Kentucky lawmakers are criticizing Gov. Andy Beshear's temporary suspension of the state's motor fuels tax and urging local officials not to allow the tax suspension to continue. During a legislative committee hearing Tuesday, several committee members argued that the policy provides minimal savings to drivers while significantly reducing funding for road projects and local governments.
Beshear declared a state of emergency that reduced Kentucky’s gas tax by 10 cents per gallon effective May 11, 2026.
“The governor took these actions because the president's war in Iran and the closure and reduced travel in the Strait of Hormuz has caused gas prices to spike significantly,” said Mike Hancock, Deputy Secretary of the Kentucky Transportation Cabinet (KYTC).
Hancock and Shaun McKiernan of KYTC’s Office of Budget and Fiscal Management spoke about the effect of the gas tax reduction at the June 2 meeting of the Interim Joint Committee on Transportation.
The 10-cent reduction is expected to reduce state Road Fund revenues by approximately $26.8 million per month. About $15 million of that loss would affect KYTC programs, and there would be about $11.8 million less funding for counties and cities.
“If it's in effect for just a couple of months, additional usage may make up for the reduction in the rate,” McKiernan said. “If the 10-cent reduction leads to lower tax revenues, then leadership will have to reduce spending.”
KYTC officials said that reduced spending would likely translate to a delay in new resurfacing projects.
Counties will receive less money in their final “make whole” payments from the County Road Aid and Rural Secondary program that are sent in July. McKiernan said the total impact on payments to local governments for fiscal year 2026 is expected to be a reduction of three to five percent.
Chad LaRue, executive director of the Kentucky Association Highway Contractors, argued that the savings for drivers are relatively small compared to the impact on transportation funding. He estimated the average driver would save about $5 per month from the 10-cent reduction.
“Certainly not trying to diminish the savings,” LaRue said, “but the impacts that these pennies and dollars make on the Road Fund and our ability to maintain and improve those roadways is significant.”
Lawmakers voice frustration
Several lawmakers said the gas tax reduction would do more long-term harm to the state than any benefit of temporary relief at the gas pump.
Committee Co-Chair John Blanton said the one-month loss in revenue is equivalent to all the money allocated to the Local Assistance Road Program for counties and cities for the entire year.
“This is not leadership. This is pandering,” Blanton said. “And it's costing the taxpayers.”
The Governor’s state of emergency and executive order on the gas tax reduction are in effect for 30 days through June 10. Under state law, mayors and county judge/executives can request an extension of the state of emergency for their jurisdiction, and Beshear’s office has reached out to local officials asking them to do so.
Sen. Greg Elkins described the tax reduction as irresponsible, and he said he didn’t know of a single local official who would be willing to request an extension.
“I encourage all the mayors and judges to hold tight because I'm sure there's going to be some arm twisting coming,” Elkins said. “Hold tight and don't bow to the pressure.”
Lawmakers also pushed back on suggestions that any lost revenue could later be replaced with money from Kentucky's Budget Reserve Trust Fund, commonly known as the rainy day fund. Members argued that the reserve should be preserved for emergencies and not used to offset what they described as a self-inflicted budget shortfall.
Click here to watch a recording of the full committee meeting.
