Dorsey Ridley: Latest budget adjustments should have minimal impact on state’s road fund

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With budget cuts looming for nearly every sector of state government, I thought this would be a good time to give an update on the health of Kentucky’s road fund.

The state road fund closed out fiscal year 2017 this summer with revenue of $1.5 billion. That is $51.1 million, or 3.5 percent, more than the official estimates contained in the state’s 24-month road fund budget.

The largest revenue stream for the road fund is the state motor fuels tax (gasoline*diesel). It brought in $760.5 million. That is $13.2 million more than official estimates. The higher-than-estimated amount was attributed to the increase in gasoline consumption across the state.

The second largest revenue stream was the motor vehicle usage tax. It brought in $499.8 million. That is a whopping $30.3 million more than official estimates. Cabinet officials told the Interim Joint Committee on Transportation, which I’m a member of, that the unexpected growth in this revenue stream isn’t sustainable because the demand for new and used cars is slowing.

The third and final revenue stream includes various fees and permits including registration fees for vehicles and driver licensing renewal fees. Those revenue streams brought in a combined $247.6 million. That is $7.5 million more than official estimates.

Kentucky brought in $25.5 million, or 1.7 percent, more from those three revenue streams than in fiscal year 2016.

Looking ahead, the state budgeted $29.7 million less for the state road fund in fiscal year 2018 that will end next summer. Still cabinet officials said they now expect road fund revenue to exceed estimates for another fiscal year.

There is a lot of concern out there about the sustainability of the motor fuels tax. Kentucky’s road budget is funded in large part from motor fuels tax, and those revenues are pegged to the price of gas. So, when gas prices floated down from their 2009 highs in the $4 a gallon range back toward a price sometimes nearing $2 a gallon, incoming road fund revenues fell precipitously.

One good thing is that the state Constitution requires revenue from the motor fuels tax, motor vehicles usage tax and those various other fees to be put in the state road fund. Revenue officials can’t really raid that fund – for the most part.

That means the governor’s proposed cut of 17.4 percent at most state cabinets will have a minimal impact on the state transportation cabinet budget. The cabinet gets only 0.7 percent of its money from the state general fund.

To meet the governor’s request the transportation cabinet gave back $62,300 that was budgeted to match federal public transit grants. The cabinet also transferred $900,000 of excess and unappropriated cash from the motor boat-titling fund, Automated Vehicles Information System replacement account and county clerk information technology improvement fund to the state general fund.

All of these issues, and more, will be vigorously discussed when we return to Frankfort on Jan. 2 to pass a 24-month budget that will take effect on July 1. I encourage you to stay in touch to share your input on the issues facing our Commonwealth. You may leave me a message by calling the toll-free Legislative Message Line at 800-372-7181. You can also e-mail me directly at Dorsey.Ridley@LRC.KY.GOV.

Dorsey Ridley is the Senate Minority Caucus Chair representing District 4, including Caldwell, Crittenden, Henderson, Livingston, Union and Webster counties.

 
 
 
 
 

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