Kentucky House Outlines Transportation Vision for Biennium
March 5, 2026The Kentucky House of Representatives unveiled 26HRS HB 501, the Commonwealth’s biannual transportation budget, which outlines how the state will allocate transportation funds for Fiscal Year 2026 through Fiscal Year 2028. The total Transportation Cabinet budget, expensed from all sources, is approximately $3.25 billion in both FY 2026-27 and FY 2027-28. This shows a slight decline of approximately $400 million (11.7%) from FY 2025-26’s total Transportation Cabinet budget of $3.62 billion.
Road Fund dollars are budgeted to decline by 9.8% from the $1.84 billion allocated in FY 2025-26 to approximately $1.7 billion in both FY 2026-27 and FY 2027-28. The decline in Road Fund revenue can be attributed to a drop in the state’s motor fuels gas tax, which has fallen as the average wholesale price of gasoline has decreased. The state’s gas tax rate has dropped 12% (from 27.8 cents to 26.4 cents) over the last two years while consumption has remained flat.
The line-items that impact Kentucky’s cities within the State’s transportation budget include:
An allocation of $19.2 million in FY 2026-27 and $18.6 million in FY 2027-28 within the State Supported Construction Program from the Road Fund for the Local Assistance Road Program (LARP) to assist cities and counties.
An allocation of $24 million in FY 2026-27 and $23.25 million in FY 2027-28 within the State Supported Construction Program from the Road Fund to establish the County and City Bridge Improvement Program (CCBIP). The KY Transportation Cabinet (KYTC) will report to the Interim Joint Committee on Appropriations and Revenue a list of bridge repairs and replacements that have been completed, the date of completion, and the status of ongoing projects.
A reporting requirement for The KY Department of Vehicle Regulation that provides data regarding wait times, types of appointments, types of transactions, suggestions on reducing customer wait times for each regional driver licensing office, and an overall statewide assessment of the regional driver licensing offices. The report will be submitted to the Interim Joint Committee on Appropriations and Revenue.
The Kentucky Municipal Road Aid (MRA) program, the 7.7% local state share of state gas tax revenues for city roads, will be funded at $54.3 million in FY 2026-27 and $57.4 million in FY 2027-28. This is a decline of approximately 22% ($11.9 million) from the $66.2 million in FY 2025-26 that was appropriated in the previous biennium transportation budget. In comparison, the Kentucky County Road Aid (CRA) Program also declined 22% from FY 2025-26 to FY 2026-27. The Office of the State Budget Director (OSBD) cautioned during the interim that the local share of the state motor fuels tax would experience a decline.
Accompanying 26RS HB 501 are the following pieces of legislation:
26RS HB 502: The 2026-2028 Biennial Highway Construction Plan.
26RS HJR 75: The last four years of the State’s Six-Year Road Plan.
26HS HJR 76: The Local Assistance Road Program projects portion of the Six-Year Road Plan.
26RS HJR 76 outlines the list of proposed local government projects, the dollar amounts in FY 2027, and project descriptions under the Kentucky Local Assistance Road Program (LARP). In total, $68.1 million is proposed under the House Joint Resolution. This is an increase from 25RS HJR 46, which proposed approximately $23.9 million in FY 2026. Information regarding the program and prior allocations to cities can be found here.
The four proposals are awaiting action by the House.
