Kentucky Lawmakers Eye Gas Tax Hike To Shore Up Road Fund
State lawmakers are considering a bill to raise Kentucky’s gas tax by 10 cents per gallon, but the measure has a long way to go and time is running out on this year’s legislative session.
Revenue from the gas tax goes into the state’s road construction fund, which has struggled in recent years because of lower fuel prices and more fuel-efficient vehicles.
Kentucky Transportation Secretary Greg Thomas said that raising the tax rate is critical to help the state shore up the road fund and make fixes to crumbling infrastructure.
“When you look at it from a safety perspective, it becomes pretty personal to all of us who have loved ones traveling the highways,” Thomas said.
In addition to raising the gas tax, House Bill 517 would also raise fees on electric cars and increase license plate renewal costs.
With only six more official working days in this year’s legislative session, the bill would have to advance quickly in order to pass. The measure was discussed in Kentucky’s House Appropriations and Revenue Committee on Tuesday, but it didn’t receive a vote.
Thomas said that Gov. Matt Bevin supports the tax increase.
“We are in support of anything that would increase revenue, but if anything I would go farther,” Thomas said.
“I would say the governor is supportive of any measure that increases transportation investment.”
Next year, Kentucky is also facing the expiration of about $120 million in federal toll credits that it usually receives every year. The state normally uses the credits as leverage for more federal grant money to fund transportation projects.
Because Kentucky’s gas tax is tied to the price of fuel, lower gas prices mean the state brings in less money to the road fund.
In 2015, the General Assembly set a “floor” to the fuel tax — meaning even if gas prices continue to drop, the state continues to receive 26 cents per gallon. And that’s where the rate currently sits.
But Andrew McNeill, state director for Americans for Prosperity, said his organization opposes the gas tax increase without reducing state spending on transportation.
“There is no interest in enhanced revenues when we can control spending and prioritize spending,” McNeill said.
“Certainly if you’re going to ask individuals to potentially pony up, then there must be more significant reform and a much more significant look at the road fund and that whole program.”
Because the bill would raise revenue, it would need a three-fifths majority of votes in both the House and Senate in order to pass.