Kentucky Acts at Last Minute to Stem Plunge in Fuel Tax Revenues

Kentucky lawmakers agreed just hours before adjourning March 24 to halt the precipitous decline in fuel tax revenues that has cost the state millions of dollars in road funding.

 The revenue decline, already at $129 million by January, occurred because Kentucky’s fuel-tax system contains an adjustable trigger that is tied to a wholesale tax on diesel and gasoline. Revenues fall as fuel prices fall.

The state long ago set a floor of 22.5 cents on a wholesale gallon price, which transportation officials and Gov. Steve Beshear said was so low that the state would begin losing another $150 million as of April 1.

Lawmakers agreed to raise the wholesale tax floor to 26 cents a gallon.