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LOUISVILLE, Ky. (WDRB) – A bill that would boost the state's road fund by adding annual fees on drivers of electric and hybrid vehicles was introduced Thursday in the Kentucky General Assembly.

House Bill 508, sponsored by Rep. Jim DuPlessis (R-Elizabethtown), also would remove the state’s longstanding link between gas taxes and wholesale fuel prices. Instead, it would tie per-gallon taxes to a national construction index.

The measure is the first to address Kentucky fuel taxes and transportation funding during the 2021 General Assembly, but it stops short of the sweeping reforms backed by the Kentucky Chamber of Commerce, the Kentucky League of Cities, the Kentucky Association of Counties and others.

Those groups want state lawmakers to increase the gas tax, the main funding source for Kentucky's road construction account, and change a formula governing how those dollars are shared with county and municipal governments.

Rep. San Santoro, a northern Kentucky Republican who sponsored similar bills in the past, said Friday he has had good conversations with House Speaker David Osborne and Senate leaders ahead of the Tuesday deadline for new legislation.

DuPlessis said his bill primarily is an effort to prepare for more alternative-fuel cars on Kentucky’s roads. He noted that General Motors recently announced plans to phase out gas- and diesel-powered engines by 2035.

“We’re looking at the end of the gas engine. We’re so bad about waiting until we have a problem to fix it,” he said. “And what we’re seeing is more and more EVs are on the road. More and more hybrid vehicles are on the road, and they’re using the roads but not paying for the roads.”

The bill, Duplessis said, would make drivers of those cars “pay their fair share.”

The fees would be due when drivers register their vehicles every year. Owners of electric cars weighing less than 10,000 pounds would owe $150, while it would cost $300 if the car is heavier. Annual fees of $75 would be charged to owners of plug-in hybrid cars weighing less than 10,000 pounds, and $150 for hybrids above that weight limit.

The National Highway Construction Cost Index would dictate whether the fees would increase or decrease annually.

In the past, some environmental advocates have raised concerns that efforts to add fees on electric and hybrid vehicles could chill purchases of cleaner-running cars.

Wholesale prices are the standard that determines Kentucky’s per-gallon gas tax, but DuPlessis' bill shifts the gas tax to the national construction index. 

The current rate Kentucky drivers pay when they fill up – 26 cents per gallon, including 24.6 cents for the road fund – would not change until 2022 at the earliest. But even then, DuPlessis said, any increase would be modest: roughly half a penny per year, based on recent construction index changes.

Besides the gas tax, HB 508 seeks to add surcharges to drivers of tractor trailers and other heavy vehicles of 4.3 cents per gallon of gas and 7.2 cents per gallon of special fuels, such as diesel.  

A fiscal analysis of the bill, including how much Kentucky’s road fund would receive, is expected next week, he said.

DuPlessis said he considered a broader bill with a greater gas tax increase.

“I guess I’m a realist. And I’m thinking about what we can get done,” he said. He added: “I’ll be happy to sign on to a better bill.”

A Kentucky Chamber-led coalition of 25 business and industry groups, including Greater Louisville Inc. and UPS, called on state lawmakers this week to increase transportation funding by raising the gas tax by at least 10 cents.

“Without action on this issue in 2021, the legislature will have, for the fourth year, chosen not to truly act on the best way to move our economy forward,” the groups said.

The gas tax, which is linked to wholesale fuel prices, has been at 26 cents per gallon since 2015, when legislators approved that amount as a “floor” that can’t go any lower even if gas prices fall. That measure was in response to plummeting tax collections as a result of lower wholesale prices.

Kentucky’s road fund has been strained by fuel-efficient vehicles that use less gas. The emergence of electric and hybrid cars also is a small but growing factor.

Ashli Watts, the Kentucky Chamber’s president and CEO, said Friday that the coalition of business groups could support eventually linking gas taxes to an index, but she reiterated that it is not likely to back any bill that doesn’t include a 10-cents-per-gallon tax increase.

That’s because city and county groups have agreed on a revenue-sharing deal that is based on additional road funds.

“That’s a fair model and that’s the way the world is moving,” Watts said. “I think we’ve all committed to that’s what needs to happen.”

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