Democratic Kentucky Gov. Andy Beshear is asking the GOP-controlled state legislature for $500 million in one-time spending to ease families’ “rising cost pressures.” Beshear’s proposed budget also includes start-up funding for his educational priority of “Pre-K for All” and fully covering hundreds of millions of dollars in increased Medicaid costs.
That’s according to a 12-page summary shared with reporters during a Wednesday morning budget briefing ahead of the governor’s State of the Commonwealth address later in the day. Beshear administration staff gave reporters the summary under embargo until the start of the 5:30 p.m. speech.
Reporters did not receive the Beshear administration’s full budget proposal, usually constituting hundreds of pages detailing revenue and spending by individual government cabinets, agencies and programs.
The summary, however, does provide highlights of the governor’s policy priorities for the next two-year state budget, along with economic challenges the popular incumbent sees facing the state. High among those challenges is Congress’ passage of Republican President Donald Trump’s One Big Beautiful Bill Act, shifting costs for federal social safety net programs such as the Supplemental Nutrition Assistance Program to states.
Beshear’s earlier budget proposals have held little sway with the GOP-controlled General Assembly. Republican leaders often pass their own budget, disregarding much of what Beshear proposes, though occasional bipartisanship is found on specific issues. The legislature has easily overridden Beshear’s line-item vetoes of budget bills during past sessions. What’s adopted this year will be the last state budget before the two-term governor leaves office next year.
“With the modest revenue picture and hundreds of millions of dollars in expected pension obligations, increasing costs of health care, the need to invest in education, maintain public safety, and grow new jobs, the 2026-28 budget will be challenging,” the executive summary states. “Moreover Kentucky has to contend with federal actions that have pushed costs onto all states and have made it harder on families to afford health care or remain eligible for Medicaid.
What is Beshear calling for?
Some of Beshear’s proposals to address “affordability issues” echo past calls for action from advocates.
Among the $500 million in Beshear’s proposed one-time spending:
- $150 million for the Affordable Housing Trust Fund, a pool of money that the Kentucky Housing Corporation manages to subsidize housing projects. Affordable housing advocates across the state have made repeated calls for the Kentucky legislature to significantly bolster the fund.
- A $125 million fund for hospitals to bridge “financial risks” from federal One Big Beautiful Bill Act provisions that limit states’ use of provider taxes to support hospitals.
- A $100 million fund to help cover the increase of health insurance costs from expiring tax credits for Affordable Care Act plans, called kynect in Kentucky..
- Create a “Utility Assistance Fund” with $75 million to be distributed by community action agencies, to provide assistance for Kentuckians facing rising utility bills. Some advocates have called for a utility disconnection moratorium this winter.
- $50 million to go to Feeding Kentucky, a network of seven food banks, to help with “rising food costs putting pressure on family budgets.”
Beshear also calls for fully funding the state’s Medicaid program, requiring an additional $420 million from the General Fund for fiscal year 2028. The summary states the One Big Beautiful Act will remove an estimated 28,539 people from Medicaid due to tighter eligibility requirements added through the law.
The budget proposal also calls for $101.5 million over two fiscal years to cover increased administrative costs shifted to states for the Supplemental Nutrition Assistance Program, or SNAP, from the One Big Beautiful Bill Act.
Education funding continues to be a major component of Beshear’s budget proposal, calling for launching “Pre-K for All,” or universal preschool for 4-year-olds in Kentucky. His proposal would allocate $40.8 million, coming from the state’s sports wagering excise tax, for fiscal year 2028 to “support the initial phase of Pre-K for All.”
Beshear’s is proposing an additional $158.8 million for schools — outside the Support Education Excellence in Kentucky, or SEEK, funding program — to give a 3% salary raise to full-time school personnel in fiscal year 2027. His proposal would allow teachers to retain a portion of their paycheck now going into a medical insurance trust fund.
Along with fully funding teachers’ pensions and medical benefits for retirees, Beshear proposes a 2.5% increase in SEEK funding for school districts in each fiscal year of the biennium.
State employees would also get a 2% salary raise each fiscal year while also fully funding pensions for government employees, according to the summary.
Beshear wants to launch a $25 million Rural Economic Development Fund “to bring jobs to rural areas that have been close but have not had that big announcement yet.” He also wants to add another $70 million to develop sites for economic development projects.
Beshear’s proposal calls for building two new female-only juvenile detention centers in Fayette County and Western Kentucky, an effort backed by a Republican state senator that failed to pass during the last budgetary session in 2024.
The budget also details a proposed $42 million project to create a “reentry campus” in Morgan County where the Kentucky Community and Technical College System would provide vocational training to inmates in an effort to reduce recidivism.