Governor Andy Beshear has issued Executive Order 2026-235 declaring a state of emergency in response to rising fuel prices and directing immediate action intended to reduce costs for Kentucky drivers. The order became effective May 11, 2026, and, under current law, remains in effect for 30 days. 

The order temporarily reduces Kentucky’s motor fuels tax by 10 cents per gallon and freezes an automatic increase that otherwise would have taken effect July 1, 2026.  

Under Kentucky law, the gas tax is adjusted periodically using a formula that reflects average wholesale prices. For fiscal year 2026, Kentucky’s gas tax rate is 26.4 cents per gallon. Under the statutory formula, the rate was expected to automatically increase to 27 cents per gallon on July 1. Executive Order 2026-235 freezes the rate at the current level. 

Under KRS 39A.090, chief executive officers or legislative bodies may request extensions of the executive order. 

The Governor also announced that he is urging Congress and Kentucky’s congressional delegation to suspend the federal gas tax through the end of the year to further reduce prices at the pump. In conjunction with these efforts, the order activates Kentucky’s price-gouging protections, making it unlawful for sellers to take advantage of the emergency by inflating prices or failing to pass along the benefit of the tax reduction to consumers. The Governor also signed Executive Order 2026-236, which he stated is intended to freeze any increase in motor vehicle property taxes in 2027.  

While the order is expected to provide financial relief to consumers, it will also result in a temporary decrease in motor fuels tax revenue. Because those revenues support Kentucky’s Road Fund and are partially distributed to cities through Municipal Road Aid payments, local governments may see a reduction in funding for road and infrastructure projects during the period the order is in effect.  

The state budget office estimates the order will reduce transportation revenues by approximately $27 million per month while the reduction remains in effect. Approximately $12 million of that amount would otherwise flow directly to cities and counties for local transportation and infrastructure funding. Cities alone are estimated to lose roughly $1 million in road funding for every 30 days the reduction continues. 

KLC will continue monitoring the implementation of the executive orders and provide additional information to members as it becomes available.