Andrew McNeill: Higher gas taxes not necessary for unprecedented investment in Kentucky’s highways

The General Assembly wrapped up the 2022 session with two long days and nights of veto overrides and last-minute legislating, adjourning one day before the constitutionally mandated April 15 deadline.

There was noticeable energy in both chambers during those closing hours, with members of the Republican super-majorities appearing invigorated by their accomplishments. Even so, they had to be ready to go home and recharge. The May primary is just around the corner. Incumbents will want to take a “victory lap” out on the campaign trail.

Republicans will be touting their achievements from the session – pro-growth tax reform, historic levels of K-12 education funding, expanding school choice, an array of workforce development initiatives. Expect Democratic Gov. Andy Beshear to cast those GOP “wins” in a much different, and unfavorable, light.

Andrew McNeill

Both sides will highlight a historic investment in the state’s roads and bridges. House Bill 241, the Transportation Cabinet’s budget, will provide plenty of opportunities for elected officials to announce new infrastructure projects in the coming months.

Buoyed by another massive influx of federal funds and coupled with healthy growth in the state’s Road Fund, the General Assembly crafted a two-year $7.1 billion transportation budget. The lion’s share, $5.3 billion, was appropriated to highway construction, maintenance and planning – a 23% increase from the prior biennium; $250 million from the General Fund positions the Cabinet to aggressively pursue a pool of federal dollars to build the Brent Spence companion bridge in Northern Kentucky.

No question about it, HB 241 is an unprecedented commitment to Kentucky’s infrastructure – all accomplished without raising the gas tax.

For the last five years, House Transportation Budget Subcommittee Chairman Sal Santoro, R-Union, has argued that the only way our state could expand and maintain our transportation networks was an immediate 10 cents a gallon increase in Kentucky’s motor fuels tax and then “index” those taxes to the cost of construction. Santoro’s position has been backed by a powerful coalition of big business, local governments and Kentucky’s highway contractors – all of whom would benefit from more government spending.

Grassroots advocates and organizations like the Bluegrass Institute pointed out that over the past two decades, $2 billion of Road Fund resources have been swept to the General Fund to support non-infrastructure-related spending. Our message was simple: Dedicate existing gas tax dollars to their intended purpose before raising taxes on Kentucky’s families. Frankfort’s conventional wisdom viewed the idea as a non-starter.

Then in last year’s budget negotiations, Sen. Chris McDaniel, R-Ryland Heights, chair of the Senate Appropriations and Revenue Committee, worked out an agreement to significantly reduce the fund transfer, effectively increasing the state’s investment in infrastructure by an additional $1.1 billion over the next decade, accomplished – again – without raising taxes.

HB 241 and McDaniel’s reform are major accomplishments. Legislators can now tell their constituents that the historic investment over the next two years in vital transportation services was possible without raising prices at the pump.

That’s a win worthy of a victory lap, especially for the rank-and-file members, who held firm against higher gas taxes. And leaders like McDaniel, who rejected the status quo and crafted a solution that will pay off for years in communities all around the state.

Andrew McNeill is a Visiting Policy Fellow at the Bluegrass Institute for Public Policy Solutions, a Kentucky free-market think tank. He can be reached at amcneill@freedomkentucky.com.