House Republicans Unveil State Spending Plan

As frigid temperatures gripped the Commonwealth, House Republicans unveiled $1.74 billion of one-time expenditures, and nearly $125 billion in recurring funds encompassing the biennium budget.

Rep. Jason Petrie, the Chairman of the House Appropriation and Revenue Committee, filed House Bill 6, the two-year, $124.8 billion state spending plan that proposes funding for K-12 public schools and investments in public safety, infrastructure, and health services. The bill also includes investments in mental health and substance abuse recovery.

“For far too long, our state budget was guided by what was politically beneficial. We turned the page on that chapter in our history when we were given the majority in 2016. We know that a robust, fiscally conservative budget is imperative to ensure long-term economic stability and prosperity for the people of Kentucky. HB 6 continues our commitment to investing in our commonwealth’s future while prioritizing responsible spending that aims to efficiently allocate resources while maintaining essential public services,” Petrie said. “This approach has served us well, allowing us to provide Kentuckians with necessary services while helping amass a historic amount in our budget reserve trust and addressing state debt and liabilities.”

In addition to the operational budget proposed in HB 6, Petrie also filed House Bill 1, an investment proposal that uses excess funds already collected in the state budget reserve trust fund to make significant one-time investments in infrastructure, economic development, public safety, and state employee and teacher’s pension liabilities.

HB 6 also includes language that explicitly states the intent of specific allocations, including a provision that encourages school districts to utilize additional SEEK resources to provide raises for certified and classified staff and report salary schedules and compensation increases. In addition, the bill includes a requirement that school districts publish certain local and statewide assessment information on their websites in an easily accessible manner. Districts would also be required to publish salary schedules and pay increases to increase transparency.

House Speaker David Osborne applauded the two-year spending proposal, “The current budget is by far the strongest, most fiscally responsible spending plan in modern history, and HB 6 further builds on its success. We know there are some who would like to see us spend every available dollar and go back for more by increasing taxes. Those economic policies have failed generations of Kentuckians and only create more problems in the future. I appreciate Chairman Petrie’s efforts, as well as the work of our vice chairs, committee members, and staff.”

Highlights from the House Budget proposal include:

Providing Opportunities for Kentucky Learners

K-12 Education Funding:

Postsecondary & Workforce Investment:

  • -Increases by $196 million over the biennium funding for the College Access Program.
  • -Includes an additional $600,000 over the biennium for the Teacher Scholarship Programs.
  • -Increases General Fund by $7.3 million in each fiscal year for a new Student Teacher Stipend Program.
  • -Increases General Fund by $4.8 million in each fiscal year for a Pilot Teacher Recruitment Student Loan Forgiveness Program.
  • -Includes $600 million over the biennium for facility maintenance, renovations, and repairs for each postsecondary institution.
  • -Provides $36 million each year to support a 4% inflationary increase to each public postsecondary institution, including Kentucky Community Colleges and Technical School.
  • -Includes $3.9 million each fiscal year to increase the Postsecondary Performance Fund.
  • -Increases the Federal Funds appropriation by $11.9 million in each fiscal year to add 90 staff positions within the Office of Unemployment Insurance.
  • -Reauthorizes funding from previous budgets to allocate $7.5 million in General Fund, $30 million in Restricted Funds, and $10 million in bond funds for replacing the unemployment system.

Building a Healthier Kentucky

  • -Funds 100 new social worker positions over the biennium with an allocation of $15 million.
  • -Includes $12 million in each fiscal year to maintain the $2 per child rate increase in Child Care Assistance provider reimbursement.
  • -Increases foster care per diem rates with a $13 million increase in funds.
  • -Includes $10 million in each fiscal year to continue the commitment to expanding the senior meals program.
  • -Provides an additional $1 million in each fiscal year for added contracted services to address the backlog in long-term care certification surveys.
  • -Includes an additional $63 million over the biennium towards expanding and enhancing mobile crisis intervention services to divert those experiencing a behavioral health crisis from hospitals, jails, and prisons.
  • -Provides an additional $14.4 million for fees to access the federal data hub used for income verification for Medicaid.
  • -Allocates an increase of $548.1 million towards Medicaid benefits in FY 24.
  • -Provides an additional $2.6 billion in funding for Medicaid benefits growth in FY 24 and FY 25, including $456.2 million in state-restricted and general fund dollars.
  • -Includes $76.3 million over the biennium for an additional 1,000 Michelle P. waiver slots to assist individuals with intellectual or developmental disabilities to live as independently as possible.
  • -Allocates $78.1 million over the biennium towards 500 new slots in the Supports for Community Living waiver program to help those with intellectual or developmental disabilities live as independently as possible.
  • -Provides $50.6 million over the biennium for 1,000 additional slots in the Home and Community based waiver program.
  • -Increases nursing home facility reimbursement rates with an additional investment of $454.8 million over the biennium.
  • -Provides an additional $31.3 million over the biennium to implement a waiver to provide services to those with serious mental illness.
  • -Increases by $85.5 million biennium funding for implementation of a waiver to serve those with substance use disorder.
  • -Provides $330.8 million in additional funds to maintain the increase in reimbursement rates for Medicaid 1915(c) Home and Community Based Services (HCBS) waivers.
  • -Allocates an additional $256.5 million over the biennium to implement a waiver to provide HCBS to those with serious mental illness or substance use disorder.
  • -Increases by $14.7 million in FY 26 funding for the development of an HCBS(C) waiver for Kentucky children with severe emotional disabilities, autism spectrum disorder, and/or intellectual disabilities.
  • -Provides an additional $75.8 million over two years to implement a waiver for substance use disorder treatment for incarcerated individuals returning to the community.
  • -Includes an additional $29.2 million for increased costs due to staffing and number of patients in state-run psychiatric and immediate care facilities for individuals with intellectual disabilities.
  • -Allocates $9.8 million more towards staffing and operations at local health departments.
  • -Provides an additional $10 million over the biennium for pediatric cancer research.
  • -Increases funding for the Human Immunodeficiency Virus Program by $30 million over the biennium to address increased enrollment and program costs.

Investing for a Safer Kentucky

  • -Includes $24.1 million in additional funds over the biennium to the KSP for pay increases for 1,013 troopers and commercial vehicle enforcement officers.
  • -Provides $3.4 million over the biennium to support a 10% salary increase for 150 positions in the KSP forensic laboratories.
  • -Increases by $2.3 million in FY 25 and $3.98 million in FY 26 funding to support an additional 20 Probation and Parole Officer positions and operating costs.
  • -Provides $2.6 million in each fiscal year towards the purchase of a total of 50 marked and 50 unmarked KSP cruisers.
  • -Increases KSP funding by $6.4 million in FY 25 and $17.7 million in FY 26 to fund Trooper cadet classes of 75 in each year.
  • -Includes an additional $27.9 million for the unified prosecutorial system for raises and new positions in commonwealth’s attorney and county attorney offices, a new case management system, and the rocket docket system.
  • -Increases by $2.2 million over the biennium for toxicology and DNA equipment as well as increased costs for evidence collection kits.
  • -Provides $480,000 in additional funds to support the transition to agency-issued cell phones, which also replaces antiquated digital audio recorders and cameras.
  • -Includes $710,000 in each fiscal year to both support seven additional full-time positions within the Sex Offender Registry program and provide for increased software service contract fees.
  • -Provides an additional $35 million over the biennium to increase access to the Body Armor Grant Program administered by the Attorney General’s Office to local governments.
  • -Increases funding by $20 million in FY 26 to support a medical services contract for primary care and mental health care at all juvenile justice facilities.
  • -Includes $7.8 million in additional juvenile justice funding in each fiscal year towards alternative to detention programming.
  • -Provides $7 million in additional funds over the biennium to support additional positions, screening tools, and training to implement evidence-based programming within juvenile justice.
  • -Increases funding for debt service on juvenile justice capital construction projects to a total of $28.5 million over the biennium with an additional $3.4 million in FY 26.
  • -Provides $169,900 in each fiscal year to support leasing 22 police-related vehicles for law enforcement vehicle operation training.
  • -Includes $2.8 million in each fiscal year to support a transfer from the KLEFPF to the Office of the KY Law Enforcement Council Support.
  • -Increases funding to support additional law enforcement instructors by $1.3 million in FY 25 and $1.4 million in FY 26.
  • -Provides $325,000 in FY 25 to update the system used to track inmate, probationer, and parolee sentences, program credits, and services received for proper sentence completion dates.
  • -Includes $42.4 million over the biennium towards the expansion of the Little Sandy Correctional Complex to support staffing, medical care, education programming, addiction services, and reentry efforts.
  • -Includes $128.9 million in FY 25 and $30.7 million in FY 26 in bond funds for debt service to support capital projects at adult correctional institutions.
  • -Increases funding to local facilities by $863,100 in each fiscal year to support medication costs for medically-assisted treatment required by the Americans with Disabilities Act.
  • -Provides $11.26 million in additional funds in each fiscal year to support additional positions and operating costs associated with state assumption of the Jefferson County Public Defender’s Office.

Honoring Service and Preparing for Disasters

  • -Provides for personnel and operating costs associated with the operation of the new KDVA nursing home in Bowling Green with an increase of $12.4 million in FY 25 and $15.6 million in FY 26.
  • -Increases funding by $320,000 in each fiscal year to provide additional burial costs for National Guard and Reserve veterans, who may not be eligible for federal benefits.
  • -Includes an additional $76,000 in FY 25 and $152,000 in FY 26 to increase grant amounts to Veterans Service Organizations.
  • -Provides $1.1 million in FY 25 and $2.2 million in FY 26 to Kentucky Emergency Management to replace the loss of federal funding as a result of the closure of the Bluegrass Army Depot.
  • -Increases by $1.5 million over the biennium to provide the state match requirement to draw down additional federal funds for the Emergency Management Performance Grant Program.
  • -Increases General Fund by $8.3 million in FY 25 and $7.8 million in FY 26 towards personnel and equipment costs related to implementing the Kentucky Urban Search and Rescue team created by the legislature in 2023.
  • -Includes debt service to support capital projects totaling $68 million in FY 25 and $4 million in FY 26 in bond funds for various Capital Projects within the Department of Military Affairs; $1 million in each fiscal year in Investment Income, and $261 million in FY 25 in third party financing.

Ensuring State Workforce Competitiveness & Addressing Public Pension Liabilities

Current State Employee Workforce:

  • -Includes language requiring the Secretary of the Personnel Cabinet to contract with an independent consultant to review all personnel and payroll records of all current employees from January 1, 2018, through June 30, 2024, to determine the exact salary compression issues that exist in the executive branch.
  • -Provides funding for a 4% inflationary salary increase in FY 25 and a 2% increment in FY 26.

Kentucky Public Pension Authority:

  • -Provides $500 million to pay toward the unfunded liability of the Kentucky Employees Non- Hazardous Pension system.

Kentucky Teacher’s Retirement (KTRS):

  • -Increases funding to the KTRS pension by $159.2 million in FY 25 and $302.1 million in FY 26, as well as directing the use of $29.3 million in FY 23 excess to continue paying not only the amount required by law, but meeting the actuarially determined contribution in both fiscal years.
  • -Authorizes the use of $11 million in existing excess state funding for retiree health insurance in FY 25 and increases funding by $6.5 million in FY 26 to continue covering the cost of coverage for members who have retired since July 1, 2010, but are not yet eligible for Medicare.
  • -Amends sick leave liability reporting language to require the full actuarial cost of member sick leave as a percentage of payroll and in total dollars by debt source by December 1, 2025 to get a more accurate liability accounting.

Investing in Rural Kentucky

  • -Provides an additional $30.1 million in FY 25 and $25.3 million in FY 26 for expansion of the Clean Water State Revolving Fund.
  • -Increases funding by $84.6 million in FY 25 and $41.1 million in FY 26 for expansion of the Drinking Water State Revolving Fund.
  • -Includes an additional $217 million in FY 25 and $868.9 million in FY 26 for broadband deployment as part of the federal Broadband Equity Access and Deployment Program (BEAD).
  • -Increases funding for the Rural Mental Health, Suicide Prevention, and Farm Safety Program by $400,000 in each fiscal year.
  • -Appropriates funding of $150,000 in FY 25 to create a comprehensive agricultural plan.
  • -Increases funding by $153,900 in FY 24, $443,900 in FY 25, and $443,900 in FY 26 for additional personnel for emergency preparedness within the Department of Agriculture.
  • -Increases support by $1.6 million over the biennium to hire additional personnel for regulatory field services within the Department of Agriculture.
  • -Provides an additional $1.2 million over the two fiscal years for additional project managers to assist with state park projects funded by the legislature in FY 22 and FY 23.
  • -Includes debt service to support state parks capital projects totaling $132.2 million over the biennium.
  • -Increases funding by $2,050,000 in FY 25 for Kentucky Exposition Center equipment replacement.
  • -Increases funding by $1.7 million in FY 24, $2,158,500 in FY 25, and $2,163,100 in FY 26 for Kentucky Exposition Center operations growth.
  • -Includes an additional $48.1 million in debt service to support capital projects at the Kentucky Exposition Center.

Increasing Government Transparency & Accountability

  • -Increases funding by $4.5 million over the biennium to assist counties with the cost of audits.
  • -Allocates an additional $36.7 million over the two fiscal years to support the transition of the CHFS Office of the Ombudsman and Administrative Review to the Auditor of Public Accounts on July 1, 2024, as enacted in 2023 SB 48.
  • -Includes an additional $2.25 million in each fiscal year to support lost revenue replacement.
  • -Provides $750,000 in FY 25 to support the Jefferson County Public Schools Audit and allows the Auditor of Public Accounts to request as a Necessary Government Expense (NGE) up to $750,000 in FY 26.

-House Bill 1 includes one-time allocations totaling $1.74 billion over the current and next two fiscal years. The measure contains:

  • -$500 million towards the unfunded liability within the Kentucky Teacher’s Retirement System
  • -$300 million towards the unfunded liability within the Kentucky Employees Retirement System Non-Hazardous Pension Fund
  • -$150 million to pay down the unfunded liability within the Kentucky State Police pension fund
  • -$450 million to provide the necessary match to approved federal grants through the GRANT program created with the passage of HB 9/2023 Regular Session
  • -$150 million for drinking and wastewater infrastructure
  • -$75 million towards site development for economic development purposes under the Kentucky Product Development Initiative program
  • -$50 million towards the finance authority loan pool for economic development
  • -$6,395,000 for the purchase of lab equipment for use by the Kentucky State Police
  • -$15 million for the short line infrastructure preservation program within the Kentucky Rail Development Program
  • -$15 million for the industrial access and safety program within the Kentucky Rail Development Program
  • -$18.5 million towards the Riverport Asset Preservation Program
  • -$11.4 million in funding to provide $200,000 grants to each of the state’s general aviation airports

Petrie emphasized that these investments are one-time only and that funding for them already exists within the state’s budget reserve trust fund, “It’s a simple philosophy – you only make these kinds of investments with money you already have. HB 1 uses funds that are already in our possession. We’ve made saving a priority and now the budget reserve trust fund exists to ensure our state is both prepared to take advantage of opportunities as well as provide for the state during difficult times.”

Economists anticipate another robust budget surplus when the current fiscal year ends on June 30. According to House Speaker David Osborne, lawmakers can use this and future surpluses to address additional investments in future legislative sessions.

“Maintaining a strong base in the budget reserve trust fund is critical,” Osborne added. “With that accomplished, we can continue to lower the individual income tax, provide the day-to-day, necessary functions of state government, and look for ways to invest in our future.”