How Several Bills Passed This Session Changed the State Budget

The 2015 General Assembly reopened the 2014-2016 budget to appropriate new monies for several initiatives. These were largely paid for — and the state’s rainy day fund was boosted by — a transfer from the Public Employee Health Trust Fund. A number of decisions were also made that affect future spending by the state in areas like debt and corrections, including the choice not to enact a financing plan for the Kentucky Teachers Retirement System. On the revenue side of the fiscal equation, legislation passed which affects the resources the state will have to meet its obligations such as the decision to stabilize the Road Fund and create a film tax credit.

Read more about these changes in our summary of the fiscal impact of the 2015 General Assembly.

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Late-night Vote Keeps Ky. Gas Taxes Steady

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Louisville’s Road Funds Set To Take Huge Hit if Frankfort Fails to Act on Gas Tax

County, Rural Roads Will Lose Millions Without Gas Tax Freeze

The clock is ticking on the 2015 session and legislators have yet to guard Kentucky’s city and county roads and bridges from the consequences of a pending 5.1 cent drop in the motor fuels tax rate. Nearly half of motor fuels revenue that the state collects goes back to local governments — through the County Road Aid (18.3 percent), Municipal Road Aid (7.7 percent) and Rural Secondary Aid (22.2 percent) programs — for building, maintaining and improving the transportation network that our local communities and economies rely on.

The interactive map below shows the total impact of cuts to these programs in each county for budget year 2016 that will result if lawmakers do not act. To view a larger version of the map, click here.

For cuts by program and by county, click here.

Schedule Hearing on Minimum Wage

“Schedule Hearing on Minimum Wage”

By Lexington Herald-Leader Editorial Board

Inaction on Gas Tax Will Drop Rate to Historically Low Levels

lf legislators end the 2015 session without preventing the pending 5.1 cent drop in the gas tax, the rate will fall to a level near its historic low over the last three decades, once inflation is taken into account.

That can be seen in the graph below of the Kentucky motor fuels tax since 1986, adjusted for the consumer price index, which reflects what the tax means for a household’s budget. The motor fuels tax didn’t change from 1986 to 2004, meaning its value dropped over that time in inflation-adjusted dollars.

gas tax history2


The rate began rising in 2004 and again in 2009 when the state adjusted the floor for the tax and as the price of gas went up. However, that merely returned the rate to its level in the mid-to-late 1980s. Allowing the rate to drop in April would bring it down to a level seen only in the early-to-mid 2000s.

Good roads are critical to public safety and to Kentucky’s economy, especially in a state so dependent on manufacturing and distribution industries. Funding from the gas tax and other sources also supports over 40,000 jobs. It’s important that the General Assembly recognize the need for a sustainable revenue stream to keep Kentucky’s infrastructure safe and up to date.