Senate panel removes gas tax increase from state revenue bill

jcheves@herald-leader.comMarch 25, 2014 

Kentucky Senate

Senate President Robert Stivers


FRANKFORT — The Kentucky Senate on Tuesday approved a two-year revenue bill for state government that omits a gas tax increase of 1.5 cents a gallon that the House approved two weeks ago.

Without the gas tax hike, the bill would raise $107 million less over the next two years for the state's road fund, which means fewer transportation projects, senators said. (The House has proposed a $4.51 billion, two-year road plan; the Senate is expected to unveil its proposed road plan this week.)

"We intend to live within our means," said Senate President Robert Stivers, R-Manchester.

The Senate vote was 30 to 0 for the bill, with seven senators voting "pass." Nobody spoke against it on the Senate floor.

The Republican-led Senate and Democratic-led House are expected to begin negotiations on the state budget and revenue bills Wednesday. House Speaker Greg Stumbo, D-Prestonsburg, would not say whether his chamber would be willing to compromise on the gas tax.

"It will have a dramatic impact on the road plan," Stumbo told reporters. "We'll just have to see what sort of road plan the Senate introduces."

The Senate revenue bill also deleted language from the House version that was intended to protect public libraries across Kentucky.

The House is concerned about courtroom battles between local taxpayer groups and libraries over what statutes the libraries must use to raise property taxes. The cases, which originated in Northern Kentucky but since have spread, potentially could drain much of the revenue from 83 percent of the state's 119 libraries. (The Lexington Public Library does not have taxing authority and would not be affected.)

By dropping a few sentences into its revenue bill clarifying the libraries' taxing authority retroactive to 1979, the House hoped to end the lawsuits. But that's not a proper role for the legislature, said Senate budget chairman Bob Leeper, a Paducah independent.

"We wanted to see how the courts ruled and what remedy they recommended," Leeper said. "We felt like because litigation was moving, we weren't comfortable getting involved in the outcome of that."

The Senate revenue bill also differs from the House bill on the subject of "instant racing," or electronic gambling machines at horse racetracks. The House wanted a blended tax on instant racing that combines a 1.5 percent and a 3.5 percent tax rate, depending on the sums wagered at each track. The Senate would impose a flat 1.5 percent tax starting April 1, and it would retroactively authorize the existing taxes the state collected from instant racing before April 1.

Last month, the Kentucky Supreme Court ruled that the Kentucky Horse Racing Commission has the legal authority to regulate instant racing, but that the pari-mutuel tax, which applies only to live racing, may not be used to collect state revenues from the games.

The House approach to instant racing would raise an estimated $1.1 million a year more for the state's general fund; the Senate approach would have no fiscal impact above the taxes already collected.

Democratic senators raised almost no opposition to the revenue bill.

"I think this is about OK except for the public libraries portion and the impact on the road fund," Sen. Robin Webb, D-Grayson, said at a Senate budget committee hearing on Tuesday.

John Cheves: (859) 231-3266. Twitter: @BGPolitics. Blog:

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