Kentucky's Road Fund isn't growing as fast as some would like. But it's doing much better than it was two years ago.
In 2015, the state Road Fund -- comprised of motor vehicle fuels tax revenue, motor vehicle usage tax, and licensing and registration fees - faced losses of more than $250 million. The Kentucky General Assembly acted quickly to stabilize the fuel tax at $.26 per gallon. This action allowed the state to continue with the road plan projects and the counties to continue their extremely important maintenance projects.
Today, the $4.5 billion two-year Road Fund continues to get nearly half its revenue from the motor fuels tax (actual revenues from the tax were $760.5 million in Fiscal Year 2017), but growth is slow. Part of the reason for that, say Transportation budget officials, is the statutory floor of 26 cents, which has been in place the past two fiscal years. Yet without that 26 cents, the losses would have been catastrophic.
And there has been some growth in the Road Fund, even if that growth isn't as robust as we would like it to be:
Actual motor fuels revenue for Fiscal Year 2017 was 13.2 percent more than estimated officially, with motor vehicle usage tax up more than 30 percent and other revenue from fees, etc. up by 7.5 percent. That brought the Road Fund $51.1 million more than anticipated last fiscal year.
The usage tax growth of 30.3 percent over official estimates came from a boon in vehicle sales in Fiscal Year 2017. Calling the growth "unprecedented," state Transportation budget officials also said it is not sustainable, warning that vehicle purchases will inevitably slow at some point.
Fiscal Year 2017 revenues were also better than they are expected to be at the close of this fiscal year. Transportation budget officials say the official enacted revenue estimate for the Road Fund for 2018 is two percent below actual 2017 revenues. That includes 1.4 percent less revenue from motor fuel taxes and 2.6 percent less in usage tax revenue.
Not that robust growth this fiscal year isn't possible. It certainly is, but Transportation officials aren't banking on revenues meeting or exceeding actual revenues from Fiscal Year 2017. Whatever growth there is will hinge on consumption.
The long view is sometimes better to take when looking at revenues, and that certainly is the case with our state Road Fund. If you look at growth over the past 10 years, you'll see growth was strong between Fiscal Years 2007 and 2014, when Kentucky's motor fuels tax revenues began to decline. We are still far from the robust revenues of 2014 but at least now, with the new 26 cent floor, our revenues are stable--with the daily Road Fund cash balance remaining above $100 million.
New agency policies have also helped the Road Fund get through the recent lean years. Some help has come from the Cabinet's "Pause-50" plan implemented last year, which paused the start of new state-funded transportation projects in all phases for Fiscal Year 2017 and limits project starts to around $50 million for Fiscal Year 2018, which began July 1. Some of these projects are now underway.
Everyone in our part of the state is pleased to see that the six-laning of I-65 in Kentucky is nearly complete. The last section in the Elizabethtown area is scheduled to be completed in 2018. Also, 2018 is the year that the Durham Springs project on Highway 98 and the bridge and roadwork project near the intersection of Old 31-E and the Old Hartsville Road in Allen County are scheduled to be completed.
All of these efforts to sustain the Road Fund will continue, Transportation officials tell us, and that's good news for us all.
Have a good week, and we'll talk soon.