In his two-year budget proposal to Kentucky lawmakers, Governor Beshear recently proposed reversing the 1.5 cents-per-gallon gas tax decrease that automatically went into effect on January 1. The Governor’s proposal would increase the current gas tax that Kentucky motorists pay from 24.4 cents per gallon at the state level to 25.9 cents.
Fluctuating gas tax rates in the state are the result of legislation that tied the tax to the wholesale price of motor fuels, which is automatically recalculated every three months. When the price of gasoline falls, so does the calculated gas tax and revenue to the state.
Governor Beshear takes issue with the relief that falling gas prices provide Kentucky motorists. His proposal would ensure that Kentucky drivers wouldn’t ever pay less than 32.2 cents per gallon, regardless of gas prices. This is because he isn’t concerned with taxpayers pain at the pump; in typical fashion, he’s much more concerned about new government contracts.
Though he'll be announcing a more comprehensive tax reform package soon, his first tax hike proposal would range from $45 million to $100 million depending on gas prices in the next two years. This revenue would comprise between 2.3 percent to 5 percent of his planned $2 billion in new spending for transportation. The rest will likely be made up of additional tax hikes he will be proposing in the coming days.
It seems likely that the Democrat Governor's legislative agenda will not be comprised of reforms that make the state more competitive for businesses or provide much relief to taxpayers.