Gas tax, other vehicle fee hikes seem closer to appearing before Kentucky lawmakers

(The Center Square) – This week could be the week when a bill to increase the gas tax in Kentucky and modernize how the state funds its transportation budget is filed in the General Assembly.

On Friday, key lawmakers took part in the 2021 Central Kentucky Legislative Day held by Commerce Lexington Inc., the chamber of commerce and economic development agency for the state’s second-largest metro area. Among them were state Rep. Sal Santoro, the Florence Republican who chairs the House Budget Subcommittee on Transportation; House Speaker David Osborne, R-Prospect; and state Senate President Robert Stivers, R-Manchester.

Both legislative leaders said they were amenable to making changes but were leery of putting all the focus on a fuel tax.

Stivers in his remarks noted the Super Bowl commercials that promoted the rising popularity of electric cars and the market share those vehicles could hold in the next 15 years.

“It’s a lot more complex than just saying, increase this by a nickel or a dime, because if you’re not going to have cars that are driving on gasoline, what does it matter what the rate is?” the Senate leader said.

Similarly, Osborne said that reports of General Motors seeking to phase out combustion engines in the next 15 years really makes any changes to the gas tax “a short-term fix” for the state’s road budget.

“I think that there is a willingness and desire to do something on the gas tax, but I do believe that it’s got to come with a more complete thought than just how do we raise money for the next couple of years,” the speaker said.

Santoro, who spoke after both leaders said his bill considers just that. For starters, owners of electric vehicles would pay a registration fee of up to $200. Owners of fuel-efficient vehicles would also pay a higher registration fee. That cost would start at $5 for vehicles that get less than 20 miles to the gallon. That fee would increase $5 for every five-mile-per-hour segment, capping at $20 for owners of cars that get 30 or more miles to the gallon.

The standard $11 registration fee would also double, Santoro said, with that money going to the state’s road fund.

The representative said the gas tax needs to be considered a “user’s fee” for the roads and bridges that are used by thousands of cars and trucks daily. A penny increase in the gas tax would generate $30 million in tax funds.

“Everyone in the commonwealth of Kentucky must understand we have a $500 million need,” Santoro said. “There’s only one way we can do this: make some changes through the legislation.”

The projects Kentucky must fund in coming years include a new Interstate 71-75 bridge connecting downtown Cincinnati with its northern Kentucky suburbs and a bridge connecting Interstate 69 in western Kentucky to the highway in Evansville, Ind.

Business groups, like Commerce Lexington, the Kentucky Chamber of Commerce and Greater Louisville Inc., the Louisville chamber of commerce, support raising the gas tax. They point to the fact the state has one of the lowest rates in the nation, and with logistics and distribution serving as a major employer statewide, Kentucky does not have sufficient revenue for infrastructure upkeep.

Opponents of raising the gas tax say the hike is regressive and hurts families. They would prefer to see lawmakers make more efficient use of the funding for new roads and maintenance of existing ones.

Last Tuesday was supposed to be the final day to submit new bills in the legislature. However, Winter Storm Uri kept lawmakers at home all week. That pushed the deadline to Feb. 23.

“Over the past four years, I’ve introduced legislation (on the gas tax) and I do have one in my desk drawer,” Santoro told Commerce Lexington. “I’m waiting for the speaker to give me the okay to drop it. I guess the snow has gotten us a little bit behind, but we still have days.”

When the legislature reconvened Monday afternoon, it’ll mark the halfway point of the 30-day session. The remaining schedule also includes several days for conference committees and a veto consideration period of Gov. Andy Beshear.

Lawmakers must adjourn by March 30.

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