Acting Transportation Cabinet head sees no need for new Road Fund formula after weathering nine-figure shortfall

02/16/2016 06:46 PM

FRANKFORT — Faced with declining revenues in the state’s Road Fund due in part to low gas prices, officials with the Kentucky Transportation Cabinet said Tuesday that the fund will make minimal progress in the biennium after a $112.5 million shortfall was resolved in the current fiscal year.

But after the General Assembly passed legislation establishing a new floor for the average wholesale price of gasoline at 26 cents per gallon and setting a maximum yearly rate that that cost can decline last year, the legislature likely will not tinker with the formula despite one lawmaker on the House Budget Review Subcommittee on Transportation who says the state needs more money to address infrastructure needs.

Acting Transportation Cabinet Secretary Mike Hancock said the agency will continue working under the current funding model, which is based on the average wholesale price of gasoline. Newly inaugurated Gov. Matt Bevin has already issued an executive order reducing the cabinet’s budget in light of lagging Road Fund receipts.

That prompted Rep. Dennis Keene to ask cabinet officials whether they had considered drafting an alternate approach to fund infrastructure improvements in the state.

“Is there any plan where we can generate more revenues for our Transportation Cabinet because it really concerns me because if we don’t keep up with our bridges and roads and expand our opportunities for economic development will dwindle,” Keene, D-Wilder, said during Tuesday’s subcommittee meeting, “and so it’s critical that we keep the amount of money in that transportation fund.”

Hancock said in response that while new money would help the cabinet’s maintenance of roadways and bridges, the agency will make their budget work.

Hancock and Charles Lovorn, executive director of the Kentucky Association of Contractors, said that it could take the state until 2020 before gas tax receipts rebound.

“We have talked in my entire 40-year career about more money, more money, more money for transportation, and we always talk about that,” Hancock told reporters after the meeting. “At the end of the day, we always say we’re going to do the very best we can with what we have, and that means taking care of what’s already out there first. That’s our primary goal and will continue to be so.”

Regardless of the decline, Hancock said the state will be able to continue progress on a number of roadway projects.

The current fiscal year’s Road Fund revenues were estimated at $1.56 billion but revised down to $1.45 billion, and the two years in the upcoming biennium are estimated at $1.46 billion and $1.48 billion, respectively.

Hancock said the plan will include $630 million for bridge maintenance, improvements to the Purchase Parkway in western Kentucky for its eventual conversion to Interstate 69, initial funding for a future Ohio River bridge between Henderson and Evansville, Ind., continued four-lane construction on the Mountain Parkway and widening of Interstate 75 in Rockcastle County.

“As you noticed the last few weeks as we’ve gone through a snow and ice period, that is an area that has its own share of issues with steep upgrades and so forth,” Hancock said.

Lovorn offered a few suggestions on how to generate money for the Road Fund, such as retaining the $10 million in annual diversions for aviation, reducing the 1.4 percent of the fund for underground storage tank cleaning and lowering the amount of road dollars budgeted for the Kentucky State Police.

He said former Gov. Paul Patton originally proposed diverting $35 million from the fund to KSP and $30 million in the second year of his biennial budget in 1998, and the allocation has grown since the Patton administration.

“We went from 30 percent and 24 percent of the funding for the state police operations to where in this proposed budget, and there’s some quarrel about this number, but minimally it’s a 38 percent and 38.1 percent because $85 million and $86 million, Lovorn said. “If we take out the $17 million that’s in there that comes from the Road Fund already because of the vehicle enforcement traffic maintenance side of that, that number would increase to 41 percent.”

But cutting funds for state police appeared to be a nonstarter for the subcommittee, a point echoed by Hancock after the meeting when discussing Lovorn’s proposals.

“From a budget perspective, those are situations that have long existed, and frankly it’s very difficult to make adjustments to them as folks have gotten accustomed to seeing those kinds of funds over the years,” he said.

“So it’s interesting to talk about, but it’s very, very difficult to change.”


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