Kentucky’s taxes on sales of gasoline, diesel and ethanol motor fuels will drop by 4.3 cents per gallon on New Year’s Day.
The decrease reflects a drop in the calculated average wholesale price of motor fuels, as provided under Kentucky law, according to the state transportation department. This will translate into a $129 million dollar annual loss for the state’s highway program, or about 6% of its budget.
“A loss of revenue is always concerning, but a revenue impact of this magnitude is crippling,” said Kentucky Transportation Secretary Mike Hancock said. “It means less money for building, improving, maintaining and repairing our roads, streets and bridges.”
Kentucky’s fuel taxes are made up of a variable excise tax and a fixed, supplemental user fee of 5 cents per gallon for gasoline and 2 cents per gallon for diesel and other fuels.
There also is a state fee that is paid at the pump, 1.4 cents per gallon, plus a federal tax of 18.4 cents per gallon of gasoline and 24.4 cents per gallon of diesel, neither of which indexed for inflation and has not changed since 1993.
The variable excise tax rate is 9% of the average wholesale fuel price, so the tax rises, falls or stays unchanged from quarter to quarter on the basis of a survey of fuel prices. The survey is conducted by the state the first month of each quarter and the change in rate, if any, takes effect on the first day of the first month of the following quarter.