House Bill 299 preserved $126M in potential losses to state Road Fund

Had House Bill 299 not passed, Kentucky would have lost 10 cents per gallon of gas sold under the previous state gas tax.

HB 299 froze the tax at 26 cents per gallon through the next fiscal year. The gas tax had been falling because it was pegged to the price at the gas pump – with no provision on how low it could go. Kentucky’s road fund was threatened by falling gas prices.

“Thankfully, (HB) 299 passed as the 2015 session came to a close,” Kentucky Transportation Cabinet Deputy Secretary Russ Romine said while testifying before the Interim Joint Committee on Transportation on June 2. It was the group’s first meeting of the year.

Without HB 299, Kentucky would have gone from 32.5 cents at the start of the current fiscal year to 22.5 cents on April 1, or a loss of 10 cents per gallon of gas sold. Romine said the last time the gas tax was that low was in the first quarter of 2010.

“HB 299 actually preserved 3.5 cents per gallon,” he said. “So instead of losing the full 10 cents, we only lost 6.5 cents off the gas tax.”

Romine cited figures from the Governor’s Office of Economic Analysis when asked how much money the 6.5-cent drop represented.

“A total of $291 million is what we stood to lose had the General Assembly not acted,” he said. “We preserved $126 million in potential losses to the road fund for the remaining fiscal year and all of next fiscal year.”

While the gas tax can now never dip below 26 cents per gallon, it can increase, starting in fiscal year 2017, if prices at the pump rise. The gas price will be calculated once a year, instead of the previous practice of quarterly, and cannot rise more than 10 cents a year.

“The needs that we have for our highway infrastructure in Kentucky far outstrips our ability to provide the revenues to pay for them,” Hancock said. “We were very pleased the General Assembly arrested the fretful that we were experiencing back earlier this year. I do not want to sound ungrateful in any way, size, shape or form, but the truth of the matter is the road system out there requires a great deal of money to keep it functioning as it should.”