An effort to make skyrocketing gas prices a bit more affordable in Kentucky is costing the state millions of dollars each month, lawmakers learned Tuesday.
Gov. Andy Beshear, a Democrat, issued an executive order in May to temporarily cut part of Kentucky’s gas tax, dropping the typical 26.4-cent-per-gallon tax to 16.4 cents per gallon. He also preemptively suspended a 0.6-cent increase to the tax set to take effect in July.
“Our families are feeling the pain,” Beshear said at the time. “The price of gas isn’t partisan. It’s not Democrat or Republican. It’s just too high.”
Kentucky’s gas tax goes toward fixing roads across the state. Beshear said in May he would ask Kentucky’s GOP-dominated legislature to cover any funding gaps with the state’s rainy day fund when they start the 2027 legislative session in January.
Beshear at the time acknowledged a lower gas tax may mean some road projects get delayed, but it’s “a small price to pay for families that can’t afford groceries and medication.”
Reps from the state’s transportation industry, though, said during a Tuesday legislative hearing the slashed tax rate works out to a savings of around $5 a month for the average Kentucky driver—but means roughly $26.8 million less heading into the road fund each month.
Transportation cabinet officials said about $11.8 million of that would’ve gone specifically to cities and counties for roadwork, with the rest hitting the state transportation department’s budget. But the ultimate impact will be determined by exactly how long the gas tax is reduced, they said.
Chad LaRue, who leads a group representing highway construction industry and related contractors, told lawmakers the tax cut is “mostly a symbolic savings for the average Kentuckian,” while representing a bigger hit to needed road projects statewide.
Every dollar counts and he doesn’t want to diminish those $5 or so in savings, LaRue said, but deferred road maintenance could lead to worsened road conditions, potentially causing tire damage and front-end alignment issues on drivers’ cars.
Beshear’s order is temporary, and is set to last until the latter of two things: until the war in Iran ends or until gas prices in Kentucky drop below $3 a gallon.
AAA data signals Kentucky’s average regular gas price generally remained the same from around the time Beshear announced the change in May—with gas being around $4.218 a gallon—to last week, when it was $4.213 a gallon. The decrease officially took effect May 11.
Gas prices in Kentucky have been trending down slightly over the past week, AAA noted, but remain elevated. Regular gas averaged around $3.921 a gallon in Kentucky on Wednesday. By Thursday morning, that had dropped to $3.883 a gallon. (For reference, a gallon of regular gas in Kentucky a year ago was around $2.83, according to AAA.)
Part of the reason for the decrease was the recent end of a separate gas tax in Louisville—the state’s largest city—and a few chunks of neighboring counties. Beshear’s order estimated that would save those drivers an extra 10 to 35 cents per gallon.
During the roughly hourlong legislative hearing in the Interim Joint Committee of Transportation, some Republican lawmakers criticized Beshear’s tax cut as short-sighted and detrimental, and accused Beshear of political pandering as he eyes a possible 2028 presidential run. LaRue asked lawmakers to consider legislation to restrict or prohibit the governor from “politicizing” the gas tax.
“We just lost $27 million like that,” Rep. John Blanton, a Republican chairing the meeting, said. “And nobody’s seeing any real benefit from it.”
Scottie Ellis, a spokesperson for Beshear, said Wednesday that cutting the gas tax wasn’t “irresponsible,” but was “the right thing to do.”
“But please ask each of the Republicans if they believe Donald Trump is pandering or irresponsible in proposing a similar reduction of the federal gas tax,” she said. (Trump said Monday he wants to drop the federal gas tax, which would cut about 18 cents per gallon. Such a move would require an act of Congress.)
Rep. Matt Lehman, a Democrat from Northern Kentucky who sits on the committee, later defended Beshear’s gas tax cut on social media: “Yes, we have underfunded construction and maintenance of Kentucky’s roads. But our Republican supermajority has failed to fix this problem for 10 years.”
He continued, saying “Beshear’s temporary tax break on skyrocketing gas prices should be a welcome measure during inflationary times like this.”
