FRANKFORT — Gov. Steve Beshear urged state lawmakers Tuesday to stabilize state highway revenue by halting an expected drop in the gas tax rate, but he stopped short of threatening a special law-making session if they do not.
Beshear said the state Road Fund has enough money for him to finish his term this December with no interruptions in highway projects. But the next governor, he said, faces a loss of hundreds of millions of dollars in the Road Fund if lawmakers do not address the gas tax rate when they return to Frankfort March 23 and 24 to finish this year's legislative session.
When lawmakers recessed last Wednesday, there was no public optimism that a consensus would be reached to stabilize the Road Fund.
The problem is declining revenue from the gas tax.
The state's gas tax rate fell from 31.9 cents per gallon to 27.6 cents on Jan. 1 because it is tied to the average wholesale price of gas. The impact to the Road Fund from that drop is expected to be about $129 million on an annualized basis.
A loss of $129 million would amount to about 6 percent of Kentucky's highway funding, which was forecast to collect $2.25 billion in the current fiscal year from all revenue sources, including state and federal motor-fuels taxes and a state usage tax on motor vehicles.
The gas tax is expected to fall to 22.5 cents per gallon on April 1. That decline would cost the fund $150 million a year.
State officials also warned that the dip could have a major impact on local governments, which get nearly half of Kentucky's gas tax for use on local streets and roads. Those payments were reduced in January, said state Transportation Cabinet spokesman Chuck Wolfe.
Wolfe noted that the tax level at the end of a fiscal year is the baseline for the next fiscal year and that state law sets 10 percent as the maximum increase in the gas tax for any given year.
If the tax is at 21.1 cents on June 30, it could increase no more than 10 percent — to 23.2 cents — in fiscal year 2016.
Even if that increase occurred immediately, beginning July 1, and continued to increase 10 percent each year after, it would be 2021 at the earliest before the tax rebounded to where it was last Sept. 30 — 31.1 cents per gallon, its highest point, Wolfe said.
Asked if he would call a special legislative session if lawmakers don't stabilize the Road Fund, Beshear said it would be premature to talk about a special session.
Only the governor can call a special session and determine its agenda. Lawmakers decide when a special session would end.
"I hope all this will be addressed by March 24," Beshear said, adding that a freeze of the gas tax rate would not constitute a tax increase.
On another important issue in this year's legislative session, Beshear said lawmakers started working Monday on reaching a compromise between the House and Senate on a bill to curb heroin abuse.
He said he was confident that a heroin bill and a bill to provide civil protective orders to dating couples would be approved later this month.
He said he did not hold out much hope that the Senate will accept a House plan to allow state government to partner with private sources on building projects. He said too many legislators were incorrectly concerned that the bill would mean tolls for the Brent Spence bridge project in Northern Kentucky.
Beshear also said he was reviewing bills lawmakers sent him and did not yet know if he would veto any of them.
Legislators have the opportunity March 23 and 24 to override any vetoes by Beshear on bills they sent him before last week's recess.