Gov. Andy Beshear took action Thursday to freeze Kentucky’s gasoline tax, an emergency measure intended to prevent an impending rate hike as consumers battle soaring prices at the pump.
The Democratic governor said his administration’s action prevented a 2-cent-per-gallon gas tax increase that would have taken effect July 1.
“I know that one of the biggest challenges of the present is the price of gasoline,” the governor said when making his announcement at his weekly press conference.
“It’s harder for families to get to work,” he added. “It costs them more to bring their children to school, take their families to church or go on a hard-earned vacation.”
Kentucky’s gasoline tax is set by state law, both in its rate and how it is calculated. The current rate of 26 cents per gallon was set to increase by 2 cents per gallon under a trigger, which would have driven regular fuel and diesel prices higher, the governor’s office said.
The average gas price in Kentucky was $4.31 a gallon at the end of May, down from about $2.85 a gallon a year ago, Beshear said.
The governor said he was freezing the gas tax rate through an emergency regulation. The action was pushed back later that day by Republican Senate Speaker Robert Stivers, who questioned the legality of the process used by Beshear. Stivers said the governor “cannot deviate from the amount of tax determined by law.”
“Not only is this action illegal, 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,” Stivers said. in a report.
Stivers said lawmakers look forward to working with the governor to achieve the goal of suspending any further gas tax increases, but doing so in a “lawful and proper” manner.
Republican House Speaker David Osborne, meanwhile, pointed to relief coming from a measure passed by the GOP-led Legislature that seeks to phase out Kentucky’s personal income taxes. The first rate cut is expected to “leave about $500 million in the pockets of Kentucky workers next year,” Osborne said.
Funds raised through the state gasoline tax contribute to the state road fund.
Beshear said freezing gas tax rates would have “no significant impact” on the state’s transportation budget and will not affect any current or planned projects.
“All projects will go ahead,” Transportation Secretary Jim Gray said.
The freeze is expected to reduce the Road Fund’s budgeted revenue by 1.6% in the first seven months of the next fiscal year, the governor said. Beshear said he will propose to lawmakers to dip into the state’s huge General Fund budget surplus next year to make up for lost revenue from the road fund. The General Fund pays for most state services, including education and public safety.
The governor also said he was seeking advice from Attorney General Daniel Cameron’s office on whether to declare a state of emergency to activate the state’s price gouging law. The AG’s office later said it had received the governor’s letter and was reviewing it. Cameron is among the Republican candidates for governor in 2023, when Beshear will seek a second term.
In February, Beshear took executive action to provide relief to Kentucky taxpayers impacted by pandemic-related increases to their vehicle property tax bills.
Meanwhile, Republicans in Kentucky are increasingly trying to tie Beshear to Democratic President Joe Biden amid the difficulties caused by soaring consumer prices.
While acknowledging the impact caused by inflation, the governor touted his handling of the state’s economy. It points to unprecedented job creation and business investment, as well as Kentucky’s lowest unemployment rate on record, posted in April. The state landed its two biggest economic development projects ever—the two battery plants—during Beshear’s tenure as governor.
In an interview with The Associated Press on Thursday, the governor commented on criticism from his potential GOP rivals in next year’s gubernatorial race.
“Unfortunately, some – instead of elevating us, talking about where we are going – are prepared to bring down … our economy for their own political ends,” he said.
During his press conference, Beshear highlighted several programs that can help inflation-ridden families pay rent, mortgages or utilities or help with child care costs.
“Don’t be afraid to ask for help,” the governor said.