Beshear Files Reg to Freeze Gas Tax

Governor Andy Beshear filed an emergency regulation on Thursday to prevent a $0.02 per gallon increase in the gasoline tax on July 1. The declaration freezes Kentucky’s average wholesale price of gasoline and the annual survey value at the current rate, blocking a required statutory increase linked to rising fuel prices.

Beshear said that Kentuckians paid $2.85 per gallon for gasoline a year ago, but that average price increased to $4.31 at the end of May.

“With today’s action, it will ensure savings of Kentuckians at least up to the first part of January, at which point the legislature will be back in session and can make a policy decision from there,” he said.

Kentucky Transportation Cabinet Secretary Jim Gray downplayed the impact of a freeze on transportation funding. Gray said the move would save Kentuckians an estimated $35.4 million between July 1, 2022, and January 2023, which has a -1.6% impact on the transportation budget. Beshear said he would ask the state legislature to “make the transportation budget whole through a transfer of General Fund dollars.”

While Gray insisted the decision would not impact current or planned projects, the executive decision will negatively impact future municipal road aid (MRA) dollars. The MRA program distributes to cities and several counties 7.7% of motor fuels tax revenue collected. Freezing the current tax rate will reduce what local governments otherwise would have received in FY 2023.

Beshear also asked Attorney General Daniel Cameron for an opinion on if the governor should declare a state of emergency to activate the state’s price gouging statute.

House Speaker David Osborne (R-Prospect) said the Majority Caucus is reviewing the governor’s executive order. “However, one thing stands out immediately,” he said. “At two cents a gallon, this provides little relief to Kentuckians paying almost twice as much at the pump as they did last year. While the skyrocketing cost is the obvious and inevitable result of disastrous foreign and domestic policies on the federal level, President Biden seems unwilling to provide meaningful solutions to the impact inflation is having on the cost of living for the average person, and the governor’s only response seems to be to ask him to print more money. This will continue to be a topic for us as we prepare for the 2023 Regular Session and, of course, as we monitor the influence that HB 8 and lowering the state income tax have on our economy. The first decrease is expected to leave an estimated $500 million in the pockets of working Kentuckians next year and provide the momentum to eliminate the income tax entirely.”

Senate President Robert Stivers (R-Manchester) also released a statement. “Because of the Biden Administration’s reckless policies, families across our commonwealth are struggling more and more,” he said.

“While I support working with the governor to find a solution to address the exorbitant rise in fuel cost, I question the manner and process by which he is doing so. KRS 138.226 requires the Department of Revenue to administer the gas tax as prescribed by law; the governor cannot deviate from the tax amount determined by statute. It is not within the governor’s purview to pick and choose which regulations he would like to enforce.

Not only is this action illegal, but it will only save residents 2-cents-per-gallon, and with current prices in Kentucky reaching $5 per gallon, it will have little to no effect on what Kentuckians should expect to pay at the pump.

This legislature looks forward to working with the governor to accomplish the goal of suspending any additional increase to the gas tax but doing so in a legal and proper fashion.”