Kentucky’s gas tax is set to increase by 1.5 cents to 21.1 cents on July 1, even though the cost of gasoline, which has been above $4 a gallon for much of the past month, has driven sales of gasoline down 2.6% in the state this year, the Louisville Courier-Journal reported.
Kentucky's diesel tax also increases on July 1 to 18.1 cents. The revenue generated by the fuel taxes goes to the state road fund.
The law in Kentucky is for the fuel tax to reset itself at least once a year based on the average wholesale price of gas in the state, according to the Courier-Journal. Since 2004, the tax has increased by a little more than a penny a year. If the wholesale price fell, the tax would follow suit.
Each penny of the gas tax brings in about $30 million in revenue for the state road fund, according to Gene Zaparanick-Brown, an economist for the state, but this year might be an exception, because people are driving less and buying less gas.
Consumers bought 10% less gas in March, for example, than they did last year, Russell Romine, acting budget director for the Kentucky Transportation Cabinet, told the Courier-Journal.
The state budget office predicts that wholesale prices will remain steady for the next year, so the state fuel taxes should do the same.
