FRANKFORT, Ky. — The GOP-dominated Kentucky Senate approved budget bills Wednesday funding the state executive branch and upping the House’s proposed one-time spending by almost $1.8 billion for projects across the state, though some advocates say funding for education and affordable housing still falls short.
Republican senators unveiled their changes to House Bill 6, the state executive branch budget and House Bill 1, allocating billions in one-time funding, during a Senate Appropriations and Revenue Committee Wednesday morning. The full Senate voted on the bills Wednesday afternoon before the public had access to the committee substitutes that were being approved.
The Senate proposes funding nearly $1.8 billion more than the House from the state’s Budget Reserve Trust Fund, also known as the “rainy day” fund. The about $3.5 billion of one-time spending in the Senate version of House Bill 1 includes a number of new projects, including:
- $890 million going to the Kentucky Transportation Cabinet’s Department of Highways for “select construction projects.”
- $75 million for the University of Kentucky’s Center for Applied Energy to make future investments in nuclear energy.
- $100 million over two years to Louisville’s local government for “the revitalization of downtown,” citing a number of projects such as Belvedere, Louisville Gardens and a “Butchertown Sports District.”
- $35 million for “capital improvements” at major airports in Louisville, Lexington, and Northern Kentucky.
- $25 million to build rural cancer center in Bullitt County.
- $10 million to support a “Transformational Housing Affordability Partnership” in Lexington.
“It gives us the opportunity to do transformational things,” Senate budget chair Chris McDaniel, told the Senate Appropriations and Revenue Committee. “We started by recognizing the amazing strides made by our colleagues in the House of Representatives and then added to that by making strategic decisions about how to invest our resources.”
The state’s “rainy day” fund last year soared to more than $3.7 billion because of healthy tax revenues. A range of advocates had called on the legislature to make investments in affordable housing, education and areas recovering from natural disasters.
The Kentucky Center for Economic Policy (KCEP), a progressive think tank which had called for more “rainy day” fund spending, in an analysis of the Senate budget documents said the Senate budget proposal includes much more Budget Reserve Trust Fund spending and would decrease the fund over two years down to about $2.8 billion.
“However, the budget remains largely austere when it comes to meeting recurring needs, containing still-inadequate monies for education, child care, housing, state and school employee raises and other areas despite additional ongoing funds being available,” the think tank’s analysis stated.
Budget whisked through in a day
The full Senate sped through and approved the budget bills Wednesday afternoon, having given them the required “readings” on the Senate floor before the bills were heard in committee.
The Senate changes in the House budget — contained in committee substitutes — were not available to the public when the Senate Appropriations and Revenue Committee voted on them Wednesday morning, nor when the bills had their “readings” in the full Senate.
A report last year by the Kentucky League of Women Voters criticized lawmakers for procedural practices that they say undermine citizen participation with legislation, including having required “readings” for a bill before it’s considered by a committee and replacing bills with new versions through last-minute committee substitutes. The League’s conclusions were disputed by Kentucky House Speaker David Osborne.
After HB 6, a 244-page bill, was approved by the committee, McDaniel told reporters he was “confident in our members to be able to digest it.”
Senate Minority Leader Gerald Neal, D-Louisville, said pushing the budget bills through a committee and the full Senate on the same day was not “the most transparent process.”
“I think it’s very important for the public to know what’s happening here,” Neal said. “I’m a great proponent of transparency, but it’s a difficult process.”
Both HB 6 and HB 1 passed the full Senate on near unanimous, bipartisan votes Wednesday afternoon, with Sen. David Yates, D-Louisville, thanking McDaniel for bringing Democrats into the conversation on the budget given that Republicans have supermajority control in the Senate.
The budget bills will now go back to the House to concur or reject the changes made by the Senate.
What the Senate budget funds — and doesn’t fund
Unlike the House budget, the Senate’s version of HB 6 doesn’t fully fund school transportation costs in the second year of the biennium budget. Fully funding school transportation costs is something required by state law, but the mandate has been suspended by the legislature in past budget cycles.
Instead, the Senate’s budget funds transportation costs for school districts at 80% of the required amount in 2025 and 90% of the required amount in 2026.
McDaniel said transportation isn’t fully funded because not all school districts have transportation costs, and the Senate decided to boost funding for some school districts through the state formula allocating monies, SEEK, while still marginally boosting transportation funding.
“It largely accommodates for the inflationary effects that a lot of folks have felt,” McDaniel said. “We think it’s important that the funding flow through the SEEK formula.”
The Senate’s budget doesn’t include across-the-board raises for school staff as advocated for by Democratic Gov. Andy Beshear, and the analysis by KCEP states that the “modest” increases to SEEK funding still don’t keep up with inflation for school districts.
Asked what he would say to those who argue the budget neglects Kentucky’s needs, McDaniel said that “taxpayer dollars” have to be spent wisely.
“We have to balance the ability of the taxpayers to live the life that they want to live and to spend their money how they choose to spend it, with the compelling governmental needs of the commonwealth,” McDaniel said.
The Senate budget removes funding for a proposed airport at the Bluegrass Station industrial park near Bourbon County, something that created local backlash over land use concerns.
Sen. Steve West, R-Paris, who initially backed the state budget funding for the airport project but retracted such support following local pushback, said the removal of the airport funding was an “important deletion.”
The Senate’s budget bill also removes a mandate included in the House version that some state agencies requesting funding for new vehicles couldn’t purchase electric vehicles.
Stivers said the House made a “policy statement” that he wasn’t in disagreement with, asserting that electric vehicles haven’t proven to be “cost efficient.”
“That’s probably something that we should let the executive branch manage the fleet,” Stivers said. “Hopefully they manage it wisely and they don’t go buy all EVs.”
Generally, charging electric vehicles is cheaper than fueling up a gas-powered vehicle, and a 2020 study by the magazine Consumer Reports found that maintenance costs for electric vehicles are half of similar gas-powered cars. However, another recent survey by the magazine found newer EV models have struggled with reliability problems.
Additionally, the Senate’s budget removes language that threatened a “takeover” of school districts if they failed to make progress in retaining teachers and staff. The budget also reverses the defunding of an alternative sentencing program, which can steer defendants to drug treatment instead of prison, that was included in the House version.
McDaniel said lawmakers had “good meetings” with the Kentucky Department of Public Advocacy and stakeholders that got to a “good resolution” on the alternative sentencing program. He didn’t directly answer a question about who wanted the program defunded.
Neither HB 6 or HB 1 meet the calls of affordable housing advocates to invest $200 million into state housing trust funds to tackle the state’s affordable housing crisis.
Senate President Robert Stivers, R-Manchester, speaking with reporters after the budget bills were passed, said the Senate is addressing homelessness across the state through a number of investments, pointing to one-time funding being used for the Community Care Campus project in Louisville and an affordable housing project in Lexington.
“The next question becomes the capacity to build,” Stivers said, referring to the housing developers capacity to spend money allocated to state housing trust funds.
Adrienne Bush, the executive director of the Homeless and Housing Coalition of Kentucky, has previously argued that affordable housing developers do have the building capacity to take on hundreds of millions of dollars in funding.
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.
