[NFBK] FW: KRF Retail Record - A Legislative Update from Frankfort for June 2026

Thu Jul 2 01:38:33 UTC 2026

Good Evening:

Something to pass on…Please see below.

Respectfully,

Todd

Todd E. Stephens, Assistant Legislative Director

NFB Kentucky

https://nfbky.org

From: Steve McClain <smcclain at kyretail.com>
Sent: Wednesday, July 1, 2026 5:08 PM
To: Todd Stephens <todde.stephens at windstream.net>
Subject: KRF Retail Record - A Legislative Update from Frankfort for June 2026

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Interim Session for June 2026

Interim legislative meetings kick off process of setting agenda for 2027 Session

Kentucky lawmakers have convened for the 2026 Interim Session as committees are meeting to discuss various issues, many of which will set up legislation for the 2027 Legislative Session. Regulations implementing laws that passed during the 2026 session have also been filed with feedback being sought from interested parties.

While discussions heat up in Frankfort, attention will begin to focus on the November elections as half of the Senate and the entire House is up for election, as well as the federal delegation to Washington, D.C. Republicans are considered heavy favorites to retain supermajorities in both chambers in Frankfort. A list of candidates running in November is attached.

TRANSPORTATION ISSUES

Republican lawmakers raise concerns about the governor’s move on gas tax

Governor Beshear’s actions to lower the gas tax may have expired on June 30, but lawmakers fear the impact may be felt in other ways for months to come.

Legislators on the Budget Review Subcommittee on Transportation and the Interim Joint Committee on Transportation during their June meeting raised concerns about the impact of freezing and decreasing the gas tax by executive order due to the war in Iran. They questioned the impact on the state’s road fund, which is primarily funded by the gas tax consumers pay at the pump. Additionally, they discussed the implementation of the executive order on retail businesses selling gas and collecting the gas tax when some jurisdictions elected to continue the tax decrease and others did not. The Federation joined with the Kentucky Grocers and Convenience Store Association and the Kentucky Petroleum Marketers Association and sent a letter to the committee explaining the difficulty in collecting the taxes when certain cities and counties choose to take the reduction and others do not. The letter is attached.

When gas prices spiked to over $4 a gallon after the war with Iran started, Beshear signed an emergency regulation to freeze the gas tax at 26.4 cents per gallon ahead of an expected increase to 27 cents per gallon on July 1. The action to freeze the current rate is projected to save Kentuckians about $1.7 million, combined, each month. He also declared a state of emergency and reduced the gas tax by 10 cents, which should have resulted in a 10 cent per gallon price decrease for Kentuckians. The Governor requested the order take effect as soon as possible for both regular and diesel, with the potential to save Kentuckians $26.8 million combined over a one-month period. As that state of emergency was about to expire, Beshear encouraged city and county leaders to request an extension of the 10 cent reduction, and 33 communities took him up on that extension, which expired June 30.

Transportation Cabinet officials and representatives from the Kentucky Association of Highway Contractors appeared before the committees about the financial consequences of the policy for the state's transportation system. Deputy Transportation Secretary Mike Hancock explained that any resulting shortfall in transportation funding could potentially be replaced through the state's Budget Reserve Trust Fund (Rainy Day Fund), subject to legislative approval.

Transportation Cabinet Budget Director Shawn McKiernan presented the financial analysis of the executive order. He estimated that the 10-cent reduction would decrease Road Fund revenues by approximately $26.8 million per month, with roughly $15 million affecting Transportation Cabinet operations and $11.8 million reducing funding distributed to counties and cities through county road aid, rural secondary roads, and municipal road aid. He explained that if revenue losses continue, the Cabinet would likely delay or reduce new road construction and resurfacing projects rather than interrupt projects already underway.

Chad LaRue, Executive Director of the Kentucky Association of Highway Contractors, claimed that motorists only saved about $5.30 per month and warned that prolonged reductions could delay maintenance, postpone construction projects, increase vehicle damage from deteriorating roads, and reduce employment opportunities within the highway construction industry. Larue also stated that nearly 30 percent of Kentucky's gas tax revenue is paid by out-of-state drivers, meaning a substantial portion of the tax relief benefits non-residents.

Committee members argued that the savings are not worth the loss of transportation funding, threatens projects that were fully funded under the recently adopted road plan, Kentucky's transportation funding system is already inadequate, questioned whether the 10-cent tax reduction was actually being passed on to consumers and urged local judges and mayors not to request extensions of the emergency order because doing so would further reduce local road funding. They also said Beshear’s decision was nothing more than political pandering because he wants to be president, and a few lawmakers suggested penalizing counties and cities who requested the reduction in gas tax by reducing what they received in transportation funding.

REGULATIONS

Governor responds to high gas prices; Department of Revenue sets gas tax rate effective July 1

The Department of Revenue proposed a new emergency regulation to set the gas tax rate (103 KAR 043 341E). The new gasoline tax rate, effective July 1, will be $.264 per gallon, and the new diesel rate will be $0.234 per gallon. Both tax rates will be in effect until the end of the Iran war. Because this is an emergency regulation, the effective tax rate will be in effect as of July 1, 2026.

This gas tax rate freeze is in conjunction with a declaration of emergency the governor issued lowering the gas tax by $0.10, but that emergency order has expired. However, some cities and counties requested that the governor keep the emergency in place for the duration of the Iran war. The legislative committee responsible for reviewing regulations is set to review the regulation at its July meeting where the committee could find the regulation deficient, sending it to the governor’s desk to determine if it will be allowed to remain in effect.

  <https://www.votervoice.net/BroadcastLinks/2Bi3ez5_HMHzIFikDAn_CQ> Click here to review 103 KAR 043: 341E

New Tobacco Licensing Regulations Proposed

After the passage of SB 245 that amended the previous tobacco and vape licensing laws, the ABC is proposing an emergency regulation on tobacco and vape licensing. 804 KAR 013:011E complies with the provisions of SB 245 that streamlined the process and protected retailers’ ability to obtain a tobacco and vape license. The regulation is straightforward and establishes a process where retailers can elect to renew their licenses in conjunction with an alcohol license or renew all tobacco licenses at once regardless of location. All retailers must be licensed, and there are no more delays available to retailers who did not initially obtain a license on Jan. 1, 2026. Written comments on the regulation will be accepted until July 31, 2026.

 <https://www.votervoice.net/BroadcastLinks/YFR_cUmTuLO2HYs3oQQdSg> Click here to read 804 KAR 013:011E

Escheating unclaimed property reporting window

For businesses that hold unclaimed property, which for retailers could include gift certificates or gift cards with an expiration, they must report this information to the state treasurer’s office before the unclaimed property escheats to the state. The regulation simply states businesses are not required to report claimed property from July 1-Aug. 1 to the state treasurer’s office. If the rightful owner claims the property Aug. 1-Jan. 1, a sworn statement must be submitted to the state treasurer’s office. Written comments on amendments to 020 KAR 001:030 are due July 31, 2026.

 <https://www.votervoice.net/BroadcastLinks/MoLVTz9-Icahdhjeil2aSQ> Click here to review 020 KAR 001:030

Transportation Cabinet proposes fuel tax rules for interstate carriers

Federal law authorizes the Department of Motor Vehicle Carriers to enter the provision of the International Fuel Tax Agreement. This amendment makes comprehensive changes to the agreement, but it does not apply to intrastate carriers. The amendments to 601 KAR 001:200 were filed June 1. Written comments on the amendment are due July 31, 2026.

 <https://www.votervoice.net/BroadcastLinks/VsoqatyXZEaNk6IBhhK9jw> Click here to review 601 KAR 001:200

Department of Alcoholic Beverage Control amends regulation prescribing application process for Cannabis-infused beverages

On June 11, more than one year after the passage of legislation requiring retailers selling Cannabis-infused beverages to obtain a quota retail package license to sell CIBS, the ABC finally amended 804 KAR 4:400 to prescribe the license forms contained within ABC’s online portal for a quota retail package license to sell the products. The substance of the regulation is contained within the incorporated license forms themselves and would need to be viewed within the ABC licensing portal. A public hearing on the regulation is scheduled on Aug. 27, 2026, and if there are no requests to make comments at the public hearing, it will be cancelled. Written comments will be accepted until August 31, 2026, and can be emailed to  <mailto:Joshua.Newton at ky.gov> Joshua.Newton at ky.gov.

 <https://www.votervoice.net/BroadcastLinks/Ib1JZ8g_oTgjsIwqEMdQAg> Click here to review 804 KAR 4:400

ENERGY AND ENVIRONMENT ISSUES

Interim Committee on Natural Resources and Energy discusses PFAS

Legislation has been filed in recent sessions on monitoring and potentially regulating and mitigating PFAS (per- and polyfluoroalkyl substances), commonly known as "forever chemicals.” While those bills have not advanced, growing concern nationally and at the state level led the Joint Interim Committee on Natural Resources and Energy to discuss the issue.

Rep. Nima Kulkarni (D-Louisville) presented proposed legislation designed to establish a statewide PFAS Working Group composed of government agencies, industry representatives, researchers, public health officials, and other stakeholders. She emphasized that the primary objective is not to ban PFAS products outright, but to better understand where PFAS contamination exists, identify communities most affected by exposure, improve data sharing among agencies, and develop recommendations for future action. Additional provisions of the bill would require manufacturers to disclose products containing intentionally added PFAS and establish reporting requirements for PFAS releases into wastewater systems.

Kulkarni stressed that PFAS contamination poses significant health concerns because these chemicals do not naturally break down and accumulate in water, soil, food supplies, livestock, and human bodies. She noted that many states have already adopted various PFAS policies and encouraged Kentucky to develop solutions tailored to its unique industries, agricultural communities, and environmental conditions.

Committee members generally expressed support for addressing PFAS but offered several recommendations to improve the legislation. Legislators emphasized balancing public health protections with the needs of Kentucky businesses, avoiding overly punitive reporting requirements, providing training and grace periods for local governments, and ensuring industry remains a cooperative partner in developing solutions. Several members also cautioned that PFAS encompasses thousands of different chemicals, suggesting the legislation should focus on health outcomes rather than broad chemical classifications.

LOCAL CORNER

City of Florence Adopts Ordinance on Traffic Stacking

Florence, located in Boone County in northern Kentucky, has adopted an ordinance on traffic stacking, where cars waiting in drive thrus impede traffic on public streets. The ordinance would allow city officials, including code enforcement officials, to issue citations to businesses that incur traffic stacking. This could include a financial penalty of up to $5,000. Additionally, the city could require businesses to amend service hours, reconfigure drive-thrus or parking lots, require the hiring of traffic staff, eliminate product promotions, restriction of deliveries, or require the increase of onsite stacking lanes. This ordinance all occurs outside of planning and zoning regulations.

FEDERAL CORNER

Monsanto wins U.S. Supreme Court federal labeling lawsuit

After multiple lawsuits regarding glyphosate on the premise of ‘duty to warn,’ the U.S. Supreme Court ruled that manufacturers required to meet federal labeling requirements cannot be subject to lawsuits as federal labeling preempts such lawsuits. The ruling is a victory for agriculture to ensure availability of crop production products.

Federal SNAP updates

Kentucky is one of nine states not required to put in additional funds into the SNAP program due to low error rates. State officials told legislators during budget negotiations that there was no need to add such extra funds based on the error rates. This is good news for the program and its beneficiaries.

Additionally, a judge has ruled that SNAP restriction waivers in half a dozen states did not follow federal law, meaning for now the waivers are not in place. Kentucky has never applied for such a waiver, even though the legislature discussed such changes. Beshear has made it clear that he will not seek such a waiver.

GENERAL BUSINESS ISSUES

State leaders in race to deal with data centers

Across the state, local communities are trying to rein in the threat of data centers. A Democratic representative is planning to file a bill to help address the process.

Rep. Adam Moore (D-Lexington) proposed a bill during this year’s legislative session that sought to ensure electricity ratepayers are not burdened by the costs of hyperscale data centers. That bill did not receive a committee hearing, but he said he has heard from constituents alarmed by local governments appearing to be entering agreements with data center developers in what residents are calling secret negotiations.

He said his new bill being drafted by legislative staff would go beyond just electricity ratepayer protections to also ensure communities have “local control” over a data center project if they want it in their community. Moore’s tentative bill would require that no hyperscale data center can locate into a community unless a county or city is designated by the state as a “Hyperscale Ready Community.” That designation would require public hearings on a project; a resolution passed by a fiscal court or city council in favor of a data center or a successful local ballot initiative; and the adoption of a siting ordinance to regulate data centers.

AGRIBUSINESS ISSUES

Interim Joint Committee on Agriculture begins discussion on agricultural economy

During the 2026 General Assembly, Kentucky agriculture secured several big policy wins. Sen. Jason Howell (R-Murray) kicked off the first Interim Joint Committee on Agriculture meeting by saying those policy wins also presented opportunities.

“Some of the things we did in this past session exposed gaps in understanding of what production agriculture means to Kentucky. The basics are easier to grasp than what the total impact that agricultural economy has across the state not just for producers or processors, but total farm and rural communities and the entire state,” Howell said. “Some of what we want to do during interim is fill in those gaps of understanding and how we are all integrated together” from farms in western Kentucky to urban Jefferson County.”

University of Kentucky Extension Professor of Livestock Economics Kenny Burdine and Jonathon Shepherd, UK Agriculture Extension Specialist, gave an overview of the economic health of the agriculture sector in Kentucky and the challenges farmers are facing.

While federal government payments helped bolster the agricultural economy in the last few years, farmers have faced increasing challenges in input costs rising faster than what they can make on production. For example, at the beginning of this year urea and diesel prices jumped 70% and while they have been coming down, the decrease has been much slower than the increase. Those challenges have led to farm bankruptcies that have increased 46% nationwide and 69% in the Southeast. Kentucky, however, had two bankruptcies in 2024 and none last year.

Senate Bill 199, which made federal pesticide labeling law the only acceptable label, limiting liability for a duty to warn, was mentioned during the discussion, particularly what the impact would be on crop management if glyphosate was taken off the market. Burdine said if there was a cheaper, more efficient alternative already available, it would be used. Howell added if glyphosate was not available, there may be more costs in diesel and labor.

Rep. Ryan Bivens (R-Hodgenville) said he has personally seen how much prices have soared in the last year alone. A tanker load of fuel was $21,000 a couple of years ago but now it is $35,000. Liquid fertilizer, which was $2,000 15 years ago now costs $16,000.

“In the fall, that load of fertilizer was $9-10,000, and is now $16,000 when the first bombs were dropped in Iran,” he said. “There’s an old saying that prices on the input side ride the elevator up but take the stairs down.”

PHARMACY ISSUES

Health Services Cabinet testifies about the progress on Rural Health Transformation funds

The Cabinet for Health and Family Services testified before both the BR Sub on Health Services and the Interim Joint Committee on Health Services regarding the federally awarded Rural Health Transformation Funds of $213 million that Kentucky received and is frantically implementing to ensure that they are compliant with federal spending timelines. The Kentucky Rural Health Transformation Grant that was approved for Kentucky includes four pillars – maternal and infant health, integrated EMS and trauma response, mobile crisis, dental access, and hubs for chronic care innovations. The focus is getting the funding out the door to ensure that the federal government does not claw back funds that have not been awarded. The cabinet does believe that they will be able to meet the federal deadlines.

 <https://www.votervoice.net/BroadcastLinks/1vPaQB38WBUDFZg4kvSPDg> Click here to review the presentation

Medicaid Oversight Advisory Board holds first interim meeting

The Medicaid Oversight and Advisory Board (MOAB) held its first meeting of the interim and the board received several updates from the Department of Medicaid Services staff. In the wake of the governor announcing that there will be a decrease in most provider reimbursements, the 4% cut does not apply to prescription drugs, but it does apply to medical equipment and supplies. With the legislature and the governor pointing fingers at each other, the solutions may not come soon. According to the Medicaid budget director, the Medicaid program was not fully funded by the legislature. Part of this distinction centered around some policy changes, federal funding changes, and state expenditures. This included the requirement for DMS to create a separate pharmaceutical rebate fund. Pharmaceutical rebates were previously used to offset expenditures; now they are considered a revenue source., while this is a distinction without much difference in terms of budgeting purposes, as the program evaluates budget shortfalls. These shortfalls led the governor to propose budget cuts, including to a one-of-a-kind clinic for persons with severe disabilities, but that too was solved when the governor moved money from the Capital Annex construction funds to ensure the clinic is funded for a year. The political spat over budgets and funding for the Medicaid program will likely continue to play out during future meetings.

In the evaluation of expenditures by MCOs, one of the largest expenditures they have is for outpatient pharmacy. This is because of legislation adopted that establishes state control of pharmacy reimbursements.

Legislative Committee Meetings

Committee hearings are streamed on either Kentucky Education Television or on the Legislative Research Commission's YouTube channel. Archived floor sessions and committee meetings from past sessions are also available.

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Important Numbers to Know

Legislative Offices (502) 564-8100
Senate President (502) 564-3120
Speaker of the House (502) 564-3366
Governor's Office (502) 564-2611
Attorney General (502) 696-5300

Toll Free Numbers

Bill Status Line (866) 840-2835
Calendar Line (800) 633-9650
Message Line (800) 372-7181
TTY Line (800) 896-0305
En Espanol (866) 840-6574

Kentucky Retail Federation Government Affairs Team

Tod Griffin, President
Shannon Stiglitz, Senior Vice President, Government Affairs
Steve McClain, Director of Communications and Public Affairs

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