Road Fund Formulas Should Reflect Our 2015 Reality

There is a lot of buzz in the news regarding the shortfall of gas tax revenues needed to fund many of our city’s most critical road projects. Today, I want to add another piece to the puzzle: Kentucky’s outdated road funding model.

When determining how to dole out the state gas tax, the current calculator distributes revenue with 18.3 % going to county road aid, 22.2% going to rural secondary aid, and 7.7% going to municipal road aid. The county and rural secondary programs (40.7%) are divided by what is known as the “formula of the fifths”—1/5 equally, 1/5th by rural population, 1/5th by rural road miles and 2/5th’s by rural land area. The municipal road aid program is based solely on the total urban population.

The “formula of the fifths” was created in 1948 when a much larger portion of the state was considered rural. As a result, the formula favors less densely populated counties. According to the Kentucky League of Cities, 61% of vehicle miles traveled each year are on rural roads while local urban roads account for 39%. Yet rural counties receive 85% of road aid funds while urban areas receive only 15%.

A closer look reveals the formulas to be increasingly outdated. First, none of the formulas — municipal road aid, county road aid or rural secondary — take into account lane miles, traffic volume or other measures related to use or maintenance needs. These formulas work to discourage growth and impede economic development. County and rural secondary formulas penalize all counties that are growing rapidly, since more of their population is considered urban.

GLI supports HB 289, sponsored by Representative Arnold Simpson (D-65) to combine the three current programs into one “Local Road Aid Program” and allocate funds based on a new “formula of thirds”. The proposed formula would split funds based on 1/3 population, 1/3 road miles and 1/3 land area. The bill has been assigned to the House Appropriations and Revenue Committee, where it is awaiting a hearing.

When the road aid formula was written more than 65 years ago, its focus made sense. Now, more than 50% of Kentuckians reside in larger towns and cities and the wear and tear on urban roads has increased accordingly. That is why Frankfort should revise the road funding formulas for a fair allocation to local governments with higher traffic areas. GLI believes that this should be done by including elements of road usage in road aid allocations.

>>For more information regarding the proposed “Local Road Aid Program” or other advocacy issues please contact Sarah Davasher-Wisdom, VP, Government Affairs and Public Policy 502.625.0073.

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