Fuel Tax Decline Bad News For State's Road Fund
While your wallet may be thicker thanks to lower gas prices, the decrease is having the opposite effect on the Kentucky Transportation Cabinet.
Kentucky funds its road and bridge projects with what’s essentially a user’s fee – an added tax at the pump that’s calculated based on the average wholesale price for motor fuels. But that business model is starting to show its age as cars and trucks become more fuel-efficient. Combine that with the recent drop in gas prices and the result, come New Years Day, will be the largest ever decrease for the motor fuels tax in a single quarter – 4.3 cents per gallon.
"This would be a considerable loss of revenue to have to make up for. Something would have to suffer somewhere down the line," says Cabinet spokesman Chuck Wolfe. "It's not possible at this time to point to a particular project or type of work that might delayed or canceled all together. The Cabinet will manage its budget as the revenues come in."
And it’s an increasingly tough job, considering this latest decrease is the fourth drop in the last five quarters.
In all, the Road Fund could stand to lose up to $129M.