Pay raises, busing and toll bridge tax credits: Beshear releases budget plan early

FRANKFORT — Two years ago, Republicans in Kentucky's House of Representatives broke protocol and rolled out their state budget proposal before Gov. Andy Beshear made his bid public.

This time Beshear isn't taking any chances. He unveiled his proposed 2024-26 budget Monday night at the Kentucky Capitol, with pay raises for public school employees and other state workers the headliner among more than $136 billion in proposed investments over the two years.

"My goal here is just to get the best budget for our people," Beshear told media members Monday. "We've got a great chance to grasp our potential, and this budget will be really important to make that happen."

Kentucky governors have traditionally unveiled their budget proposals before the legislature takes them up. The move two years ago by House Republicans was described by House Democrats as "beyond petty" and one that illustrated the GOP's unwillingness to work with Beshear. But House Speaker David Osborne, R-Prospect, said waiting for the governor's plan would have been a "waste of time" after months of work by committees had already taken place.

The 2024 legislative session will begin Jan. 2.

Speaking Monday, Beshear said he released his plan early to ensure his recommendations were available before the House's proposal is put forward, as its initial budget in early 2022 omitted funding he viewed as critical. He added that he has had early conversations about his plan with House and Senate members.

"The driving purpose with me unveiling our budget so early is hoping as many of these important things get in the House's budget when they submit it at the beginning of the session," said Beshear, who won reelection in November and was inaugurated last week.

The budget proposal is a massive document that will undergo changes before being approved, and it remains to be seen which items the legislature's Republican supermajorities includes. But in the meantime, here's what Beshear proposes:

Education

Beshear campaigned throughout the year on issues such as increasing teacher pay and funding preschool for all Kentucky kids. Those items are key pieces in his plan.

Beshear's proposal calls for an 11% salary increase for all public school employees. That money — an additional $545 million each year — would be included in the Support Education Excellence in Kentucky budget, ensuring every school district is able to get a piece (SEEK's budget is increased by 18% in the plan).

An 11% bump in minimum teacher salaries is also included, and the budget fully funds teacher pensions and retiree medical benefits and does not increase health insurance premiums for school employees.

State workers outside education stand to benefit as well, with $90 million set aside each year for raises for all Kentucky government employees.

Pre-kindergarten education for all 4-year-olds is in the plan — with a yearly price tag of $172 million — and the Department of Education estimates an additional 34,000 children would have access to those services. And $150 million would be put toward school construction projects, as many planned improvements have been delayed or otherwise impacted by rising inflation and building costs.

Student transportation, a hot topic in Louisville amid busing issues with Jefferson County Public Schools, would see a 45% increase in funding, with an additional $124.4 million to go toward fully funding pupil transportation. Beshear's budget also proposes to use $125 million in unspent funds from SEEK's budget to fund student transportation in the current year.

More than $140 million over two years would go toward child care assistance, including $40 million yearly to retain Child Care Assistance Program reimbursement rates.

The plan also calls for an 8% increase in spending on colleges and universities, with $60 million added in fiscal year 2025 and $78.9 million added in 2026. The plan has $400 million set aside from Bond Funds for capital projects at the state's nine post-secondary education institutions and nearly $150 million in Bond Funds and the General Fund for construction projects that have been affected by rising prices.

Police, public safety and social services

The governor's budget aims to address staffing shortages and an expected wave of retirements with Kentucky State Police by increasing trooper pay by $2,500 in 2025 while adding funding for 150 more troopers in the next two years, with more than $55 million for those efforts. Nearly $48 million would go toward replacing KSP's radio system as well, and $35 million would be set aside for body armor for local law enforcement.

Investments in the state's juvenile justice system would create two new female-only juvenile detention centers on opposite sides of the state and renovate several other centers, including Louisville's Jefferson County Youth Detention Center and Lyndon Detention Center. Beshear's plan also calls for establishing a psychiatric treatment facility for children, putting $10.5 million up for job skills training at adult jails and providing nearly $30 million for an expansion of the Little Sandy Correctional Complex.

Medicaid is fully funded in the budget — with federal funds from the COVID-19 public health emergency expiring, $395 million would be required from the General Fund in 2026. About $30 million would go toward expanding services for the program's Serious Mental Illness Waiver.

More than $51 million is set aside for funding slots with the Michelle P. and Supports for Community Living waiver programs, which support people with mental or intellectual disabilities, while a total of about $455 million would provide a mandated rebate of nursing home reimbursement rates.

The proposed budget also calls for hiring 100 more social workers and would put nearly $10 million aside each fiscal year to increase foster care rates, with a higher increase planned for relative caregivers responsible for children in the state's custody.

Economic growth, infrastructure and other investments

Beshear's budget includes $100 million to support "mega projects" that would be expected to create at least 250 jobs at an average hourly rate of at least $30. Another $100 million would go toward the Kentucky Product Development Initiative to make sure potential development sites are ready when companies are deciding where to expand. In addition, $15 million would go to talent attraction and $11 million for tourism marketing.

Another $1 million over two years would go toward establishing an economic development office in South Korea — the nation is a key player in the electric vehicle market, and Kentucky is in the process of opening a $5.8 billion electric vehicle battery plant.

The Cleaner Water Program, part of Beshear's Better Kentucky Plan, would land $500 million in 2025 for utility improvements and $300 million for major transportation projects, including Interstate 69 in Western Kentucky and the Mountain Parkway expansion in Eastern Kentucky.

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Beshear's plan also calls for $50 million being set aside for bridges and $28 million for serious highway repairs. And commuters from Louisville to Southern Indiana would be excited about a proposal to use one-time funds for a one-year tax credit for Kentucky residents who pay tolls to cross the city's three tolled Ohio River bridges.

Airports in Kentucky would get $50 million, too, and $184 million in funding would pay for reconstructed marinas, conference centers and other amenities at Kentucky's state parks. More than $800 million would be set aside for deferred maintenance debt.

Beshear noted the budget does not dip into Kentucky's "rainy day" fund, which sat at more than $3.7 billion this summer. He called the plan one that addresses "things that actually matter to our people" and "reflects our shared Kentucky values of family, faith and community."

This story will be updated.

Reach Lucas Aulbach at laulbach@courier-journal.com.

This article originally appeared on Louisville Courier Journal: Andy Beshear unveils budget proposal before KY legislative session