Alabama Legislature Convenes for 2018 Session

The Alabama Legislature came back to town this week and completed their first and second workdays highlighted by Governor Kay Ivey’s State of the State presentation on Tuesday evening.  The Legislature has 105 calendar days in which to conduct 30 legislative workdays.  Generally, the legislative schedule involves workdays on Tuesdays and Thursdays with the principal committee day being held on Wednesday.  Following this schedule, the legislature would be set to adjourn the session on April 23rd.

This year is anticipated to be different, because it is an election year.  The election primaries are scheduled for Tuesday, June 5th.  The legislators running for re-election want to get out of Montgomery as quickly as possible so that they can spend their time campaigning and rumors have it that they will try to be gone by the end of March.

In this first week of action, the House of Representatives introduced 202 bills and the Senate introduced 171 bills.

Of note to forestry is SB131, sponsored by Senator Trip Pittman (R-Montrose) which redistributes 20% of the forest severance tax from the Alabama Forestry Commission to the State’s General Fund.  Pittman’s bill will be taken up in the Senate’s Finance & Taxation General Fund Appropriations committee (which Pittman chairs) on next Wednesday.  AFA is opposed to this bill.

As evidence of the legislature’s desire to move quickly through the session, both the General Fund and Education Trust Fund appropriations bills have already been introduced.  The Alabama Constitution vests one principal responsibility upon the Legislature and that is to pass appropriations bills that result in a balance budget for the state.  This year, the FY19 (begins October 1, 2018) ETF bill (sponsored by Representative Bill Poole) will originate in the House of Representatives and the FY19 GF bill will originate in the Senate (sponsored by Senator Trip Pittman).

The legislature is not anticipated to propose an increase in fuel taxes this session, but advocates are gearing for a substantial increase next year (after the elections).  In anticipation of that future revenue, Senator Gerald Dial (R-Lineville) has introduced SB86 setting up a $2.45 BILLION bond issue for road and bridge construction.  ATRIP II (as its being referred to) would utilize the future fuel tax increase to underwrite the bond issue that is intended to be split evenly between state DOT projects and local (county and municipal) projects.  AFA has developed an Issue Brief regarding fuel taxes that is available by clicking here.

The election season is well underway, but candidates for the legislature and state offices are precluded from raising campaign dollars while the legislature is in session, up until 120 days prior to the primary elections.  This has created a fund raising “dead period” from January 9th through February 5th.

Luther Strange Works to Protect Alabama Landowners


Quietly, behind the scenes and with no political objective, Luther Strange has worked to assist private landowners from government intrusion.  In many cases, the office of Attorney General (in conservative states) was the only check available to the inexhaustible thirst of the Obama Administration and the increasingly liberal court system that he appointed to infringe on the private property rights of landowners.

Here is one prime example:

In 2001, the United States Fish & Wildlife Service listed the Dusky Gopher Frog as an endangered species pursuant to the Endangered Species Act.  Several years passed and in 2009 (only after the Obama administration took control and a lawsuit was settled with the Center for Biological Diversity, an environmental advocacy group), the Service, in a proposed rule making, designated an area of Mississippi to be critical habitat for the frog.  This area was where the frog was currently located and the Service felt the need to protect the area to ensure the “conservation” of the species.

The environmental group objected to the proposed area complaining that it wasn’t suitable for the “recovery” of the species; a novel interpretation of the ESA’s statutory requirements.  The Service however agreed to this new characterization and issued a final rule that not only included the acreage in Mississippi, but also acreage in Louisiana that admittedly did not have suitable habitat for the frog and had not seen this species in over 50 years.

The Louisiana land was owned and leased by Weyerhaeuser which brought suit in federal court challenging the critical habitat designation.  The federal district judge ruled in favor of the Service and the case was appealed to the Fifth Circuit Court of Appeals in New Orleans.  A three judge panel (two Obama and one Bush appointees) reviewed the case and upheld the lower court ruling on a 2-1 vote.

In the dissenting opinion offered by Judge Priscilla Owen (the Bush appointee) she stated “the majority opinion interprets the ESA to allow the Government to impose restrictions on private land use even though the land: is not occupied by the endangered species and has not been for more than fifty years; is not near areas inhabited by the species; cannot sustain the species without substantial alterations and future annual maintenance, neither of which the Government has the authority to effectuate, as it concedes; and does not play any supporting role in the existence of current habitat for the species.”  She goes on to note that “if the Endangered Species Act permitted the actions taken by the Government in this case, then vast portions of the United States could be designated as ‘critical habitat” because it is theoretically possible, even if not probable, that land could be modified to sustain the introduction or reintroduction of an endangered species…..the majority opinion’s holding is unprecedented and sweeping.” (Emphasis added)

After the panel’s decision, Weyerhaeuser then asked for the entire appellate court to review the case.  Alabama Attorney General Luther Strange agreed with Weyerhaeuser’s position and Judge Owen’s analysis.  He led an effort to bring 15 state Attorney Generals to jointly petition the court to support the request for the full court to review the case.  His staff prepared the amicus brief that the state’s filed in the matter.

Unfortunately the request for rehearing was denied and now the case has been appealed to the United States Supreme Court.  Alabama and the other states have continued to fight this case and have now petitioned the Supreme Court to take up the case.

If this ruling is not taken up and overturned by the Supreme Court it will stand as the law for the 5th Circuit jurisdiction and can be relied upon as precedent by other jurisdictions.

As Alabama’s Attorney General, Luther Strange has distinguished himself in working diligently to protect the rights of private landowners.  The Dusky Gopher Frog is just one example of his efforts to curb the Government’s enthusiasm in utilizing federal laws, agencies and courts to direct land use and land management practices.

We have an opportunity to show our appreciation to Luther Strange.  The election for United States Senate is next Tuesday, September 26th.  AFA has endorsed Luther and he needs your vote.

Luther Strange Has Earned AFA Support

The headline in the Montgomery Advertiser on October 6, 2014 read “U.S. Supreme Court rejects Alabama school-funding case.”

We can (and should) thank Luther Strange for this victory.

There have been several important landmark dates in the history of the Alabama Forestry Association; the election that defeated Bob Riley’s $1 billion tax hike (Amendment One) and the transfer of power in the Statehouse in 2010 come quickly to mind.  However, the final disposition of the Lynch v. State of Alabama lawsuit has to be the most important for Alabama’s landowners.

The lawsuit, first filed in 2008, was brought by plaintiff’s challenging the constitutionality of Alabama’s ad valorem tax system.  Specifically, they sought to do away with the differential assessment for different types of land uses and to terminate the current use valuation for timberland owners.  Had they been successful, Alabama’s timberland owners would have been required to pay property taxes at a rate at least ten times greater than the current rate of taxation.

Upon his election in 2010, AFA staff met with Attorney General Strange and his legal team to discuss the Lynch suit.  He quickly grasped the importance of the lawsuit and pledged to devote the resources needed to effectively manage the litigation.  In addition, he agreed to allow AFA to assist the state with further legal expertise, conducting studies and preparation of expert witnesses.

Brought in federal court, the District Court for the Northern District of Alabama (Birmingham) ruled in favor of the State and then later the Federal District Court of Appeals in Atlanta did the same.

Finally, after six long years and hundreds of thousands of dollars of legal expense, the United States Supreme Court gave notice that it would not take up the case and the case was over.

The State’s defense was well managed and the lawyers that General Strange had on his staff were well prepared and very talented.

This outcome could easily have gone the other direction if the State of Alabama’s Attorney General’s office had been occupied by someone driven by political ambition.  Thankfully, that was not the case in this instance.  Luther Strange knew the law, knew what to do and did so without any consideration of the political consequences.

Luther Strange’s management of the Lynch lawsuit is just one of the reasons that the Alabama Forestry Association has endorsed him to be elected to the United States Senate.  He has helped Alabama’s landowners and deserves our support.  The election is next Tuesday, September 26th.  AFA highly recommends that you turn out and vote for Luther Strange.

AFA To Propose Changes to Forest Products Severance Tax Statute

Alabama first adopted a forest products “severance” tax in 1945.  The purpose of this tax was to “provide for the conservation of the natural resources of the state by protection of the forest products and development of the forestry program.”  As such, the proceeds of the tax were earmarked for the Alabama Forestry Commission.  The severance tax was based on the volumetric amount of wood products produced from trees severed in Alabama and was intended to be paid by the landowner.

In 1973, the statute was amended to include a second tax, referred to as the “processors” tax and was levied against the “processor of the forest products or the manufacturer using the forest products in an amount equal to 50% of the tax on the severer.”  The tax was intended to be paid by the manufacturer and not the land owner.

Therefore, when most people refer to “severance” taxes, they are really intending to include both the severance tax and the processors tax.

Over the course of time, the forest industry has changed dramatically.  In 1993, the legislature, recognizing these changes, once again changed the statute to allow taxpayers an election to either pay the tax based on the weight of wood received or to continue to pay based upon the volume of wood products produced.  The clear intent of the legislature was to allow this election for all forms of produced wood products, but unfortunately the actual statutory language (by the placement of a “period” instead of a “comma”) technically excluded sawmills from the election to use weight.

Recent interpretations of the statute have highlighted the need to remove the ambiguities and vagueness created by the archaic language of the law.  As such, the Association has drafted changes to the statute that will hopefully clear up the current confusion.

The proposed changes are intended to be revenue neutral; tax rates are not changed.  The language is updated to reflect current products and practices, retains the option for taxpayers to elect to remit taxes based upon volume or by weight, and simplifies compliance.

AFA plans to continue meeting with constituent groups, legislators and the state with the hope to introduce legislation in the next couple of weeks.  If you have any questions with regard to the proposed changes or desire to become involved in the process, please contact an AFA staff member.

2016 Legislative Wrap Up- Part V of V- Other Legislation of Interest

RSAWednesday, May 4th, marked the close of the 2016 Alabama Legislature’s Regular Session.  Legislators passed the constitutionally required appropriations bills fairly early in the session which left time for debate on several high profile issues.  Many of these issues were not resolved which causes speculation that a special session may be called later in the year.



A detailed analysis of several legislative initiatives have been discussed recently; I- Fuel Tax (See Article Here), II- BP Settlement (See Article Here), III- Prison Construction (See Article Here), IV- Appropriations (See Article Here), and today’s article, V- Other Legislation of Interest, concludes the series.

Today….Other Legislation of Interest

Public Pensions

The Alabama public pension system administered by the Retirement Systems of Alabama will require a taxpayer (employer) contribution for FY17 of approximately $945 million, of which, nearly $750 million will be for the teacher’s pension (TRS) and another $195 million for state agencies pension (ERS).  Of the $945 million, $131 million is attributable to current retiree (“normal”) obligations and a whopping $814 million is needed to offset the accrued liabilities of the system.  The system is currently funded at 67.5% (TRS) and 63.2% (ERS) of its liabilities.

Of the nearly $750 million needed for the TRS, $413 million comes from the state education appropriations, with an estimated $351 million of that amount, attributed to offset accrued liabilities.  In other words, $351 million could have been spent on educational uses (teacher’s salaries, books, transportation, etc.) but was used instead to offset management decisions made by RSA that have resulted in excess liabilities.

RSA has been criticized for adopting an investment strategy referred to as “economically targeted investments (ETI)” that involves investing in Alabama companies, real estate and golf courses that exhibit lower returns for beneficiaries but positively affect local economies.  RSA claims that the “net” benefit to the state outweighs the lower returns to the beneficiaries.

HB468, introduced by Representative Phil Williams (R- Huntsville) and SB387, introduced by Senator Larry Stutts (R- Tuscumbia) and co-sponsored by Senators Paul Bussman (R- Cullman) and Trip Pittman (R- Montrose), attempted to bring the RSA investment strategy in-line with the private sector by requiring RSA to follow Section 19-3B-802 of the Alabama Uniform Trust Code.  This section is entitled “Duty of Loyalty” and subsection (a) simply sets forth that a trustee (RSA) shall administer the trust solely in the interests of the beneficiaries (public employees).  Essentially, this bill would preclude RSA’s ETI investment strategy, unless the investments were in the best interest of the pension system’s beneficiaries.

RSA opposed the bills and they did not get favorable consideration from their respective commitees.

In the interest of transparency, Representative Phil Williams (R- Huntsville) and Senator Paul Bussman (R- Cullman) introduced HB467 and SB376 respectfully that would, among other things, require the RSA to provide in its annual reports the performance of investments for all asset classes, including separate reporting for public equity, fixed income, private placements, private equity and real estate over time periods of one, three, five, ten and twenty years.

Many members of the legislature are frustrated that current reporting practices make it quite difficult to determine the performance of RSA by these separate classes.  RSA opposed these bills and they never made it out of committee.

Senator Tom Whatley (R- Auburn) introduced SB283 which would effectively preclude new employees from non-governmental agencies from participating in the state’s public pension system and the state health insurance plan.  Currently employees of the Alabama Education Association, the Alabama High School Athletic Association, the Alabama Association of School Boards, School Superintendents of Alabama, the Alabama State Employees Association and many other private organizations are able to participate in the pension system and the Public Employees’ Health Insurance Plan.  This bill did not make it out of committee.

Finally, with respect to the RSA, Representative Lynn Greer (R- Rogersville) introduced HB346 which would have required all new state public employees to contribute monthly to individual retirement accounts (like a 401K) administered by the RSA in lieu of the defined benefit pension system primarily offered by the RSA.  The legislation would allow an opt-out provision for employees after being in the plan after 90 days.  RSA opposed this legislation and it never was addressed in committee.

Tax Earmarks

Senator Cam Ward (R- Alabaster) introduced SB15 which would have removed the “earmarks” for certain taxes and direct their payment into the General Fund for distribution pursuant to the General Fund Appropriation’s bill by the legislature on an annual basis.  Approximately $500 million in tax revenues would be freed up including the tax revenues generated by the forest products severance tax that are currently directed to the Alabama Forestry Commission.  Ward’s bill passed committee but was not passed by the full Senate.

Worker’s Compensation

Senator Arthur Orr (R- Decatur) introduced SB122 on behalf of the AFA’s affiliate organization, ForestFund.  This legislation would have simply limited an employer’s liability for permanent total disability benefits after the age 65 and would limit the obligation of an employer to pay medical benefits if an employee does not seek medical attention for a claimed work injury within two years of the injury.  The bill passed out of committee but was never addressed on the floor of the Senate.


Senator Vivian Figures (D- Mobile) introduced SB136 that would increase statewide ad valorem taxes by 5 mills in order to raise revenue for Medicaid.  The bill passed committee but was never addressed by the full Senate.

Representative Ralph Howard (D-Greensboro) passed a local bill, HB418, which will allow a referendum in Sumter County to raise ad valorem taxes by 6 mills be distributed 35% to the York Health Care Authority, 25% to the Sumter County Commission for ambulance service, roads and bridges, 20% to the Sumter County Volunteer Firefighters Association, 15% to the Sumter County Sheriff’s Department and 5% to Sumter County Board of Education.

Representative Donnie Chesteen (R- Geneva) nearly passed a local bill, HB539, which would have allowed Geneva County to conduct a referendum to allow the Geneva County Commission to levy a five cents/gallon fuel tax for road and bridge construction.  The bill passed both houses of the legislature but died in the basket on the last day.

Representative Paul Lee (R- Dothan) introduced a local bill, HB540, which would have allowed Houston County to conduct a referendum to allow the Houston County Commission to levy a five cents/gallon fuel tax for road and bridge construction.  The bill did not get considered in its committee.


HB68, sponsored by Representative Danny Garrett (R- Trussville), would prohibit an agency of the Executive Department of the state that receives appropriations from the General Fund or the Educational Trust Fund from entering into or renewing a contract with a lobbyists or lobbying firm.  The bill passed the House and a Senate committee but died before being addressed by the full Senate.

While You Were Sleeping During the General Fund Debate….

save-spendIn 2015, the Alabama legislature made changes to the Rolling Reserve Act that are beginning to have an impact on the Education Appropriations process as the legislature works to finalize education spending plans for the FY17 fiscal year (begins October 1, 2016).

Originally, the Rolling Reserve Act (which was adopted in 2011 shortly after the Republicans gained control of the legislature) set a cap on education spending based on the prior 15 years average of actual education revenues plus 40% of any new revenue measures passed in the previous legislative session.  This was a vast improvement over the previous method of estimating how much revenue might come in for the year and appropriating that amount.

Additionally, the original Rolling Reserve Act would put Excess Funds (actual revenues that exceeded the cap) into a Budget Stabilization Fund (until it reached 20% of the current year appropriations for education spending; approximately $1.2 billion) and then would begin rolling over into the Education Trust Fund Capital Fund (which could be utilized for education related capital projects).

The original Rolling Reserve Act was a fiscally responsible and prudent budgeting tool.

So of course, the legislature had to change it; which they did during the second special session in 2015.  While everyone else was focused on trying to raise taxes to fund Medicaid through an agonizingly long legislative year, this bill changing the Rolling Reserve Act went practically unnoticed.

The new Rolling Reserve Act now sets a cap based on 14 of the 15 highest previously funded years, adds the amount for the Prepaid Affordable College Tuition (PACT) program and adds 100% of newly enacted revenue measures.  The result is a much higher cap.

Additionally, the new Rolling Reserve Act changes the distribution of any Excess Funds.  Now it only puts 1% of the prior year spending amount into the Budget Stabilization Fund (2% for FY15 only) up to 7.5% of the prior year expenditures (which would be approximately $450 million).  The remaining amount is deposited into an Advancement & Technology Fund to be appropriated in the next fiscal year for school related repairs, deferred maintenance, technology and equipment (read…slush fund).

So what’s the impact of these changes?

In FY15 (ended September 30, 2015), Excess Revenues for education were $140.1 million.  All of these funds would have been placed in the Budget Stabilization Fund pursuant to the original Rolling Reserve Act.  However the new distribution resulted in $118.3 million going to the Budget Stabilization Fund and $21.8 million went to the Technology Fund.

We are currently in FY16, but the estimates are that there will be $195 million in Excess Funds based on a cap of $5.95 billion (the amount that was appropriated) and estimated revenue of $6.15 billion.  The distribution, pursuant to the new Rolling Reserve Act will be $59.5 million to the Stabilization Fund and a whopping $135.5 million to be appropriated by the legislature for special projects in 2017.

As the legislature now considers the FY17 Education Appropriations, they are working off a cap of $6.43 billion (thanks to the new Rolling Reserve Act) while expected revenues are $6.33 billion.  Since anticipated actual revenue is less than the cap, there is no expectation of putting any money into the savings account for FY17.

But….spending on education will now go up an incredible $382 million over the prior year (FY16).

Thanks to the new Rolling Reserve Act, we now have a new cap that is higher than expected revenue and no savings will be put away….in spite of having an increase in actual revenue of $186 million.

Fiscal responsibility and prudent budgeting have been tossed aside.

Who was the architect of the new Rolling Reserve Act?


Senator Trip Pittman (R- Montrose) sponsored it in the Senate and Representative Bill Poole (R- Tuscaloosa) sponsored it in the House.  Interestingly, these were the chairmen of the Education Appropriation committees in both houses.

In the Senate, one republican member voted against the bill….Senator Bill Holtzclaw.  Three other republicans “passed” on the vote….Senators Pittman, Scofield and Stutts.  22 Republicans voted for the measure.

In the House, the vote was 88-14.  The only republican members voting against the measure were Representatives Harbison, Henry, Holmes (Mike), Jones, Moore (Barry), Wadsworth, Whorton (Issac) and Wharton (Ritchie).

Good thing the AEA is not as powerful as they once were….right?

AFA Legislative Update

statehouse3The Alabama Legislature returns this week to work its 15th and 16th legislative days.  The pace of work has been brisk and principally directed towards passing the constitutionally mandated spending bills as early as possible, perhaps before they take Spring Break on the week of March 28th.

General Fund Appropriation

The Senate has passed a General Fund Appropriation bill (SB125) and Chairman Steve Clouse has quickly moved the bill through the House Ways & Means Committee to allow floor consideration as early as Tuesday of this week.  The House committee made some slight changes to the Senate version and the Senate is expected to concur with those changes if the bill comes out of the House in similar fashion to what was passed from committee.  There is expected to be much discussion regarding Medicaid funding and it will probably be a contentious day in the House.  If the Senate concurs with the House bill, the Governor is expected to veto the bill because it does not include enough for Medicaid.  The legislature is expected to override the Governor’s veto and is anticipating a potential special session to address the issue later in the year.

Education Fund Appropriation

The Appropriation bill for education spending, HB117 sponsored by Representative Bill Poole (R- Tuscaloosa) has passed the House of Representatives and now moves to consideration by the Senate’s Finance & Taxation Education Fund committee.  The committee, chaired by Senator Arthur Orr (R- Decatur) is expected to consider the bill in the next week or so.  The bill passed with no opposition in the House.

Fuel Tax Increase

The House of Representatives is expected to take up the “Accountability” portion of the fuel tax increase package, SB180 sponsored by Senator Gerald Dial (R- Lineville), on Wednesday in the House Transportation committee.  The long-awaited introduction of the second bill, the actual fuel tax increase itself, is also expected to occur this week.  The bill, sponsored by Representative Mac McCutcheon (R- Madison), is expected to include an increase in both gasoline and diesel taxes, a mechanism to automatically adjust the tax on a four year basis (without any future votes required) and an index from which to make the adjustment.  The index most prominently discussed to date would include an average of surrounding contiguous states.  AFA is opposed to any new fuel tax increase until transparency and fiscal accountability and a change in prioritization (allowing counties more revenue) for existing fuel taxes is implemented.  An automatic adjustment mechanism, especially one linked to other state’s actions, is also not supported.

Property Tax Increase

A bill, SB136, sponsored by Senator Vivian Figures (D- Mobile) would set up a state-wide referendum to increase property taxes by 5 mils to be dedicated to Medicaid funding.  The bill was given a favorable report out of the Senate’s Finance and Taxation General Fund Committee last week.  The committee, chaired by Senator Trip Pittman (R- Montrose), voted 7-6 in favor of the bill.  During the committee’s discussion, it was apparent that several committee members were in favor of discussing property tax increases as part of the overall “solution” for the constantly challenged General Fund Appropriations process.

The six senators that opposed the bill were Clyde Chambliss (R- Prattville), Steve Livingston (R- Scottsboro), Tim Melson (R-  Florence), Paul Sanford (R- Huntsville), Larry Stutts (R- Tuscumbia) and Cam Ward (R- Alabaster).  Please contact these members and express your appreciation for their support in opposing the property tax increase.  Their contact information can be obtained here.

The seven senators voting in favor of the property tax increase included 4 Republicans and 3 Democrats:  Trip Pittman (R- Montrose), Greg Albritton (R- Range), Bill Holtzclaw (R- Madison), Jabo Waggoner (R- Vestavia Hills), Priscilla Dunn (D- Birmingham), Billy Beasley (D- Clayton) and Bobby Singleton (D- Greensboro).



Legislative Action Alert!

The Alabama Senate’s Transportation & Energy Committee is considering SB180 sponsored by Senator Gerald Dial (R- Lineville). The Alabama Forestry Association and the Alabama Farmer’s Federation are working together to support a Substitute to SB180 that is being offered by Senator Greg Albritton (R- Bay Minette).

Senator Albritton’s Substitute would re-allocate $62 million of existing diesel tax revenue to the counties for road and bridge projects. This would give the counties much needed revenue without having to raise taxes.

Please contact your county commissioners immediately and let them know about Senator Albritton’s Substitute and ask them to call their senators and express support for the Substitute.

If you are able to make contact with a commissioner, please let Bill Harris know the outcome of your discussion at We need to know what contacts have been made.

The Senate Transportation and Energy is chaired by Gerald Allen (R- Tuscaloosa) and is made up of Senators Greg Albritton (R- Bay Minette), Clyde Chambliss (R- Prattville), Linda Coleman (D- Birmingham), Gerald Dial (R- Lineville), Jimmy Holley (R- Elba), Bill Holtzclaw (R- Madison), Steve Livingston (R- Scottsboro), Jim McClendon (R- Springville), Arthur Orr (R- Decatur), Greg Reed (R- Jasper), Quinton Ross (D- Montgomery), Hank Sanders (D- Selma), Clay Scofield (R- Guntersville), Cam Ward (R- Alabaster) and Tom Whatley (R- Auburn).

Supporting us today in committee were Senators Albritton, Allen, Chambliss, Holtzclaw, Livingston, Orr, Scofield and Sanders. Please contact these senators (their contact information can be found at and express your appreciation for their support and encourage them to continue to support the Substitute.

The Transportation and Energy Committee is expected to meet early next week on Tuesday, February 16th so time is of the essence.

Increased Fuel Taxes in the Pipeline Heading Your Way

The public spectacle of mass hysteria during the recent 2015 Regular Session and two special sessions has been well documented. The media, state employees and state agencies (especially Medicaid and its providers) effectively convinced legislative officials that the “sky was falling.”

As has been pointed out previously, the sky is not falling. But more on that at a later date.

gastaxQuietly, behind the scenes, an even more disturbing plot has been hatched to raise revenues by increasing fuel taxes.

Representative Mac McCutcheon (R-Huntsville) introduced legislation in the first special session (HB50) and the second special session (HB28) that would dramatically increase the fuel tax.

Currently, Alabama citizens pay $0.19/gallon of state tax on gasoline and diesel, regardless of the underlying fuel cost. McCutcheon’s legislation would immediately raise that by $0.05/gallon and then raise it $0.02/gallon per year until the rate of tax equals 15% of the “current year price.”

The U.S. Energy Information Administration’s “U.S. Regular Gasoline Prices” for the Gulf Coast Region on 9/28/15 was $2.015/gallon. Diesel for the same time period was $2.323/gallon. The 15% “cap” proposed in the McCutcheon legislation would be $0.30/gallon for gasoline and $0.35/gallon for diesel in addition to the existing $0.19/gallon.

Had McCutcheon’s legislation passed (and assuming gas/diesel prices remained constant), the 2015 taxes on gasoline would be $0.26/gallon ($0.19 existing + $0.05 immediate increase + $0.02 annual increase) or a whopping increase of 37%. Additionally (again assuming gas/diesel prices remain constant), the tax would increase $0.02/gallon per year…each year…until the total reached $0.49/gallon (an estimated 11 years of automatic increases) or a total increase of 160%!  And that’s assuming that the “current year price” does not escalate over time.


The McCutcheon legislation actually was approved by the House Transportation Utilities and Infrastructure committee on September 14, 2015, which positioned it for possible consideration before the full House of Representatives. Given their willingness to raise revenue to continue to grow the size of state government, it’s somewhat surprising the House did not pass the bill.

The House TU&I Committee that voted the bill out is composed of Chairman Lynn Greer (R-Rogersville), Vice Chairman Joe Faust (R- Fairhope), George Bandy (D- Opelika), Will Ainsworth (R- Guntersville), Napoleon Bracy (D- Prichard), Barbara Drummond (D- Mobile), Victor Gaston (R- Mobile), Dexter Grimsley (D- Newville), Nathaniel Ledbetter (R- Rainsville), Phillip Pettus (R- Killen), Chris Sells (R- Greenville), Kyle South (R- Fayette) and Margie Wilcox (R- Mobile). A committee composed of 13 members, 9 of which are Republicans…voted to increase fuel taxes by 37% in 2015 alone!

When asked about the vote, Will Ainsworth said “I was upstairs (in the Senate) working with (Senate ProTem) Del (Marsh) on another matter when the committee met.  I would have voted no, but I certainly wasn’t there to vote yes.  I understand that it was a voice vote.”

Do we need to increase fuel taxes? Let’s look at that.

Currently the gasoline tax revenue is shared between the state (45%) and the counties and municipalities (55%) and the diesel tax goes almost entirely to the state.  In FY14, gasoline taxes generated $399 million and diesel taxes generated almost $144 million. The state uses its funds to match federal funds (ahem…that is taxpayer funds as well) and as a result, the State DOT had a total budget in FY14 of $1.45 billion.

Meanwhile, the counties and municipalities got about $200 million of the taxes collected. By the time you distribute this among 67 counties (one-half equally and the other half by population), not much trickles down to rural counties. And of that, it’s in the county’s discretion to spend it on replacing/repairing bridges, resurfacing roads, paving dirt roads, etc.

Enacting McCutcheon’s legislation would have increased gasoline taxes by $150 million and diesel taxes by $72.8 million, or a total of $222.8 million, in 2015 alone, with only $35-$40 million of that amount available to the counties and municipalities.

Even if all the allocated amounts to the counties were used to replace/repair bridges, it wouldn’t even begin to address the problem.

gastax2The graph above (produced by the American Petroleum Institute in 2012) would indicate that Alabama’s existing total tax rate (federal, state and local combined) is situated fairly normally for a southern state.

Fuel cost is one of the most critical expense items for logging operations (which includes transporting to the mills).  But, loggers also need well maintained rural roads and bridges…which costs money and most rural counties don’t have enough.

So do we need to raise fuel taxes?  Maybe, at some point….but, before we agree to that, we need to see more funding going to the counties. A good start would be to allocate the existing diesel tax in a similar fashion to that of the gasoline tax.

In the short term….one thing is for sure. McCutcheon’s bill (or one similar) will be back in the 2016 Regular Session. The Alabama Forestry Association will be formulating a position on this legislation and you are welcome to provide your input.

Stay tuned….

**Updated 10/6/15 to reflect the Ainsworth comments regarding the committee’s voice vote.

AFA 2015 Roadshow to Visit Talladega County

selwoodThe Alabama Forestry Association will host its Piedmont District Meeting and Childersburg Regional Reception on Thursday, October 8th at the beautiful lodge at Selwood Farm. The District Meeting is slated to begin at 5pm with the Regional Reception to follow at 6pm.


The District Meeting is open to all AFA members and is the official annual business session for the membership in the district. A presentation will be made to update the membership on the latest forestry related news and issues. The current Piedmont District Board member is Chris Langley and he will serve through the conclusion of the 2017 year.

Regional Receptions are held with three objectives in mind. First, we use them as an opportunity to express our appreciation to our members for their support and interest in the Association. Second, these receptions are excellent opportunities to bring new prospects for AFA membership to meet and experience what it means to be a part of the AFA family. Finally, we invite local public officials to the receptions and this is a great time to meet and get to know the folks that represent us and to let them see and hear issues of importance to the timber industry.

If you have not already done so, you can register on-line at or contact Liz Chambers at 334-481-2135.

Please plan to come join the staff and have a festive evening! Feel free to bring your family and guests, as there is no cost for the event.