Lawmakers and Business Leaders Preview Key Issues Ahead of the 2026 General Assembly

Business and legislative leaders gathered on November 10 in Lexington for the Kentucky Chamber’s 2026 Legislative Preview Conference, outlining the priorities and challenges that will shape the upcoming session of the Kentucky General Assembly.

Kentucky Chamber Chair Condrad Daniels of HJI Supply Chain Solutions highlighted the General Assembly’s recent progress, including tax reform, investments in education and workforce development, and a sustained focus on competitiveness.

Looking ahead, Daniels said the Chamber’s focus is on addressing the barriers that continue to hold back Kentucky’s full potential. “We believe opportunity is the foundation of a strong economy and a thriving Commonwealth,” he said.

Civility in Leadership

Both said civility is not weakness, but a mark of effective leadership rooted in respect. Fletcher said civility comes from the Latin root for “citizenship,” meaning it extends beyond politeness to a sense of collective responsibility. Beshear agreed, describing civility as treating others the way one wishes to be treated and noted that leaders must be willing to listen, admit when they’re wrong, and “disagree without being disagreeable.”

Both reflected on the importance of building trust and finding common ground across party lines. Fletcher said most issues have areas of agreement if leaders are willing to sit down and work through them, while Beshear emphasized that personal relationships and trust are what make bipartisanship possible.

Discussing the role of the business community, both governors said employers and economic leaders play a powerful role in setting the tone for cooperation. They also shared advice on addressing some of Kentucky’s most persistent challenges. Beshear pointed to child care and early education as critical long-term investments for the state’s workforce and economy. Fletcher emphasized recovery and reentry as areas where business and government collaboration can expand opportunity.

Legislative Leaders

House Speaker David Osborne said Kentucky’s financial position is among the strongest in the nation, allowing lawmakers to make strategic investments after years of disciplined budgeting. He pointed to the state’s record rainy-day fund and targeted infrastructure spending as proof that a solid foundation provides the General Assembly with the flexibility to invest in growth.

Osborne said that housing and child care remain essential to workforce participation and community stability. He called for more practical regulation, especially of employer-based child care, to make it easier for businesses to offer on-site options. Senate President Pro Tempore David Givens agreed that housing and child care solutions must be driven locally and added that reducing regulatory and administrative burdens—particularly in rural areas—is key to expanding access and economic participation.

On tax reform, both leaders stated that they are committed to responsibly phasing out Kentucky’s individual income tax, and Osborne noted that lawmakers are considering whether to accelerate the next rate reduction or broaden reforms to other areas of the tax code.

The leaders also noted the growing importance of reliable, affordable energy to Kentucky’s competitiveness and said nuclear and data center development will remain key topics in the 2026 session.

Givens also addressed federal uncertainty and health care costs, noting that unpredictable national policy continues to challenge state budget planning. Even so, he said Kentucky’s budgeting approach has positioned the Commonwealth for long-term stability and growth.

Budget and Revenue

Lawmakers who will lead the formation of the biennial budget in 2026 discussed Kentucky’s financial outlook heading into the legislative session, emphasizing the importance of long-term planning, fiscal discipline, and continued progress on pro-growth tax reform.

Senate Appropriations and Revenue Committee Chair Chris McDaniel said lawmakers will monitor key indicators, such as workforce participation, regional growth, and median household income, to guide budget decisions in 2026.

House Majority Whip Jason Nemes said the 2026 session will focus on maintaining that disciplined approach while continuing the phased reduction of the individual income tax, which has been cut from 6 percent to 3.5 percent since 2018, with the ultimate goal of reaching zero.

McDaniel said the next budget should consider extending child care tax credits for providers to help working families and strengthen the labor force. Also, he urged lawmakers to pursue solutions that incentivize workforce housing development, such as zoning flexibility, regulatory streamlining, and targeted incentives that expand supply without driving up prices.

Supporting Working Families

House Families and Children Committee Chair Samara Heavrin discussed the Kentucky Chamber’s work through the Kentucky Collaborative on Child Care, which convened diverse leaders to develop recommendations. Those proposals, she said, focus on regulatory modernization, affordability, and flexible care options that align with real work schedules.

Rep. Susan Witten and Sen. Robby Mills, co-chairs of the Kentucky Housing Task Force, said the state’s shortage of more than 206,000 housing units has made homeownership increasingly out of reach for working Kentuckians. Mills noted that housing prices and property taxes have risen severely, with an insufficient number of homes available to meet demand. “Houses are where jobs go to sleep,” he said, adding that affordability directly influences where employers can grow and workers can live.

Witten said the task force’s upcoming recommendations will draw on successful efforts in neighboring states, focus on ways to reduce regulatory delays, expand infrastructure capacity, and encourage investment in workforce housing.

Sen. Craig Richardson said affordability remains the defining issue for families. He added that affordability and opportunity are inseparable, saying every major policy should be judged by whether it helps families keep more of what they earn and makes Kentucky a more attractive place to live and work.

Education and Workforce

Lawmakers discussed Kentucky’s education system as the foundation of the state’s workforce, emphasizing the need to strengthen the teacher pipeline, align scholarship programs with workforce needs, and better connect schools with local employers.

Rep. Scott Lewis, chair of the House Primary and Secondary Education Committee, emphasized that the success of education is essential to Kentucky’s economic future and requires collaboration between educators, employers, and local communities. Rep. Erika Hancock underscored the importance of supporting teachers, noting that retention heavily depends on morale and resources.

Senate Majority Leader Max Wise highlighted “grow-your-own” teacher pathways and called for adding education as an eligible field under the Work Ready Scholarship.

House Postsecondary Education Committee Chair James Tipton and other panelists focused on strengthening postsecondary access, emphasizing the importance of dual credit and work-based learning, as well as aligning scholarship programs with the needs of the workforce.

They agreed that the Kentucky Educational Excellence Scholarship (KEES) remains one of the state’s most effective tools for helping students pursue education and career pathways, and that regular review of these programs is needed to ensure they reflect Kentucky’s changing economy.

Technology and Energy

Rep. Derek Lewis provided an update from the Artificial Intelligence (AI) Task Force, saying the rise of AI and data-driven industries is creating new demands. He emphasized the need for planning and streamlined policies to support innovation while maintaining reliability to keep Kentucky competitive.

House Natural Resources and Energy Committee Chair Jim Gooch said much of Kentucky’s power infrastructure is aging, emphasizing the need to modernize and balance energy sources while keeping coal part of the mix. He added that potential federal reforms could give states more flexibility to upgrade facilities and cut regulatory barriers.

Sen. Danny Carroll emphasized the importance of a coordinated statewide energy strategy that brings coal, natural gas, and nuclear development under the Energy Planning and Inventory Commission.

On nuclear development, Carroll highlighted the Nuclear Energy Development Authority’s pilot project to identify three potential reactor sites through a partnership between the state, utilities, and private investors. Carroll also pointed to progress in Paducah, where companies like Global Laser Enrichment are helping reindustrialize the former Department of Energy site and position Kentucky for future nuclear investment.

Lewis added that ensuring adequate baseload generation will be essential, particularly in eastern Kentucky, where coal plants have closed but transmission capacity remains.

Rep. Adam Moore emphasized the need for energy affordability, calling for bipartisan, practical solutions across all energy types—coal, natural gas, renewables, and nuclear—to keep costs stable as demand grows. 

Transportation and Infrastructure

Lawmakers discussed advancing Kentucky’s aviation sector, rural infrastructure, and long-term transportation strategy to support economic growth.

Speaker Pro Tempore David Meade highlighted Kentucky’s new alternative aviation fuel initiative, created in 2024 to strengthen supply chains and open new opportunities for farmers and refiners. He said the effort will help attract major carriers and producers while positioning Kentucky as a leader in the industry.

Sen. Brandon Storm shared insights from the Air Mobility and Aviation Economic Development Task Force, which is examining Kentucky’s aviation workforce needs. The task force highlighted aircraft maintenance and air traffic control as high-demand career areas and selected an education provider to lead new training programs.

House Transportation Committee Chair John Blanton emphasized the importance of data-driven investments to help cities and counties tackle key infrastructure projects.

Panelists also discussed leveraging one-time federal dollars for infrastructure improvements and investing in ports, rail, and freight corridors to maintain Kentucky’s competitiveness as a logistics hub.

Medicaid Sustainability

With numerous changes underway in Kentucky’s Medicaid program, lawmakers discussed how to ensure its long-term stability through enhanced oversight, improved data systems, and workforce and rural health enhancements.

Rep. Kim Moser, who serves as chair of the House Health Services Committee and co-chairs the Medicaid Oversight and Advisory Board, stated that the board’s priority is to improve oversight, accountability, and transparency across the system. Senate Health Services Committee Chair Stephen Meredith added that lawmakers plan to pursue short-term administrative changes this session while developing longer-term strategies to reduce inefficiencies and modernize operations.

Both emphasized that data and technology will be key to Medicaid’s future. Moser said the board is exploring a statewide “health data trust” to improve coordination and considering how artificial intelligence could help streamline analysis and increase efficiency.

Meredith emphasized that rural health care is a pressing challenge, noting that 40 percent of Kentuckians live in rural areas, but only 17 percent of the state’s primary care physicians practice there. He added that upcoming recommendations from the Make America Healthy Again Task Force are expected to reinforce the need for stronger primary care throughout the state.  Moser added that Kentucky’s strong telehealth laws and new “food as medicine” partnerships can help address chronic disease and access barriers in rural communities.

The panel also discussed workforce issues, highlighting efforts to expand training opportunities, strengthen workforce data, and create clearer career pathways for international health care professionals.  Rep. Wade Williams discussed legislation that would allow hospitals to improve workplace safety and retention for health care staff.

Tourism 

Lawmakers highlighted tourism as a major contributor to Kentucky’s economy, emphasizing its connection to quality of life, local investment, and regional collaboration.

Rep. Kim King, chair of the House Tourism and Outdoor Recreation Committee, said Kentucky continues to see record tourism growth and credited strong partnerships among local governments, tourism commissions, and small businesses for driving that success. She also noted that trail development and multi-county collaboration have helped strengthen rural areas.

Sen. Scott Madon and Sen. Matt Nunn discussed the growth of outdoor recreation and adventure tourism, particularly in eastern Kentucky. They said these projects are creating new opportunities for small businesses and helping showcase the state’s natural beauty.

Rep. Anne Donworth encouraged lawmakers to explore policies that help communities fund marketing efforts—such as expanding restaurant tax eligibility and ensuring that short-term rentals contribute to local occupancy taxes.

Panelists agreed that sustained growth will require public-private partnerships, strong local engagement, and continued investment in projects that make Kentucky an attractive place to visit, live, and work.

To learn more about the Kentucky Chamber’s 2026 Legislative Agenda, visit kychamber.com/issues. Stay tuned to The Bottom Line for more on the upcoming session of the General Assembly.