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Kentucky transportation officials outline multi‑million dollar hit to county road aid from recent executive order
Summary
At a June 3 meeting of the Budget Review Subcommittee on Transportation, KYTC officials told lawmakers that Executive Order 2026-235 could reduce FY26 payments to County Road Aid, Rural Secondary and Municipal Road Aid by about 3.3%—roughly $11.8 million for one month and $17.7 million over 1.5 months—raising short‑term cash‑flow and reserve concerns.
At a June 3 meeting of the Budget Review Subcommittee on Transportation, Shaun McKiernan, Budget Director for the Kentucky Transportation Cabinet, told co-chair Senator Donald Douglas that Executive Order 2026-235 would produce about a 3.3% reduction in FY26 total payments to county and municipal road programs.
"The 3.3% impact on FY26 total payments represents a cost of $11.8 million if the reduction lasts 1 month and $17.7 million over 1.5 months," McKiernan said, adding that those amounts affect County Road Aid, Rural Secondary, and Municipal Road Aid and amount to roughly a 5% reduction of the total available for those programs.
Why it matters: those programs provide routine maintenance and local road projects across Kentucky counties, and a shortfall at that scale could strain local cash flow and delay planned work. Deputy Secretary Mike Hancock of the Kentucky Transportation Cabinet told the committee the cabinet is monitoring cash flow closely and coordinating with the Department of Revenue on how counties will track the change.
"The Department of Revenue is having discussions about how the counties will track the changes in the gas tax," Hancock said, noting that KYTC performs monthly cash‑flow reviews as part of its financial oversight. He also said the Road Fund routinely supports large daily expenditures: "$10 million per day is not an unusual amount for expenditures to come from the Road Fund," which he equated to about $100 million for a 10‑day reserve.
Senator Jimmy Higdon warned the committee about the decision by the Attorney General that shortens the tax take and signaled concern about any extension. "The decision by the Attorney General was for a 30‑day reduction of 10 cents per gallon. It could be catastrophic if the reduction is extended beyond that period of time," Higdon said to the panel.
Committee members pressed for operational fixes and options to stabilize revenue. Representative John Blanton urged collaboration to modernize revenue‑tracking systems and preserve a consistent balance of incoming funds. In response, Hancock told Representative Tom Smith that KYTC's quality engineering staff "welcome the opportunity to make things better," and told Representative Randy Bridges that KYTC evaluates all projects, including those tied to economic development.
McKiernan and Hancock also presented a separate but related briefing on the timeline and an efficiency forecast for using General Funds in the Road Plan for high‑growth counties, describing planning steps to manage allocations and schedules should revenue volatility persist.
The subcommittee received the briefings but took no formal vote or motion at the meeting. With no further business, Co‑Chair Representative Ken Upchurch adjourned the session at 11:25 AM ET/10:25 AM CT.
