Gas tax freeze among topics discussed at this week’s General Assembly interim committee meetings

Gas tax freeze

KACo Executive Director/CEO Jim Henderson testified Wednesday before the Appropriations and Revenue Committee on the impact of Gov. Beshear's recently signed emergency regulation to freeze a 2-cent wholesale gas tax increase that was expected July 1 and budgeted for by state and county governments. Transportation Cabinet Secretary Jim Gray testified on the regulation. 

The gas tax rate is set by statute and includes triggers to increase based on the average wholesale price of motor fuels. 

The current rate of 26 cents was set to increase under the trigger for the first time since 2014. The average driver's estimated savings will be approximately $1 a month with the freeze. During the first seven months of the 2023 fiscal year, the freeze is estimated to reduce budgeted Road Fund revenues by 1.6 percent. 

To make up for the decrease, Gov. Beshear said he will ask the General Assembly to use funds from the General Fund budget surplus when the 2023 session begins in January. This freeze will cost counties statewide $5.1 million in the span of those seven months.

Discussing the variation in gas prices across the state, Henderson noted the gas tax remains the same despite the retail price paid at the pump. He reminded legislators that the gas tax is also paid by drivers out of state. Counties own half of all road miles in Kentucky and one-third of all bridges, yet counties only receive 18.3 percent of the gas tax.

He noted that while the motor vehicle usage tax paid into the Road Fund has seen the most sustained and significant growth in the last three years, “the only portion of the Road Fund for county road aid is the gas tax,” Henderson said. “This makes the tax disproportionately more important to counties.”

The record rise in inflation also has affected the per-ton asphalt price for counties. Ten years ago in Simpson County, it was $50 per ton. This year the bid was $99 per ton. He welcomed continued policy discussion on other methodologies to fund roads in Kentucky. 

Broadband

Officials testified about broadband deployment before the Appropriations and Revenue committee. State Budget Director John Hicks started with an update on the progress of the newly established Office of Broadband Deployment, intended to give the state a single source for all broadband initiatives and expertise for county and state assistance. As of this week, $83 million in grants have been distributed for deployment projects. 

Crittenden County Judge/Executive Perry Newcom, Henderson County Judge/Executive Brad Schneider and Jeff Hohn, CEO of western Kentucky-based electric co-op Kenergy, testified to the plans and needs in Kenergy’s 14-county service area, 60 percent of which is considered unserved or underserved on broadband. 

Schneider pointed to the economic development impacts of the lack of high-speed internet access across his county, urging the state to move swiftly on grants. Newcom thanked legislators for establishing the office and funding the deployment. He noted larger providers have infrastructure in place but do not allow broad access. One Crittenden county business that does have access pays $600 per month for an intermediate broadband speed. 

Electric vehicle charging stations

Tuesday, John Moore, Assistant State Highway Engineer for Project Development, updated the Interim Joint Committee on Transportation on the state’s plan for deploying electric vehicle charging stations.

During the next five years, Kentucky will receive $69.5 million in federal funding to expand electric vehicle infrastructure. To obtain the funds, the Kentucky Transportation Cabinet must submit a plan by Aug. 1, which must be approved by the U.S. Departments of Transportation and Energy. 

The state is expected to receive $10.3 million this year. The federal dollars require a 20 percent match, which can come from public and/or private sources. 

Moore emphasized the importance of public-private partnerships. He said that private companies would identify where to place these charging stations with guidance from the state to ensure that rural areas are included. The federal program requires charging stations to be placed no more than 50 miles apart. 

LRC staff provided legislators with information concerning how other states fund transportation and implement electric vehicle charging stations. Click here to view the report. 

KACo will continue to advocate for a reasonable share of the state's electric and hybrid vehicle fees, which go into effect January 2024. 

National opioid settlement fund

Representatives from Attorney General Daniel Cameron’s office reviewed the newly created Kentucky Opioid Abatement Advisory Committee before a budget review subcommittee. The advisory committee is tasked with deploying the state’s 50 percent portion of the $478 million from the national settlement. Counties and cities will split $241.7 million, to be distributed over 18 years. More details on the settlement can be found here.