Kentucky legislature sends state budget bills to governor, including billions in one-time spending

FRANKFORT — Bills funding the state executive branch to the tune of more than $128 billion and allocating billions of dollars in one-time investments received final passage through the legislature Thursday in one of the final days of this year’s legislative session.

Republicans in the GOP-dominated legislature hailed the spending plan as making strong, necessary investments while Democrats reiterated their critiques that the bills didn’t go far enough, noting “glaring omissions” in the budget. 

Rep. Jason Petrie, R-Elkton, the chair of the House Appropriations and Revenue Committee, in a statement said the state budget makes sure “investments are made in the future of our communities.”

“The bill reflects our dedication to efficiency and accountability, and should instill confidence in the state’s ability to navigate through challenges and take advantage of opportunities,” Petrie said in his statement. 

Lawmakers passed versions agreed upon by both legislative chambers of House Bill 6, the two-year state executive branch budget that constitutes most ongoing spending, and House Bill 1, allocating about $2.7 billion in one-time spending, largely along party lines. Lawmakers going into Thursday evening also passed budget bills funding the road projects and the legislative and judicial branches of state government. 

Lawmakers won’t reconvene for the final two days of this year’s legislative session until April 12. Democratic Gov. Andy Beshear will have until then to consider vetoing specific line-items in the budget bills, along with other vetoes, which could be overridden by Republican supermajorities in the legislature. 

Funding for school districts has increased compared to past versions of the state budget, provided through the statewide funding formula SEEK. The original budget presented and passed by the Kentucky House of Representatives in February allocated $6,440,909,400 through SEEK. The agreed-upon version of the budget sent to the governor allocates $6,627,692,500, a little less than a 3% increase. 

Beshear, who has called for an 11% across-the-board raise for school employees instead, in a Thursday press conference said the budget as a whole has “gotten better” but that he was still “disappointed that there is not mandated teacher raises” and funding for universal pre-kindergarten education in schools.

“We have got to get our educators a real raise if we’re going to be competitive with other states,” Beshear said. 

Democrats on the House floor argued that, if not across-the-board raises, more funding could have been added to SEEK to provide more financial support for raises for teachers.The Kentucky Center for Economic Policy, a progressive think tank, in an analysis of the agreed-upon budget said SEEK funding still doesn’t keep up with inflation. 

Rep. James Tipton, R-Taylorsville, the chair of the House Education Committee, responded to Democratic criticisms that the state budget still didn’t allocate enough for the state’s needs, arguing that every state representative could write “different versions of the budget.” 

“We’re not here to get everything we might want,” Tipton said, arguing the budget had “historic” funding for education. “We’re here to come up with a compromise and work together for the good of the commonwealth.” 

Rep. Cherlynn Stevenson, D-Lexington, said she was also worried about newly implemented caps on emergency disaster spending in the budget, echoing concerns expressed by Beshear. In the case of a declared disaster, the Kentucky Department of Military Affairs can request up to $75 million in the current fiscal year and $100 million total over the next two fiscal years. 

“I’d hate to see us have to be called back in for a special session should there be an emergency,” Stevenson said. “I’ve talked about how we are not the emergency response branch, that the executive is.” 

The budget doesn’t come near the original calls by affordable housing advocates to invest $200 million into tackling the state’s housing shortage, particularly in rural parts of the state recovering from natural disasters. Senate leaders, including Senate President Robert Stivers, previously questioned the capacity of housing builders to use substantial amounts of funding. 

HB 1, which provides about $2.7 billion in one-time investments using monies from the state’s ballooning “rainy day” fund, includes $10 million into the Rural Housing Trust Fund established by the legislature last year. 

The amount of one-time spending from the “rainy day” fund had been cut down from the Senate’s version of the budget, which called for $3.5 billion in one-time spending. 

Sen. Chris McDaniel, R-Ryland Heights, said to reporters the reductions in the one-time spending primarily came from decreasing the amount of funding going toward road projects, from $890 million in the Senate’s to $450 million. 

Among the significant investments of one-time funding include: 

• $150 million into a fund for economically distressed water utilities,
• Among other allocations to universities, $60 million for Murray State University to build a facility for a veterinarian, technician program and $25 million to Eastern Kentucky University to support its aviation program,
•  $230 million invested into paying down debts in various pension funds for public employees,
• A slew of local projects, including infrastructure for cities, counties and local utilities. 

When asked about the potential for another income tax cut by the legislature, McDaniel said it was “not definite” but that “the early projections look like it will happen.” 

The legislature in 2022 set a fiscal framework with triggers — determined by state revenues, spending and the amount of funding in the state’s “rainy day” fund — to determine when it can further cut the state’s income tax rate in an effort to eventually eliminate the income tax entirely. 

The state did not meet one of the triggers in 2023. Researchers at the Kentucky Center for Economic Policy have argued GOP leaders have held spending in the budget significantly down in an effort to meet the fiscal triggers, something Republicans have denied the budget is geared toward.