Government
1:45 pm
Wed June 5, 2013

Kentucky to Raise Gas Tax in July

Kentuckians can expect to pay a bit more at the pump this summer, due, in part, to a rise in the state gas tax. Starting July first, gasoline prices will have an extra 2.4 cents tagged on, accounting for a total of a more than 32-cent tax.

That’s the 10 percent annual cap the General Assembly placed on gas tax rates in 1980. The money will go into the Kentucky Transportation Cabinet Road Fund, and officials there estimate the increase could add some $72 million to the fund this year.

Cabinet Spokesman Chuck Wolfe says tax rate is a reasonable fee.

“The motor fuels tax is a classic user fee,” he said. “If you use the streets, roads and bridges, you pay for that at the pump.”

Wolfe says the Department of Revenue monitors the average wholesale price in the state on a quarterly basis. Numbers are checked in January, April, July and October.

The extra two cents per gallon will go into effect July first. Because of the General Assembly cap, another increase could not go into effect until July 2014 no matter what July and October numbers indicate.

But the revenue is an important factor for many state officials.

It’s a positive for Kentucky taxpayers, says fifth-district Representative Kenny Imes, because, as of now, the KyTC budget is paid for entirely by taxes and fees. Imes is part of a joint, non-session Transportation Committee in Frankfort that was briefed on the upcoming tax increases on Tuesday.

At that meeting, representatives from the KyTC and Department of Revenue discussed the road budget. Imes anticipates less revenue through the state gas tax in the future.

“I do think we will have to look at an alternative way of financing this over the long haul,” he said.

In all, tax revenues are estimated values, because fluctuations in prices at the pump could drive consumers away and account for fewer dollars coming in.

The Republican representative says the Commonwealth has historically imposed lower tax rates than surrounding states, but the last two years’ hikes have put it at a high. Tennessee taxes 21 cents to the gallon, and Illinois taxes 19 cents.