With the next state budget now in the Senate’s possession for its consideration, the House continued its work on the measures that will shape Kentucky’s long-term infrastructure investments. Lawmakers focused on bills and resolutions that establish the funding framework for the state’s six-year roadmap for constructing and maintaining roads, bridges, and other critical transportation infrastructure. These measures also include support for important projects at the city and county level while outlining the final four years of Kentucky’s six-year road plan, ensuring communities across the Commonwealth can plan for improvements that keep people and commerce moving safely and efficiently.
During the second week of March, we approved HB 502, a $4.2 billion proposal that includes 617 projects in communities across the Commonwealth. The measure is a strong response to the decrease in gas tax revenue and takes a strategic approach to making sure that every dollar makes the biggest impact. The bill includes $420 million for pavement repairs on interstates and state highways, and $900 million for bridge improvements. It also continues the commitment to fund major projects on the Mountain Parkway, I-69, and the Brent Spence Bridge.
To determine which projects were funded in HB 502, the plan relies heavily on the SHIFT (Strategic Highway Investment Formula for Tomorrow). The formula applies to all transportation funding that is not prioritized by other means, including maintenance work, local government projects, and those with dedicated federal funding. The SHIFT process starts with local and state transportation leaders identifying potential projects, which are then run through criteria that include safety, congestion, economic growth, benefit/cost, asset management, and resiliency. SHIFT is also used for local road planning, in which case non-motorized mobility – like bicycles and scooters – is also considered.
The road plan represents a multi-billion-dollar investment in Kentucky’s transportation infrastructure, requiring careful planning. To manage this effectively, the plan is organized in six-year windows, allowing lawmakers to prioritize projects, coordinate funding, and address the most critical needs across the state. As part of this effort, the House approved HJR 75, which lays out the final four years of the next six-year plan. The plan schedules total appropriations of $3.98 billion in FY 2029, $4.98 billion in FY 2030, $5.4 billion in FY 2031, and $9.7 billion in FY 2032. This provides a structured, forward-looking approach to maintaining and improving roads across the Commonwealth.
Lawmakers also approved HB 501, the operating budget for the programs and services offered by the Kentucky Transportation Cabinet. The bill also provides cities and counties road funding through the Local Assistance Road Program (LARP). In the first fiscal year, the measure provides $68.2 million, with $28.6 million set aside for the second year. A resolution that details how the first year’s payment of $68.2 million will be spent, HJR 76 also cleared the House.
This represents a significant increase from current funding levels. LARP received $23.8 million in Fiscal Year (FY) 2026 and $19.9 million in FY 2025, while the proposed FY 2027 funding would exceed those two years combined. To put it simply, this would allow many more local roads across the Commonwealth to be resurfaced. Since the program began, funding has generally limited projects to roads rated a 10, and occasionally a few rated 9. HJR 76 includes funding for projects rated 8,9, and 10. The additional investment would allow more deteriorating roads to be repaired before conditions worsen further.
To make the most of every dollar, we passed HB 622, which would create a pilot program to evaluate the use of “chip seal” surface treatment on county gravel roads. Beginning July 1, 2026, and running through June 30, 2030, the Department of Rural and Municipal Aid would oversee the project. Chip seal is less expensive to install and the pilot program will give us an opportunity to measure its benefits against potential drawbacks.
Overall, this is a solid plan. This is particularly important considering declining revenue from Kentucky’s motor fuels tax – the primary source of funding for road projects. Not only have we experienced a decline because of the increase in hybrid and electric vehicles, but the tax rate has also gone down. The motor fuels tax is adjusted each year based on the average wholesale price of gasoline. When gas prices go up, the tax rate increases; when prices fall, the rate decreases. Under this formula, the tax dropped from 27.8 cents per gallon in FY 2025 to 26.4 cents per gallon in FY 2026 as fuel prices declined.
This legislation now goes to the Senate for consideration. We will continue our work on it in conference committee before session adjourns. As a reminder, the House version of the state’s two-year, $31.56 billion budget plan went to the Senate in late February. The bill, HB 500, reflects a commitment to Kentucky’s core priorities while maintaining a responsible, forward-looking approach to spending. It includes an increase in per-pupil education funding and continues strong support for essential services such as Family Resource and Youth Service Centers, Medicaid, juvenile justice, corrections, and programs serving veterans.
At the same time, the plan looks for opportunities to make government more efficient and effective. It encourages the state to streamline operations by trimming outdated programs, eliminating duplicate grants and incentives, and reducing unnecessary administrative costs and consulting contracts. A 3% reduction in executive branch spending each year is included, while agencies are given flexibility to determine where savings can be achieved. By focusing resources on programs that deliver results and right-sizing government operations, the plan helps free up funding to better serve Kentucky families and communities.
The budget also responsibly addresses employee benefits by funding the Kentucky Employees Health Plan (KEHP) at actuarially determined levels. It accounts for projected cost increases of 14% in the first year and 10% in the second. Lawmakers continue to seek greater transparency surrounding these estimates and other executive branch budget proposals, including requesting additional data and issuing subpoenas to better understand the rising costs of the health plan.
As always, I can be reached anytime through the toll-free message line in Frankfort at 1-800-372-7181. You can also contact me via email at Amy.Neighbors@kylegislature.gov and keep track through the Kentucky legislature’s website at legislature.ky.gov.
(HD21 – News from the Office of Rep. Neighbors)