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Low gas prices putting strain on Kentucky’s road fund

FRANKFORT, Ky. (AP) — Lower gas prices welcomed by consumers have put a dent in Kentucky’s road fund. The result is more highway projects stacking up without sufficient money to cover them all, lawmakers were told Tuesday.

Kentucky’s motor fuels tax — a crucial source for the road fund — has produced sharply lower revenues amid a period of lower pump prices. The gas tax is tied to the wholesale price of fuel, though lawmakers last year set a minimum gas tax rate at 26-cents-per-gallon to try to stave off deeper revenue plunges.

But road funding woes are continuing. Acting state Transportation Secretary Mike Hancock said Tuesday that the number of “over programmed” projects is higher than in past years due to lower gas tax revenues.

Hancock appeared before a House budget subcommittee to delve into Gov. Matt Bevin’s proposal to spend $6 billion on roads and bridges in the next six years. The amount includes state and federal funds.

Hancock told lawmakers his staff hasn’t put together a recommended list of priority projects as the state grapples with diminished gas tax revenues, though officials will eventually need to “hone in” on priorities.

“Because first in, first out will be difficult to manage, and in fact may exhaust the revenues fairly quickly,” Hancock told the lawmakers.

State Rep. Dennis Keene said the solution is “real simple. We need more revenue.” He warned that economic development efforts will suffer if the state doesn’t find sufficient revenue to meet highway needs.

“With these gas prices so low, you’re not going to be able to do a lot,” the Wilder Democrat said. “It doesn’t take a study to figure it out. We need another plan to start looking at.”

According to AAA, prices for regular unleaded gas are in the low- to mid-$1.60s per gallon in several Kentucky cities, compared to the $2.30s a year ago.

Rep. Leslie Combs agreed that additional revenues are needed to take care of infrastructure demands and retain quality highway employees. Combs, D-Pikeville, didn’t offer any specifics on how to increase revenues, but said: “I think we’re enjoying low rates, and we need to take advantage of enjoying low rates.”

Transportation Cabinet officials said state motor fuels tax revenues have continued to fall. Actual revenues in the current fiscal year are about $33 million below projections, they said.

Gas tax receipts in the next fiscal year are expected to be tens of millions of dollars below this year’s amount, followed by projected slight increases the next two years.

As a result, Hancock said: “We’re going to have to use some wisdom in how we stretch the dollars we have across as much as we can.”

Hancock said one steady revenue source for the state in coming years will be from the federal government — the result of congressional passage of a five-year transportation bill last year.

Hancock also outlined highlights of the governor’s six-year highway plan. The recommendations include hundreds of millions in state and federal funds to repair or replace substandard bridges across the state.

“The amount of money that we’re going to be spending on our bridges in Kentucky is significant,” he said. “It’s something that we think is very much needed.”

The plan also includes funding for environmental work and an initial financing plan for a proposed Ohio River bridge at Henderson, he said.

“That project is one that we’re going to take a hard look at over the biennium and try to figure out exactly what we need to do and hopefully figure out a way to pay for it,” Hancock said.

Other highlighted projects included:

—Continuing improvements to the Purchase Parkway in far western Kentucky for its ultimate conversion into part of Interstate 69.

—Upgrading the Natcher Parkway in western Kentucky in order to establish an interstate spur route between Bowling Green and Owensboro.

—Expanding a section of I-75 to six lanes in Rockcastle County.

—Continuing work to widen the Mountain Parkway to four lanes between Campton and Prestonsburg in eastern Kentucky.

In related news, Report: Kentucky coal at lowest production since 1950s.

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