Gov. Andy Beshear extends 10¢ gas-tax relief in 37 areas and redirects savings to blunt child-welfare and Medicaid cuts

Governor Andy Beshear announced steps Thursday to cushion Kentucky families from rising fuel and program costs, saying he had issued a 30-day, 10¢ reduction in the state gasoline tax and extended that cut in 37 communities while using administrative savings and unused program funds to blunt deep budget cuts to foster care and Medicaid.

"That's why on May 5, I took several steps to help lower gas and diesel prices for Kentuckians," Beshear said, describing an executive order that declared a state of emergency and reduced the gas tax by 10¢ for one month. He told reporters the order was expected to save Kentuckians about $26.8 million statewide over that period.

He said state law passed after the pandemic limits a governor'issued state of emergency to 30 days unless a county judge or mayor approves an extension for their area. "So on Tuesday, we announced that 33 communities had submitted their request, and I extended the order in those areas," Beshear said, later noting the total had reached 37 before the deadline and that the extensions run through June 30.

Beshear framed the moves as a choice to prioritize family budgets over short-term impacts to the state road fund: "We are losing millions. Now in this instance, our families are keeping millions," he said, adding the state has reserves and savings to cover the effect.

On budget offsets, Beshear said he would reassign administrative savings and money allocated to projects that did not occur. He cited about $186 million in debt-service savings his administration identified and said $25 million originally allotted to a failed economic development project and $5 million tied to an EKU housing project would be redirected to protect services.

"Given this new flexibility, we are going to direct those funds towards the services, especially for foster care and foster care children that otherwise would have seen deep and difficult cuts," Beshear said. He said the actions are "extraordinary measures" intended to blunt roughly half of the Medicaid reductions in the adopted budget and to avoid cuts to foster-parent rates and residential-provider payments that support 8,841 children.

Beshear also said the administration secured $120 million from FEMA that was not accounted for by the legislature and projected a year-end surplus that could exceed $300 million, money he said would grow the rainy-day fund and provide additional capacity to protect services.

Republican legislators have criticized the move, and Beshear said some local officials withdrew extension requests after what he described as pressure from state lawmakers. He said he expects that if legislators or the attorney general challenge his transfers in court, the money will already have been moved, and "All they'll be doing is taking it away from foster families and foster care residential providers that desperately need it."

The governor said some measures may still require legislative action to fully backfill impacted road or aid formulas, and he urged providers and affected families to contact their legislators to press for relief.

The briefing concluded with questions from reporters about the scope of the extensions and whether the reassignments fully address municipal and county road aid shortfalls. Beshear said the state has the funds to cover the immediate pain and that he will continue seeking ways to put families first.

The governor did not identify a final legal citation for the post-pandemic law that limits emergency extensions beyond 30 days; he described it orally as a statute enacted by the General Assembly during the pandemic era.