The GOP-controlled Kentucky legislature gave final passage Wednesday to the state’s executive branch budget, allocating more than $31 billion in General Fund revenues and sparking heated debates between Republicans and Democrats over funding for education, Medicaid, and more.
In the House, Democrats called the finalized state budget morally and fiscally short-shighted. The Republican chair of the House budget committee was incensed, shouting at one point that Democrats were trying to “make up stuff.”
Republicans eventually voted to end debate Wednesday evening on House Bill 500 and send the budget bill to the governor by a vote of 73-21. The Kentucky Senate had earlier passed the budget by a vote of 38-0.
House Appropriations and Revenue Committee Chair Jason Petrie, R-Elkton, slammed Democratic criticisms of the budget, saying that to “restrain the growth of spending is not a cut.”
“A liberal contingent of the United States that believes with all its soul, mind and heart, that if you don’t keep growing government at the fastest pace you can with the most money you can and borrow everything you can through debt, then you are falling behind,” Petrie said. “That is false.”
Petrie told lawmakers that the budget deal reached by House and Senate negotiators cuts base funding for state agencies by 7% over the biennium, though some areas are exempt from cuts, including juvenile justice, some universities and pension funds.
His impassioned speech defending the budget received a standing ovation from his caucus.
House Republicans have consistently emphasized their budget puts “needs over wants” and would restrain what they say is unsustainable spending by the executive branch on everything from government travel to Medicaid benefits. Democrats have argued the revenue is there to fund government programs and Kentuckians’ needs.
Jason Bailey, the executive director of the progressive think tank Kentucky Center for Economic Policy, in a statement said that “years of tax cuts” by the legislature “have already resulted in revenue that is too low to truly move Kentucky forward.”
Bailey was referring to income tax rate reductions by the GOP-controlled legislature in recent years. It’s a goal of Republicans in the legislature to over time eliminate the state’s individual income tax.
A spokesperson for Democratic Gov. Andy Beshear previously said limits imposed on travel and other expenditures were politically motivated and unfounded. A Beshear spokesperson said the governor’s office would not have a response on the budget Wednesday evening.
House Minority Floor Leader Pamela Stevenson referenced the GOP’s “needs over wants” refrain in lambasting Republicans for putting Kentuckians’ health at risk by underfunding Medicaid. An analysis by the Kentucky Center for Economic Policy concludes that Medicaid funding in the legislature’s budget falls $691 million short of what Beshear had recommended.
“Don’t go home and say we did a good job when we have put Kentuckians at risk. We have the money, we have the data, and we are refusing to act,” Stevenson said.
House Speaker Pro Tem David Meade, R-Stanford, responded to Democratic critiques on Medicaid spending by arguing that the Beshear administration requested an “astronomical amount for Medicaid.”
“It boils down to him expanding a program that he did not have the authority to do so, nor the approval of this body or the other body down the hall to do so,” Meade said.
Meade said there was also funding from the Kentucky Insurance Regulatory Trust, a fund that collects fees from insurers, that serves as a backstop for Medicaid funds.
The budget allocates a slight increase in funding for public schools compared to the current fiscal year, provided through the Support Education Excellence in Kentucky Program, though K-12 education funding falls short of what Beshear had proposed. The budget also does not include Beshear’s call to fund universal preschool for 4-year-olds, or “Pre-K for All.”
‘One-time’ spending on infrastructure, projects
The GOP-controlled legislature also passed a finalized bill allocating hundreds of millions of dollars in one-time appropriations pulling from the state’s Budget Reserve Trust Fund, also known as the “rainy day” fund, allocating monies for drinking water and wastewater projects, airport renovations and economic development initiatives. The $1.7 billion in spending over the biennium includes $42 million Eastern Kentucky University is required to have in escrow reserve to launch a school of osteopathic medicine.
Road plan
The legislature also sent Beshear bills funding the judiciary and legislative branches, along with the state’s transportation budget and road plans.
The $4.6 billion biennial road plan and a $7 billion transportation operating budget go toward, among other things, three new regional driver licensing offices located in Bullitt, Oldham and Barren Counties, $190 million for various road projects and $25 million each year for bridge improvements.
Senate Transportation Committee Chair Jimmy Higdon, R-Lebanon, said the plan “is about being honest with taxpayers and making sure every dollar delivers results, especially during a time when our road revenues are not going as far as they used to.”
“We are prioritizing projects that can move forward now and making meaningful investments in communities across the commonwealth,” Higdon said in a statement.
Is another income tax cut on GOP’s bingo card?
Sen. Chris McDaniel, R-Ryland Heights the chair of the Senate Appropriations and Revenue Committee, in a statement referencing the legislature’s one-time spending, said it was “amazing to hear naysayers of the budgeting philosophy and policy priorities of the Kentucky General Assembly constantly spell doom and gloom, only to be met with greater total revenues and stronger reserves.”
“We were told numerous times that income tax reduction would blow a hole in our state budget, yet since 2017 we’ve managed to reduce the income tax by half while simultaneously making record investments in education and pensions and creating a robust budget reserve trust fund that has created opportunity for game-changing statewide and regional investments not just once, but now twice,” McDaniel said.
Spending levels in each state budget are a factor in calculating fiscal triggers that determine whether the state can afford to reduce the individual income tax rate. A provision in the one-time spending bill exempts the appropriations from counting against another income tax cut.
The finalized budgetary bills were still not publicly available on the legislature’s website Wednesday evening. But Kentucky House Speaker David Osborne had said he believed the public has had adequate time during the budget process to weigh in on the finalized budget.
Rep. Chad Aull, D-Lexington, told lawmakers that “others have and will describe in detail the pain that will be felt by our citizens across the commonwealth due to the cuts that are contained within this budget.”
Aull said that a Republican lawmaker had told him that HB 500 “is the worst budget that he’s seen since he’s been up here.”
“You know what? Folks, he’s right,” Aull said. “But this is the part that frustrates me … We have the power to change this.”
Petrie had responded to Democratic criticism by saying HB 500 was “an awesome budget.”
“It’s going to rewrite some base issues that we have, and put additional funding in,” Petrie said.
The Kentucky Democratic Party in a social media post lambasted Republicans for the distribution of printed bingo cards — with phrases such as “I’m concerned” and “Disenfranchised” — to mock Democrats’ concerns during debate on the House floor.
“The only joke is thinking the KY GOP have the best interests of Kentuckians in mind,” the party said in a Bluesky post.
While lawmakers had recessed for dinner Wednesday evening after passing HB 500, a Lantern reporter confirmed that a few Republican House lawmakers did have bingo cards, some of them partially filled in, sitting on their desks.
Osborne told reporters after the House had finished its business Wednesday evening he believed concerns over the budget were “political theater,” pointing to how the Kentucky Senate had unanimously passed the budget bill.
“We invested the money as wisely as we possibly could, making sure that we meet the needs of Kentuckians,” Osborne said.