Consumber Prices

Gas is pumped at a Costco Warehouse.

(The Center Square) – Kentucky’s gas tax will increase in just a little more than a month.

In a series of tweets, Gov. Andy Beshear said drivers would be paying 2.1 cents more per gallon starting July 1, and the Democratic state executive blamed the Republican-led General Assembly.

Last year, as Kentucky and the rest of the nation were dealing with record fuel prices, Beshear took the unusual step of suspending a 2-cent tax hike. The state’s gas tax rate is calculated specifically by state law.

According to AAA, the record daily average price for a gallon of regular unleaded was $4.798 on June 11, 2022, a little more than a week after the governor took action.

Kentucky’s average price Friday, the start of the Memorial Day holiday weekend, was $3.349, a drop of more than 30% from the record high.

“While I’m glad to see gas prices going down this year… I still hoped the General Assembly would have acted,” Beshear tweeted. “Given that we had the best General Fund collections in the history of Kentucky, this shouldn’t have been an issue.”

Beshear is seeking re-election this year, and Attorney General Daniel Cameron is his Republican challenger in November.

The tax hike means the state tax on gas will go from 26 cents per gallon to 28.1 cents when the 2023-24 fiscal year starts. The tax on diesel will increase from 23 cents per gallon to 25.1 at the same time.

Even with the 8% tax increase on unleaded fuel, Kentucky’s state tax will remain lower than the national state tax average of 31.6 cents per gallon. That’s according to a January report from the U.S. Energy Information Administration.

Among neighboring states, only Missouri’s 22.5-cent tax was lower according the federal agency.

There has been some chatter within the business community about an increase in the tax, which is used to build new roads and bridges and maintain existing ones. That comes as the American Society of Civil Engineers gave the state’s roads a D grade and the bridges a C-minus.

In its 2023 legislative agenda, the Kentucky Chamber of Commerce said it supported state and federal legislation that would “provide new and sustainable funding” for the state’s network of roads and bridges, which are the group said are vital to businesses in the state and to attract new investments.

The chamber, which opposes temporary suspensions of gas taxes, noted Kentucky has $6 billion worth of road projects that were not funded at the beginning of this year.