding isn’t guaranteed

JUNEAU — The Alaska Senate voted 12-5 on Monday to double the Alaska’s lowest-in-the-nation state gas tax from 8 cents per gallon to 16 cents per gallon.

Sen. Click Bishop, R-Fairbanks, speaks in favor of his proposed gas tax increase Monday, March 2, 2020 on the floor of the Alaska State Senate. (James Brooks / ADN)

The decision, which must be approved by the House of Representatives and Gov. Mike Dunleavy before it becomes law, also raises the state’s marine fuel tax and increases registration fees for electric and plug-in hybrid vehicles. It does not change taxes on home heating fuel, jet fuel or aviation gasoline.

The tax increase is expected to raise $33.8 million per year for the state, according to the Alaska Department of Revenue.

The proposal came from Sen. Click Bishop, R-Fairbanks, who has worked for six years on the idea.

“Our potholes are turning into ruts, and ruts are turning into bigger and bigger liabilities for Alaskans,” he said.

Transportation and trucking companies testified in favor of the increase, saying poorly maintained roads have cost an extraordinary amount in vehicle maintenance.

Gas tax revenue has been trending downward, according to state figures. That decrease, coupled with budget cuts, has forced the state to close road maintenance stations.

Bishop said money from the tax increase would be used for road maintenance, and no one spoke on the Senate floor against him.

But Sen. Shelley Hughes, R-Palmer, said after the vote there’s no guarantee the money would go to transportation. Alaska’s constitution prohibits dedicated funds; a future version of the Alaska Legislature could use fuel tax money for another purpose.

Hughes, who voted against the bill, worries the state could cut other road maintenance support, leaving spending flat even as tax revenue rises.

Bishop said Department of Transportation officials have promised that won’t happen.

"They have testified that if this bill passes, they will certainly use this money to improve our roadways," he said.

In addition, he said he trusts that the legislators will hold the administration to that promise.

Hughes believes Matanuska-Susitna Borough residents who commute to Anchorage will pay disproportionately more than drivers in other parts of the state.

“We’re going to pay the most, and there’s no guarantee that we’ll be proportionally returned,” she said.

The other three senators representing the Mat-Su and Eagle River joined Hughes in opposing the bill. Sen. Lora Reinbold, R-Eagle River, said she wants to see reductions in state spending.

Sen. Bill Wielechowski, D-Anchorage, also voted against the tax increase, but the longtime supporter of oil-tax reform said he did so for reasons other than the legislation itself.

“I’m not going to be supporting taxes on working families as long as we’re continuing to give out $1 billion per year in oil tax credits to some of the wealthiest corporations in the world,” he said.

The final vote on a proposed Alaska gas tax increase is seen Monday, March 2, 2020 in the Alaska State Senate. (James Brooks / ADN)
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