by Tom Loftus –
(Photo: The Courier-Journal)
FRANKFORT, Ky. – Due to falling state gas tax revenues, Gov. Matt Bevin issued an order Monday cutting the state Transportation Cabinet budget by $112.5 million.
The order calls for more than half of the savings – $62 million – to be achieved by a reduction in state road aid to cities and counties.
In Louisville, Metro Councilwoman Jessica Green warned the cuts could put an undue burden on urban municipalities.
“These cuts will result in a delay in some state road projects, and could also mean that some roadways that need repair will continue to be a hazard to Kentucky families,” said Green, D-1st District. “As we move forward, I would urge the new administration to make our people the top priority.”
The 26-member Metro council allocated $5 million in the city budget this year to supplement road maintenance, with many members calling Louisville’s road conditions an embarrassment.
“Road repairs are not only a quality of life issue, but are also a public safety issue for all Kentuckians,” Green said. “We deserve to be put first.”
Mayor Greg Fischer’s office did not immediately respond to a request for comment on the cuts.
Bevin’s move was triggered by a new official forecast of state tax revenues made in December that projects revenues to the state’s Road Fund will fall $112.5 million below the $1.56 billion anticipated by the state budget.
A statement from the State Budget Office said that the current state budget includes a provision that says “in the event of a projected revenue shortfall in Road Fund revenue receipts, the governor must implement reductions to resolve any projected deficit.”
“We’ve known that our Road Fund revenues have been decreasing for a long, long time, so this does not come as much of a surprise,” said Ernie Harris, a Crestwood Republican who chairs the Senate Transportation Committee.
The gas tax is the Road Fund’s main source of revenue. And because that tax is pegged to the price of gas, revenues from the gas tax have fallen in recent years.
Last year, Transportation Secretary Mike Hancock and then-Gov. Steve Beshear warned lawmakers of the anticipated drop in gas tax revenues. The gas tax rate had dropped from a high of 32.5 cents per gallon in the fall of 2014 to 27.6 cents per gallon in early 2015.
Beshear and Hancock urged lawmakers to set 27.6 cents per gallon as the minimum state rate rather than allow another pending reduction to 22.5 cents per gallon take effect on April 1, 2015.
Lawmakers declined to freeze the minimum rate at 27.6 cents and instead passed a bill setting the minimum rate at 26 cents per gallon.
Bevin’s order states that most of the specific program cuts within it are automatic, or “statutory,” cuts that must be imposed with such shortfalls. For instance, because road aid to cities and counties is based on a percentage of gas tax revenues, it was cut automatically by $62 million.
That $62 million represents a cut of about 12 percent in the state’s revenue-sharing program with local governments.
The order cuts the budget of the Department of Highways by nearly $29 million, which Harris said will delay work on some projects in the state road construction plan. The Department of Vehicle Regulation is cut by $2.5 million. Some other transportation programs will take small cuts.
This story will be updated.
Reporter Tom Loftus can be reached at (502) 875-5136 or [email protected]. Reporter Phillip M. Bailey contributed to this report.
