Senate passes new version of state budget with changes from governor’s budget and room for additions based on federal aid

After legislative leaders from both the House and the Senate spent recent weeks deciding what the next year of Kentucky’s budget will look like, the Senate passed the free conference committee report making changes to the governor’s proposal Monday.

The budget bill was crafted just as the federal government passed another COVID-19 stimulus package that will bring around $4.3 billion additional dollars into Kentucky to be spent in many areas.

Because of this, Senate leaders explained what the body was passing Monday was mainly continuation and did not make many changes because the federal bill, just signed by the president late last week, will bring those funds into the state after they have adjourned meaning they cannot currently allocate the money.

But part of House Bill 192, the bill appropriating funds for the state budget, says that the federal funds being sent to the state cannot be spent freely by the governor without consent of the General Assembly, giving lawmakers more of a say in how those funds are spent.

Senate President Robert Stivers pointed to areas, like investments in broadband, where the legislature planned to spend a substantial amount of General Fund dollars until they learned there would be more federal money coming in. In a recent meeting, the state budget director noted investment in broadband as one of the prioritized areas in the federal bill.

The free conference committee did remove raises Gov. Andy Beshear gave to teachers and state employees but instead gave some pay increases in very targeted areas in the face of the pandemic.

Education funding at all levels was held harmless and some additional funds were put toward performance-based funding for higher education. It was noted that through previous COVID stimulus bills as well as the one most recently passed, more than $2.8 billion is coming to Kentucky to be spent on education through 2023.

Money was put toward additional staffing for the unemployment insurance office as the state still faces many outstanding claims and rampant fraud.

There is $75 million annual cap on film tax credits included in the bill as well as things like money for historic preservation and other areas.

The amended version of House Bill 192 now moves to the House for concurrence because of the changes made in the Senate with the free conference committee. The budget will then go to the governor who will have the ability to veto the legislation in the coming days.