Road fund may get a second look next session with $139M decline in receipts expected, lawmaker says

09/01/2015 07:08 PM

A multimillion-dollar dip in receipts was expected when lawmakers approved a compromise bill on Kentucky’s motor fuels tax this session, but at least one legislator hopes to shore up the state road fund’s bottom line when the General Assembly reconvenes in January.

Transportation Cabinet officials laid out the road fund’s status during an Interim Joint Transportation Committee meeting at the Muhammad Ali Center Tuesday, and estimates show the fund is expected to lose $139.2 million in the current fiscal year.

Russ Romine, deputy cabinet secretary, said the Consensus Forecasting Group predicted “a pretty flat” outlook for the road fund at the panel’s August meeting, adding that receipts will not reach last fiscal year’s level until fiscal year 2020.

The anticipated $139.2 million drop in receipts has the cabinet looking at which projects in the current biennial road plan can be completed, said Transportation Cabinet Secretary Mike Hancock.

Lawmakers knew to expect the decline when voting on House Bill 299 earlier this year, which set a new floor on the average wholesale price of gasoline, limited declines on such prices at 10 percent and moved from quarterly to annual price adjustments starting next fiscal year. Officials have said the move staved off a steeper drop in road fund receipts.

“The 2015 General Assembly made some very tough decisions to do the things that they did at that time,” Hancock said.

“I’m not aware at this point of any efforts to push for tax increases of any kind to offset the reductions. I think we’re just going to take things in stride. Probably through our highway plan there might be fewer projects we’re able to build and that kind of thing, but those are the very real repercussions from having fewer dollars to work with.”

State Rep. Leslie Combs played a role in cobbling together this year’s compromise on the gas tax, and she’s optimistic that other proposals will be heard in the upcoming session to limit the predicted $139.2 million road fund shortfall.

Combs, D-Pikeville, said there are some ideas in the works, although she declined to offer specifics after Tuesday’s meeting.

“Yesterday I attended a Kentuckians for Better Transportation meeting,” she said. “They’re going make some proposals. I don’t want to, I guess, discuss those just yet, but they do have some good ideas out there. Some of these ideas have been floated around in the past. Once again, they can make a minor dent in the deficit we’re going to see, but they’re also obvious changes that probably need to be addressed and we haven’t addressed them in recent times.”

Declining road fund receipts could also pose headaches for the next gubernatorial administration.

Republican nominee Matt Bevin, who attended Tuesday’s meeting on the road fund and bridge construction in Louisville, said if elected, his administration would have to write a two-year highway plan based on the dollars available. Bevin specifically highlighted a handful of uncompleted western Kentucky road projects, with a combined $53 million price tag, as part of a pre-Fancy Farm press conference in July on infrastructure issues in the state.

“You can budget for whatever you like, but in reality you can only spend what you have,” Bevin told reporters Tuesday, “and so to that end we’ll deal with the dollars that are actually there as part of the budgeting process.”

Democratic nominee Jack Conway’s campaign did not respond to an email seeking comment.

One group that may convince lawmakers to take another look at the declining road fund is local elected officials, who rely on 48.2 percent of motor fuels tax receipts for road maintenance. The projected $132.2 million drop in tax receipts equates to $63.7 million in local maintenance funds, according to the Consensus Forecasting Group’s preliminary estimate.

Hancock is unsure whether local politicians will bring any misgivings of lost road fund money to the legislature next year.

“Many of them work with significantly fewer dollars to stretch across their needs, so I think it’s something that could be a force in the 2016 session,” he said.

Kevin Wheatley

Kevin Wheatley is a reporter for Pure Politics. He joined cn|2 in September 2014 after five years at The State Journal in Frankfort, where he covered Kentucky government and politics. You can reach him at kevin.wheatley@charter.com or 502-792-1135 and follow him on Twitter at @KWheatley_cn2.

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