The Transportation Cabinet budget, HB 501, passed the House this week on a 90–9 vote. The House proposal includes an unprecedented $68.2 million in FY2027 for the Local Assistance Road Program (LARP) to assist counties and cities with local road projects, along with $28.6 million in FY2028 for the program.
In recent years, LARP has been funded at around $20 million annually. The additional funding in FY2027 would provide enough funding to complete all projects ranked 8, 9, or 10 that were submitted in October 2025. Counties appreciate the House’s proposed investment in infrastructure, which supports local mobility, commerce, and public safety.
A list of the proposed projects can be found in HJR 76, which the House also passed this week.
The Transportation Cabinet budget also includes $24 million in FY2027 and $23.25 million in FY2028 for the County and City Bridge Improvement Program.
Other provisions in the budget include:
- A requirement for a level-of-service report on regional driver licensing offices, with data on wait times to be submitted to the Interim Joint Committee on Transportation by Sept. 1, 2027.
- $3.6 million in each fiscal year to support further enhancements and connectivity for the Kentucky Automated Vehicle Information System (KAVIS).
The state’s Six-Year Road Plan is divided into two measures which also passed the House this week:
- HB 502 – establishes the two-year Biennial Highway Construction Plan.
- HJR 75 – outlines the final four years of the Six-Year Road Plan.
These measures now move to the Senate, where lawmakers will make their own changes before sending them back to the House.
Conference committees will then work to resolve the differences and send the final versions to the governor before the 10-day veto period begins April 1. This ensures the General Assembly can consider any veto overrides when lawmakers return for the final two days of the session, currently scheduled for April 14–15.
Comprehensive jail proposal
Conversations with legislators and leadership on jail funding and policy changes have now shifted to the state budget discussion, marking the next step in the process.
Key components of HB 557, the comprehensive jail bill originally filed this session, are now being discussed as potential additions to the state budget bill, HB 500. Moving these provisions into the budget is a common step in the legislative process as House and Senate leaders negotiate final spending priorities for the biennium.
A central part of KACo’s request is to rebalance the financial responsibility for jail costs between the state and counties, an issue fiscal courts have raised for many years.
KACo encourages county officials to contact their House and Senate members and ask them to support additional funding for county jails.
Bills on the move
HB 9 – Sponsored by House Appropriations and Revenue Chairman Jason Petrie (R-Todd), the bill passed the House floor 63-31 this week and is a House priority measure. The legislation is a comprehensive alcohol taxation measure and represents a compromise following the filing of an earlier alcohol proposal (HB 612) that contained significantly stricter provisions.
The bill makes several changes to the local regulatory license fee, with a delayed implementation date of July 1, 2027:
- Requires counties and cities that currently levy the fee to impose the fee at a rate of no more than 5% by July 1, 2027.
- Expands the allowable uses of the fee to include all emergency services for jurisdictions that impose the fee at a rate of no more than 3% by July 1, 2027.
- Expands eligibility to impose the fee to all jurisdictions, with any new fees capped at 1%. Any county that has held a local option election prior to July 1, 2026, may enact a fee based on that election no later than July 1, 2028. Any county that holds a local option election after July 1, 2026, may enact the fee within one year of the election date.
- Requires an audit of the segregated fund for each local government that imposes the fee for FY 2026 and every three years thereafter. Jurisdictions that fail to substantially comply with statutory requirements must reduce the fee to 1% for a first offense and would be prohibited from imposing the fee for a second offense.
HB 311 – Sponsored by Rep. Josh Calloway (R-Breckenridge), passed out of committee this week and would require each railroad company to remove plants, trees, brush, or other obstructive vegetation at intersections with public roads or highways for 250 feet in each direction.
If a railroad fails to remove the vegetation, the Transportation Cabinet or local government would be required to remove the obstructive vegetation and recover the cost of removal from the responsible railroad company. Railroad companies are required to be and remain in compliance with the vegetation removal requirements by Jan. 1, 2029.
HB 622 – Sponsored by House Transportation Chairman John Blanton (R-Magoffin), passed the House 96-0. It creates a pilot program allowing counties to use county road aid funding to apply chip seal or recycled asphalt pavement (RAP) on existing gravel roads.
The percentage of county road aid funding that may be used for these projects would be based on the county’s percentage of roads classified as gravel in the prior fiscal year. The pilot program would take effect July 1, 2026.
The bill also requires the Kentucky Transportation Cabinet not to restrict the use of RAP as long as the material meets the Cabinet’s established performance standards.
HB 647 – Sponsored by Rep. Shawn McPherson (R-Allen), passed unanimously on the House floor. The bill extends the Government Resources Accelerating Needed Transformation (GRANT) program through December 31, 2028, allowing it to continue assisting local governments and nonprofits with the local matching funds required for federal grants. The bill also increases the required local match for eligible projects, doubling the current requirement. The match currently ranges from 1% to 5% based on population rankings and would increase to 2% to 10% under the bill.
HB 687 – Sponsored by Rep. Mitch Whitaker (R-Letcher) and passed out of House committee this week, it would authorize county judge/executives, with fiscal court approval, to contract for animal sheltering services for stray equines. It would also assert immunity from criminal and civil liability for any act related to the taking up and posting of stray equines.
HB 757 – Sponsored by Appropriations & Revenue Chairman Rep. Jason Petrie (Todd), passed the House floor 69-18 and is the annual “revenue bill.” It includes changes to the state tax code and revenue laws.
Key provisions include:
- Requiring the Department for Local Government to report on TVA in-lieu-of tax payments received by counties and cities.
- Ending the Tax Increment Financing (TIF) program for new projects after the bill’s effective date. Existing TIF agreements will remain in place.
- Extending the Waste Tire Trust Fund through July 1, 2028.
- Requiring cash transactions to be rounded to the nearest five cents if pennies are unavailable in anticipation of the eventual shortage.
- Updating language enacted in 2025 related to regional industrial taxing districts.
- Requiring proceeds from the sale of jail property purchased with canteen funds to be returned to the same canteen account. Jailers must report annual proceeds from these sales to the Legislative Research Commission by December 1 each year for review by the Interim Joint Committee on Appropriations and Revenue.
- Clarifying that when a county, city, or school district adopts a tax rate 4% above the compensating rate, it takes effect after 45 days unless citizens file a petition to challenge the rate. If a petition is filed, the rate is paused while the challenge is resolved.
- Ending the ability of school districts to adopt a new occupational license tax after Jan. 1, 2026 and freezing the rates for districts that currently impose the tax.
HB 900 – Sponsored by House Appropriations and Revenue Chairman Jason Petrie (R-Todd), passed the House 85-13. It is a one-time appropriations bill from the Budget Reserve Trust Fund, allocating $800 million over the biennium plus $1 million for the current fiscal year.
The bill does not specify individual projects but outlines several spending categories, including water and sewer infrastructure, economic development, and one-time local infrastructure projects. Earlier this week, House Speaker David Osborne noted that the House received approximately $30 billion in one-time funding requests.
SB 149 - sponsored by Sen. Greg Elkins (R-Clark), passed out of committee this week. The bill would allow fiscal courts to appoint an acting county treasurer if the county treasurer is temporarily unable to perform the duties of the office for more than five days, instead of the current 30-day threshold.
The bill also clarifies that when the office is vacant due to resignation, termination, or death, the fiscal court may appoint an acting treasurer for up to 60 days. If the term of office has not ended within that 60-day period, the fiscal court must appoint a treasurer to complete the remainder of the term.
Additionally, the bill allows fiscal courts the option to appoint a deputy county treasurer to serve under the supervision of the treasurer.
Important legislative dates
April 2-13 – Veto recess
April 14-15 – Final two days of session
For questions or feedback, contact Shellie Hampton or Kayla Smith at shellie.hampton@kaco.org or kayla.smith@kaco.org.
