City street funding issue heard by state panel

City street funding issue heard by state panel

Bill Stephens

October 27th, 2016



FRANKFORT—Cities want more state road aid, according to testimony given to state lawmakers today, and local officials say they have a plan to get it that won’t hurt counties. But not all lawmakers seemed convinced, with some requesting more information about the proposal.

The Kentucky League of Cities’ plan would set an $825 million cap on state road funds distributed through a state 1948 revenue-sharing formula called the “Fifths Formula”—the formula on which distribution of county road aid and rural secondary road funding is based. Revenue-sharing dollars allocated to local governments above that cap under the proposal would be split between cities and unincorporated areas based on population and road miles, KLC officials told the Interim Joint Committee on Local Government.

Rep. Jim DuPlessis, R-Elizabethtown, told KLC he has been told that Kentucky’s counties don’t agree with the proposal. He also said setting a cap could be a problem several years down the road.

“I think that cap, if there is some cap, needs to also have an inflationary increase as well—That’s the kind of thing I think the county judge-executives and KACo (Kentucky Association of Counties) would probably be interested in working with together,” DuPlessis said.

Committee Co-Chair Rep. Steve Riggs, D-Louisville, said the committee needs a simplistic, written definition of the Fifths Formula and other pertinent information from KLC, which KLC Deputy Executive Director J.D. Chaney said will be provided to the panel. “We will include all that: the legislative agenda, the formula of Fifths, the way it works with the new proposal… we’ll get all that together,” he said.

The proposed $825 million cap would be based on 2014 state gas tax receipts that Chaney called the “very highest level ever” of gas tax receipts figured into the formula. Setting the cap at that level, he said, would hold counties “harmless,” or essentially allow them to continue receiving the funding they already enjoy. Previous KLC road fund proposals had considered taking some of revenue sharing dollars away from the counties and reallocating it to cities, he reminded lawmakers.

Senate Majority Floor Leader Damon Thayer, R-Georgetown, asked what percentage of city road budgets KLC hopes to fund with state road dollars. Chaney said there is no set percentage proposed—only a system that he said would hopefully, in time, be “more fair” to cities.

“It still favors counties,” he said. “64.2 percent of that new money above $825 million would still go to counties and 35.8 percent would go to cities, instead of (the current) 18 percent. So no, we’re not here asking the General Assembly to give us 100 percent of funds—but there’s no set percentage at all.”

KLC President and Sadieville Mayor Claude Christensen said Kentucky cities spend around $250 million a year on construction and maintenance of city streets, yet receive less than $60 million in state road aid. Those funds are provided through the state municipal road aid program, founded in the 1970s, which is based on population and not the Fifths Formula.

Christensen said his city of Sadieville had to use around 13 percent of its general fund dollars to cover street work last fiscal year. The city had a total budget of $287,000 yet only received $5,837 in municipal road aid from the state to cover $41,730 in street repairs.

“Some years, in fact most years, we just can’t afford to do any street work. We have to wait until it’s really bad and we have no choice,” he said. At the same time, he said Kentucky counties have received more road aid than they needed in recent funding cycles.

“We’re not interested in harming the counties. We’re just interested in having enough to do what we need to do in the cities,” said Christensen.

The road fund proposal is KLC’s top legislative priority for the 2017 session of the General Assembly, with pensions, tax options, drug abuse concerns, prevailing wage and unfunded mandates rounding out the list.

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