Kentucky bill seeks fuel tax increase for road, bridge funding

March 13, 2020

Keith Goble


The pursuit of additional funding for road and bridge work is underway at the Kentucky statehouse. The state has a $500 million backlog of maintenance work. A fuel tax increase is a large part of the plan.

A bipartisan House bill would raise fuel tax rates and increase vehicle registration fees to eat into the funding gap. All components of the tax and fee increase effort would raise about $483 million annually.

Kentucky now collects 26 cents per gallon on gas purchases. Diesel purchases net the state 23 cents per gallon.

Sponsored by Republican Rep. Sal Santoro and Democratic Reps. John Sims Jr. and Russ Meyer, the bill would raise the gas tax rate by 8.6 cents to 34.6 cents. The diesel rate would be increased by 11.6 cents to 34.6 cents.

An additional surtax of 4.3 cents for gas and 7.2 cents for diesel would also be tacked on to fuel purchases.

One cost reduction tied to fuel tax rates would eliminate collection of the supplemental highway user tax collected on gas and diesel purchases. The fee is a nickel on each gallon sold.

After all the changes, the new gas tax rate would be 33.9 cents and the diesel rate would be 36.8 cents.

The tax rates would also be adjusted annually based on a federal construction index.

Registration fees

A separate component of the funding bill in addition to the fuel tax increase would raise vehicle registration fees.

The cost to register passenger vehicles would increase from $11.50 to $2. Most commercial vehicles, including tractor-trailers, would have registration costs increase by the same amount.

Additionally, costs for CDL reinstatements, overweight and overdimensional single-trip and annual permits would be increased.

CDL reinstatements would increase from $50 to $100.

Single-trip permit fees for overweight and overdimensional loads 200,000 pounds or less would be raised from $60 to $150. Single-trip permits for the same type of loads exceeding 200,000 pounds would increase from $60 to $1,500.

The annual permit fee for overweight and overdimensional loads 14 feet or less would be raised from $250 to $625. Annual permits for the same type of loads exceeding 14 feet would increase from $500 to $1,250.

One truck fee, however, would be eliminated. The $30 county clerk fee for registration of vehicles more than 44,000 pounds would be removed.

Alternative fuel vehicles

Electric vehicles would also be tabbed for paying more into the transportation fund.

A $200 fee would be implemented for registering new electric vehicles. License plate renewals for affected vehicles would be set at $200.

The fee would be adjusted annually based on the same federal construction index that would be used for gas and diesel rate increases.

Road fund distribution

Included in the bill is the creation of a “multimodal transportation fund” that would be administered by the Kentucky Transportation Cabinet.

Additionally, there would be a change in the revenue distribution formula to cities and counties. Currently, cities get 7.7% and counties get 18.3%.

The current revenue sharing percentages would be unchanged for tax collections below $825 million. Tax collections in excess of $825 million would be shared equally – 13%.

The bill, HB580, is in the House Transportation Committee.

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