Senate unveils and passes its version of Kentucky’s next two-year budget

Senate Appropriations and Revenue Chair Chris McDaniel said Wednesday Kentucky has exercised discipline and made difficult decisions on budgets in recent years. And as a result, he said the Senate’s budget proposals seek to make the Commonwealth more competitive in the next century with many one-time investments.

Both budget bills, House Bill 1 and House Bill 6, saw passage in Senate committee and on the Senate floor with changes that presented more spending in each.

The key differences in the Senate budget proposal for House Bill 6, the executive branch budget, compared to the House proposal include increased funding for K-12 education with nearly $100 million more going to the SEEK formula over two years.

Additionally, the performance-based funding model for post-secondary institutions is increased from $100 million in the House budget to $201 million in the Senate proposal, spends more on Medicaid funding, increases jail performance funding looking to result in long-term savings, and pays off some bonds related to the KentuckyWired project.

The Senate budget proposal includes several key child care priorities championed by the Kentucky Chamber. The proposal maintains increased reimbursement rates for child care providers serving children under the Child Care Assistance Program (CCAP). This program helps lower-income working families afford child care. The Senate budget maintains a critical new program allowing employees at child care centers to automatically qualify for CCAP, addresses a benefits cliff challenge for CCAP families, covers the cost of background checks for providers, creates and funds a new Innovations in Early Childhood Education Delivery program, and continues funding for the Employee Child Care Assistance Partnership. The House budget also proposed funding increased reimbursement rates for child care providers and continuation of the Employee Child Care Assistance Partnership.

The Senate makes several one-time appropriations in House Bill 1, legislation proposed by the House taking money from the Budget Reserve Trust Fund to make one-time investments. That fund currently has a balance of $3.7 billion and current figures expect a surplus in FY 24 that could help replenish some of that money. The House version spent $1.74 billion while the Senate version of House Bill 1 has a higher total spend.

A large portion of that increase would come from moving $890 million from the Budget Reserve Trust Fund to the Road Fund to “invest and also free up dollars and increasing purchasing power of the Commonwealth,” McDaniel said on the Senate floor.

New projects in the bill, which are in addition to much of what was in the House version, include:

• $50 million to disadvantaged counties to help with building funds to try and attract employers and provide good jobs
• $100 million to the city of Louisville for various downtown revitalization projects
• $100 million to fund infrastructure projects in Warren and Hardin counties, where massive growth is anticipated due to the construction of two major electric vehicle battery production facilities
• $75 million for one time checks to certain state retirees, prioritizing those who retired before 2015 making less than $45,000 from their pension
• A total of $35 million to the state’s largest airports for improvements
• Significant funding for cancer centers and other health investments at some of the state’s universities
• $36 million to the Kentucky Horse Park for upgraded facilities and construction of a museum
• $60 million for the construction of a veterinary technician program at Murray State
• And more

House Bills 1 and 6 passed nearly unanimously with only one no vote on House Bill 6.

Both bills will now go back to the House to be considered. If they do not accept the changes, the legislation will end up in a conference committee, which is very typical of the budgeting process.

Stay tuned to The Bottom Line for more updates on the budget and other issues throughout the 2024 legislative session.