The state executive branch would have to significantly cut spending for a number of expenses, including in-state and out-of-state travel, under a “bare bones” budget bill for the state executive branch filed this week by a key Republican committee chair.
Rep. Jason Petrie, R-Elkton, the chair of the Kentucky House Appropriations and Revenue Committee, told fellow lawmakers Tuesday afternoon that budgetary bills were “scaled back” and just the starting point in the budget process, stripped of budget requests from various agencies.
The executive branch budget encompasses 11 cabinets within state government, ranging from the Energy and Environment Cabinet that oversees environmental regulation to the Economic Development Cabinet that oversees incentives to bring companies to Kentucky. It also includes budgets for the offices of various state constitutional officers such as the attorney general.
The House executive branch budget would spend $29,809,800,800 in General Fund monies over the next two fiscal years; in the previous two-year budget, the legislature allocated $30,070,244,700 in General Fund monies.
Petrie said agencies and other interested parties would have the opportunity to come before the legislature’s budget review committees to make their case for additional spending. He said a new version of the executive branch budget would then be introduced through substitute language in a future committee hearing.
“There will be a lot of issues that have already been in the process of vetting, but they will be vetted publicly through those meetings,” Petrie said. “There’s no amount of revenue that can feed the executive branch and its wants and its desires, but we will find what they need, and that’s how we’ll come up with a good budget.”
Crafting a new two-year state budget, which allocates billions of General Fund revenues, is a large undertaking for lawmakers, though the GOP-controlled legislature has often brushed off budget proposals and suggestions from Democratic Kentucky Gov. Andy Beshear. The initial version of the executive branch budget bill, House Bill 500, is no exception.
Unlike the proposed budget from Beshear, the initial House budget doesn’t include mandated raises for school district employees in the state, nor funding for Beshear’s priority of “Pre-K for All,” — universal preschool for four-year-olds. The state is the primary source of K-12 education funding, combined with local tax dollars, though the amount of state dollars a school district receives can vary. The budget bill instead encourages school districts to give their staff a raise.
HB 500 also directs state officials including the state budget director, the secretary of the Finance and Administration Cabinet and the secretary of the Executive Cabinet to significantly reduce executive branch spending across a number of expenditure categories in upcoming fiscal years.
That includes cutting travel expenses across the fourth quarter of the current fiscal year by 50% compared to the fourth quarter of the previous fiscal year. The executive branch spent more than $30 million on travel in fiscal year 2024-2025 according to the budget language. Other expenditure categories that would have to be cut by at least 20% in future fiscal years include advertising spending and “temporary manpower services.”
Petrie on Tuesday said the state does not have a “revenue problem,” and that a major theme of this budget would be to “restrain the growth rate of spending.”
A press release from the House Majority Caucus stated HB 500 implements a 4% spending reduction in the first fiscal year of the two-year budget and then an additional 3% to most state agencies in the second year of the budget. The release also states there are a number of exceptions to those spending reductions, including types of education funding, juvenile justice funding and public pension contributions.
For education funding, the per-pupil funding provided through the Support Education Excellence in Kentucky program, or SEEK, the formula that allocates monies to school districts, is maintained at $4,586 per pupil across the next two fiscal years, the same level as the current fiscal year. The proposed budget from Beshear sets per pupil funding at $4,701 per pupil in fiscal year 2026-2027 and $4,818 per pupil in fiscal year 2027-2028.
Transportation funding provided through SEEK would also be reduced by $40 million in each upcoming fiscal year compared to the current fiscal year.
HB 500 also doesn’t include Beshear’s call for one-time allocations to go toward utility cost assistance and food assistance; Petrie said any one-time allocations would likely be included in a separate bill beyond HB 500.
A progressive think tank’s analysis of the initial executive branch budget bill criticized “deep” funding cuts or freezes to various aspects of state government, including to the state’s Medicaid program, as a part of the legislature’s effort to meet fiscal triggers in state law to reduce the state income tax rate.
“At the same time, the budget leaves funds unspent with the apparent goal of triggering even more reductions to the income tax,” said Jason Bailey, the executive director of the Kentucky Center for Economic Policy. “More giveaways to the wealthy, and cuts to the services that benefit us all, is no way to build a Kentucky that everyone can afford and where all can prosper. There is plenty of time for the House to improve this budget with greater investments in the services needed to make Kentucky healthier and safer and our communities stronger.”
Scottie Ellis, a spokesperson for Beshear, in an emailed statement said Beshear “prioritized the people of Kentucky in his budget by investing in job creation, health care, education and public safety, and he hopes the House will amend their initial budget to do the same.”
Ellis also criticized the exclusion of “Pre-K for All” from the initial budget and cuts to Medicaid “at a time our rural hospitals are under attack and facing closure because of the President’s ‘big, ugly bill.’”
In addition, Ellis also said reductions in spending listed in the budget are “unfounded and politically motivated.”
“Of the areas listed, around $100 million is revenue collected and distributed back to local governments through the state,” Ellis said. “Thirty percent of that is targeted at hiring seasonal employees for peak seasons at Kentucky State Parks and tourism advertising ahead of summer and spring, which has helped secure three straight record years for economic impact in the tourism industry.”
She said other mandated cuts specified in the budget would “impact food at prisons, halt travel for all executive branch needs – including witnesses for legal cases and more – and cut staff at Driver Licensing Regional Offices, which have helped reduce wait times for Kentuckians through improved services.”
Kentucky House Speaker David Osborne, R-Prospect, told reporters Wednesday the mandated spending cuts to executive branch travel and other expenditures were targeted at areas where spending was increasing “without a logical explanation.”
“So just trying to draw attention to it and make sure that we bring focus to areas that may be getting out of control,” said Osborne, who didn’t offer specific examples of problematic expenditures. “There will be a back and forth process. We encourage the administration to be forthcoming with information that’s requested,” Osborne said.
Osborne, responding to criticism that the budget is geared toward making it easier to cut the income tax rate in the future, said lawmakers don’t “specifically budget to hit a tax cut.”
“Clearly our objective is to, of course, give as much money as we can back to the taxpayers who earned it,” Osborne said.
He said lawmakers are hopeful to hit fiscal triggers needed to lower the income tax rate but “that’s not the objective” with budgeting.