FRANKFORT — The GOP-controlled Kentucky Senate unanimously passed its version of the two-year state budget Wednesday providing less money than the House for public schools but substantially more for Medicaid, while cutting a number of state agency budgets.
State senators also passed budget bills funding the state’s legislative and judicial branches, along with a bill that would spend $810 million from the Budget Reserve Trust Fund on one-time appropriations that were not specified. The so-called “rainy day” fund currently holds billions of dollars in revenue surpluses from recent years.
Senate Appropriations and Revenue Committee Chair Chris McDaniel, R-Ryland Heights, told lawmakers on the Senate floor that the legislature has had to write budgets “at times that were exceptionally tight” during a global pandemic and when times have gotten better. “I could not be more proud of our current and past members because we did things with discipline. We made tough decisions when we had to. We crafted our budgets for the future, not just for today,” McDaniel said.
The minority of Democrats joined the GOP supermajority in advancing the budget bills, as they did during the last state budget process in 2024. Senate Minority Floor Leader Gerald Neal, D-Louisville, thanked McDaniel for meeting with Democrats earlier in the day to answer questions about the budget bills.
“I think that’s where the process should go. We look forward to continuing this process,” Neal said.
The Senate quickly moved the budget —spanning 228 pages and substantially changed from what the House approved — through a legislative committee and voted for it on the Senate floor in one day. The budget approved by the Senate became publicly available on the legislature’s website just hours before the vote.
The League of Women Voters of Kentucky has criticized moving a bill through a legislative committee and to a final vote in one day as an anti-transparency maneuver, depriving the public of time to weigh in.
McDaniel said the budget bills had to be moved swiftly because developing them is a long, difficult process and time is limited to finish the legislature’s work. Lawmakers have 10 legislative workdays remaining in the 60-day session to pass the budget.
“Even when you’re negotiating with people of the same party, it will take us a while to get through it. And simply, with the amount of time that’s left, we’ve got to move this thing along quickly,” McDaniel said.
The Kentucky House of Representatives passed its budget bill last month and would have to concur with the Senate’s changes to send the bill to Democratic Gov. Andy Beshear for his consideration.
State budgets typically reach their final form in House-Senate conference committees that negotiate behind closed doors.
The Senate version of the budget
The Senate version of House Bill 500 would slightly decrease the amount of funding that goes to Kentucky’s school districts compared to what the House proposed and provide significantly less than what the Democratic governor wants.
The Senate plan provides $4,626 per student in fiscal year 2026-2027 and $4,774 per student per student in fiscal year 2027-2028 through the Support Education Excellence in Kentucky (SEEK) formula, which provides monies to school districts, slightly less than what the House proposed.
In contrast, Beshear’s budget proposal called for $4,701 per student in fiscal year 2026-2027 and $4,818 per student in fiscal year 2027-2028.
The Senate’s budget keeps transportation funding for school districts flat, similar to the House budget. The Senate also reversed cuts to higher education that the House made.
McDaniel said a number of state agencies would see cuts to their allocations of at least 4%, though lawmakers gave several exemptions from the cuts including for Kentucky State Police, juvenile justice and prison funding, prosecutors and public defenders and teachers’ pensions.
Overall, the Senate budget allocates $31,011,874,600 in General Fund revenues. The House budget allocates $30,977,333,400 in revenues, about $34 million less.
McDaniel said the Senate also provided a 13th check for state retirees by using a portion of $350 million the budget pulls from the Kentucky Insurance Regulatory Trust, a state fund financed by fees on insurers.
Kentucky Government Retirees, an advocacy group representing 20,000 Kentucky Retirement Systems retirees and active employees, said in a statement it was “gratified” to see the 13th check in the budget.
Jason Bailey, the executive director of the progressive think tank Kentucky Center for Economic Policy, in a statement said the Senate budget makes “modest improvements” but doesn’t go far enough, arguing that K-12 education remains “woefully underfunded.”
The Senate voted to fund Medicaid benefits at “approximately the same level” as the governor’s proposal, the think tank found in its analysis, in contrast to deep cuts to Medicaid in the House budget. The federal-state program pays for 1-3 Kentuckians’ health care.
Bailey said the “underfunding of education and deep cuts to the bases of many agencies prove years of tax cuts have already resulted in revenue that is too low to meet the needs of Kentuckians,” referencing the income tax rate cuts lawmakers have approved in recent years.
“Thankfully, the Senate budget does not substantially underspend relative to revenue in an attempt to trigger more tax cuts in the future. But as the underfunding of education and deep cuts to the bases of many agencies prove, years of tax cuts have already resulted in revenue that is too low to meet the needs of Kentuckians.”
“As the House and Senate reconcile their budgets in the coming weeks, they should work toward a version that uses a responsible portion of the massive Budget Reserve Trust Fund to make greater targeted investments in the services needed to make Kentucky healthier and safer and our communities stronger.”
McDaniel told reporters approximately $3.9 billion would remain in the Budget Reserve Trust Fund under the Senate’s proposal.
‘A pretty fast process’
The speed with which the budget moved through the Senate left little time for senators to review the actual text, though several emphasized the budget crafting is ongoing.
Sen. Jared Carpenter, R-Berea, told the Lantern Wednesday morning he hadn’t had a chance to review the budget bill, mentioning it’s “a pretty fast process once we get it in our hands.”
“Our folks have been working on this thing for several weeks, way up in the night, to try to get it to a process now to where we can look at it and vote on it, have an understanding of it,” said Carpenter, who’s been in the legislature since 2011.
Neal, the Senate Minority Floor Leader, had said on the Senate floor in 2024 — when Republicans in a similar fashion passed a changed version of the budget through the chamber in one day — that the maneuver was not “the most transparent process.”
He told the Lantern on Wednesday that senators “expect everything to be put on the table” with the budget.
“We are confident of that, but we got to scrutinize the budget more carefully,” Neal said.
Sen. Gex Williams, R-Verona, who served in the legislature in the 1990s, predicted the budget would likely go to a conference committee where leadership would ultimately decide what’s in the budget.
“There can be huge swings between what we saw today. Not that there could be — there will be,” Williams said, referencing the negotiations between the Senate and House. “Even to senators and reps it’s a little bit of an opaque experience.”
“You put everything in, but it’s those guys that are in the leadership — they’re behind closed doors at the time, and they both come out and blame it on the other leadership,” Williams said. “That’s the way it’s worked. That’s the way it’s always worked.
Given the volume of legislation still awaiting action in both chambers, Williams said it would be better if we “did all this stuff earlier and had a longer process.”
This article is republished under a Creative Commons license from Kentucky Lantern, which is part of States Newsroom, a network of news bureaus supported by grants and a coalition of donors as a 501c(3) public charity. Kentucky Lantern maintains editorial independence. Contact Editor Jamie Lucke for questions: info@kentuckylantern.com. Follow Kentucky Lantern on Facebook and Twitter.
Liam Niemeyer covers government and policy in Kentucky and its impacts throughout the Commonwealth for the Kentucky Lantern. He most recently spent four years reporting award-winning stories for WKMS Public Radio in Murray.
