New $30 billion GOP budget and massive one-time spending bill clears KY House
Now, it’s in the hands of Kentucky’s Senate.
The House approved House Bill 6, the Executive Branch budget proposal, on a 77-19 vote Thursday night. The bill from House Appropriations & Revenue Chair Jason Petrie passed with most Democrats voting no and the lion’s share of Republicans voting yes.
The budget as amended in a recent committee substitute allocates $14.3 billion and $15.6 billion General Fund dollars over the next two fiscal years. Including federal funds, restricted funds and other sources of funding, the budget proposal allocates almost $130 billion total.
The House also passed House Bill 1, a $1.8 billion-plus bill that focuses on one-time appropriations, in a unanimous bipartisan vote.
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Highlights in both bills include:
House Bill 6 increases the per-pupil formula funding to schools — the Support Education Excellence in Kentucky formula, commonly called SEEK — by 4% in the first year and another 2% in the second year. The total dollar investment remains roughly static, however, due to decreases in enrollment and changes in local property valuation.
House Bill 6 boosts educational funding by $196 million over the two-year budget for the College Access Program, a needs-based grant initiative for Kentucky undergraduate students.
House Bill 6 funds 100 new social worker positions over the course of the next two years and allocates $13 million to increase the foster care per-diem rate.
House Bill 6 allocates for the purposes of student transportation $319 million and $359 million in the next two fiscal years. In the second year, that would mean 100% funding from the state, a mark that hasn’t been reached since 2004.
House Bill 1 puts $950 million that will go toward paying down the state’s pension obligations.
House Bill 1 offers $225 million toward the Cabinet for Economic Development, with $100 million going explicitly toward “mega-development projects.”
House Bill 1 allocates $150 million for drinking and wastewater improvements across the state.
Both House Bill 6 and House Bill 1 would grow the state’s massive Budget Reserve Trust Fund (also known as the “Rainy Day Fund”) from $3.7 billion to $5.2 billion.
Before the bills gained passage, Democrats complained, and several filed floor amendments to address their perceived budget shortcomings.
Their complaints centered around a lack of spending on education, housing, child care, state retirees, infrastructure and more. They pointed to the state’s large rainy day fund as representing a missed opportunity.
House Minority Floor Leader Derrick Graham, D-Frankfort, predicted this session’s budget, with leftover surpluses due in part to federal money still shuffling through the economy, will be one of the easiest for lawmakers to approve. Because of that, he expressed worries that big, bold investments in public education won’t ever happen if they’re not happening this cycle.
He pointed to recent polling done by the Kentucky Association of School Administrators showing that a significant percentage of superintendents say the current education funding is not enough to retain or attract teachers.
“One in four Kentucky teachers left their classrooms last year, and while not all of those left the profession, many did,” Graham said. “That makes it a crisis, and we’re not meeting it.”
Graham, who represents many state government retirees in his Franklin County district, also found the budget deficient for that constituency. Unlike Beshear’s budget proposal, House Bill 6 does not include an extra retirement check for state retirees.
Rep. Josie Raymond, D-Louisville, derided the alleged stinginess of the budget. She pointed out housing and child care, in particular as areas of need not adequately addressed by the bill.
House Bill 6 provides just under $120 million from the General Fund towards child care, far short of the Beshear administration’s estimated $330 million needed to fill holes left by federal funding streams drying up.
“Pick your financial adviser and they will tell you ,‘That’s foolish. What you should do after you have adequate reserves is look for needs holding the commonwealth back.’ We have an incredible opportunity this year to solve these needs, and we are about to squander it.”
Republicans pushed back. Longtime Louisville Republican Rep. Kevin Bratcher said the GOP was wisely saving money.
“Responsible government means that you have to prepare for the bad days, not just go spend it on what feels good today and who cares about tomorrow. We almost went bankrupt in ‘07 and ‘08,” Bratcher said.
“Because of (Petrie) and many others in this building, we’ve turned it around. That’s why I vote yes today.”
Jason Bailey, executive director of the Kentucky Center for Economic Policy, said overall spending is on the low side because Republicans want to cut the income tax again. They have done so for two consecutive years but won’t in 2025 based revenue and savings “triggers” that need to be hit.
“By sitting on this money instead of using more of it to improve the lives of Kentuckians, legislators are prioritizing additional potential income tax cuts, which if enacted will go overwhelmingly to the wealthy,” Bailey said in a statement.
“That makes it possible to reduce the income tax to 3%, down from 5% two years ago, which would permanently eliminate one out of every six dollars in the state budget and jeopardize future investments in schools, health, infrastructure and other critical needs.”
Petrie told reporters Wednesday that projections under the proposed budget “look good” for another 0.5% drop from the current 4% rate come January 2026..
As for 2027, Petrie said “it’ll be close” and for the following year he said it will likely be “difficult” to hit the triggers to cut the rate another 0.5%.
