Beshear unveils more dollars for education, but will GOP legislature bite?
Fully funding universal Pre-K and an across-the-board 11% raise for all school employees headlined Gov. Andy Beshear’s budget proposal that was to be unveiled in a Monday night address.
The proposed executive budget for 2024-2026 — the legislature passes budgets on even-numbered years for the next two years — totals $136.6 billion.
The budget includes $1.1 billion for high-speed broadband implementation, $500 million investment in cleaner water projects, $300 million for major transportation projects, more than $200 million for economic development, an 8% increase for the state’s nine higher education institutions, $141 million to support child care assistance and state employee raises.
It also proposes to give all state employees two raises, 6% then 4%, and to spend $100 million on a one-time “13th pension check” to state retirees.
Overall, the budget proposal allocates almost $17.2 billion in General Fund expenditures for Fiscal Year 2025, with $2.1 billion of that being non-recurring costs. In Fiscal Year 2026, the governor proposes about $16.3 billion in expenditures, with about $290 million in non-recurring expenditures.
Beshear’s proposals face a potentially rocky road through the legislature, which is controlled by significant Republican majorities in both chambers that have not looked favorably on many of the Democratic governor’s proposals.
The timing of Monday night’s planned address was an important wrinkle.
In previous years, governors gave their budget addresses in January before the House presented its own.
“If you run the Executive Branch every day, you’re in the best position to put together a proposed Executive Branch budget. Last budget session for the first time in Kentucky’s history, and we believe in the history of any state, the House jumped in front and submitted an Executive Branch budget without a direct proposal from the governor,” Beshear said.
Legislative leaders have said in the lead-up to this upcoming session they will remain frugal despite sizable surpluses. The latest estimate from the Consensus Revenue Forecasting Group estimates the commonwealth is bringing in an annual surplus of $1.4 billion.
House Speaker David Osborne, R-Prospect, in a statement released before Beshear’s address, said that House Republicans would take his proposal into consideration.
“The legislature has been working on the budget we will consider during the 2024 Regular Session since we passed the current budget two years ago. As the only branch of government with the constitutional authority to appropriate money, it is duty to do so,” Osborne said.
“While we are not aware of any of the Governor’s requests, we welcome his early submission and are hopeful that it includes information that we have asked for over the past several months.”
Top of mind for many Republicans is meeting the criteria set out in 2022’s House Bill 8 to drop Kentucky’s income tax another half-percentage point.
Since that bill’s passage, two years of such a reduction, 2023 and 2024, have taken place to reduce the personal income tax from 5% to 4% this upcoming January. The state did not meet the criteria for another such cut starting January 2025.
The governor’s proposed budget would leave the Budget Reserve Trust Fund — also known as the “Rainy Day Fund” — untouched at its current balance of $3.7 billion. A certain amount in the Budget Reserve Trust Fund is one of the criteria needed to trigger another income tax rate cut.
Beshear indicated to reporters before the address that his relationship with the legislature could strengthen in his second term. He said that discussions with the legislature on school employee pay raises have “started in a productive way.”
He said because he’s not facing a re-election battle, making headway on the ambitious proposals is possible.
“On the political side. I’m term limited. This is a time where it’s not a win or a loss for me. This is a time where, hopefully, we can all come together and push something forward. Maybe it takes something off the table politically for them,” Beshear said.
“I’ll let them do that analysis.”
Under the budget presented by Beshear and State Budget Director John Hicks, an additional half-point reduction to the state income tax would not occur over the next two years.
Beshear argued there is currently, and will be over the next two years, plenty of money to fund the big-ticket proposals in his proposed budget.
Education
The price tag for a mandated, across-the-board school employee raise of 11% totals $1.1 billion over the next two years.
Universal Pre-K would yield an annual recurring cost of $172 million starting out, and the Kentucky Department of Education estimate that an additional 34,000 Kentucky 4-year-olds would have access to pre-school education.
“Right now, we got 54% of Kentucky’s kids that aren’t kindergarten ready. That’s something that every responsible adult, regardless of whether you have kids or how old they are, to look at and say. ‘We have to fix this.’
“You look at so many Kentuckians that might be on the verge of poverty because we don’t pay jobs, that we supposedly honor, enough,” Beshear said.
“I believe these two pieces (universal Pre-K and teacher raises) are wildly popular around Kentucky, and they will benefit every single Kentucky in one way or another.”
In addition to those two big-ticket items, Beshear proposed a funding bump in the SEEK formula, the state’s funding program for public schools. He proposed raising it by 4%, from $4,200 per pupil to $4,368 per pupil. That increase would cost about $126 million and $114 million in each year.
The governor also proposed fully funding pupil transportation, adding $124 million each year for that purpose. Jefferson County, as well as other counties, have recently faced issues with pupil transportation.
“We are very pleased with the prioritization of education funding in Gov. Andy Beshear’s two-year budget proposal,” Interim Kentucky Education Commissioner Robin Fields Kinney said in response.
Kinney said the proposal reflects the importance of investing in education and includes all of the Kentucky Department of Education’s and the Kentucky Board of Education’s priorities, which include: increasing the Supporting Education Excellence in Kentucky (SEEK) base amount; increasing the amount for SEEK transportation; funding universal preschool; providing supports for the education workforce; providing school improvement services to more schools through the Kentucky Educational Recovery Fund; more funding for Kentucky Education Technology System; and funding for Read to Succeed.
The Prichard Committee for Academic Excellence issued a statement saying Beshear’s initiatives such as an 11% pay increase for public school employees “can all positively influence Kentucky’s education outcomes and the state’s workforce and economy.”
“Andy Beshear is matching his rhetoric around kids with thoughtful, relevant, focused, and deep budget commitments,” said Terry Brooks, executive director of Kentucky Youth Advocates. “Here’s to hoping that the General Assembly matches that kind of moral and political leadership in those coming legislative budget proposals – and in the final two-year state budget by the fall of the gavel on April 15.”
In the world of public post-secondary education, the governor proposed a base budget increase of 8% for all state-run post-secondary institutions. This would cost $60 million in the first year and $79 million in the second year.
The budget proposal includes $400 in Bond Funds toward deferred maintenance on post-secondary institution buildings.
A new investment of $16 million is included to establish a psychiatric residency program at Pikeville Medical Center. It also includes a two-year commitment of $1.3 million for a scholarship program at Kentucky State University to establish a pipeline to state government work for nursing and social work students.
Infrastructure and economy
The greatest one-time investment in the proposal is $500 million for the Better Kentucky Cleaner Water program, a grant-based program for improving water and wastewater projects across the Commonwealth. Grants are allocated based on county population.
The proposal puts $300 million in one-time funds to fund two big infrastructure undertakings: the I-69 bridge from Henderson County to Indiana and the Mountain Parkway in Eastern Kentucky.
As previously reported, Kentucky is set to receive $1.1 billion in federal funds for high-speed broadband expansion.
Beshear’s budget would also allocate $100 million each for the Kentucky Product Development Initiative, an already-existent program, as well as $100 million to attract “mega projects” that would employ at least 250 Kentuckians with an average of $30 per hour or more salary.
Funding for specific local projects is included in the proposal as well, including for riverfront projects in Paducah and Covington as well as convention center projects in Frankfort and Ashland.
Also included in the proposal is $500,000 for an economic development office in South Korea. The historic $5.8 billion BlueOvalSK project in Glendale is being completed by Ford Motor Company with a Korean partner, SK Innovations.
On the workforce front, Beshear proposed $141 million over two years to continue to fund a Child Care Assistance Program to reimburse providers, to allocate extra money freed up if Universal Pre-K is passed and to provide more funds to providers who care for children from age 0 to 3.
Beshear also mentioned that his budget would add 100 additional state social workers, up from the current count of 1,120. It also includes a 12% rate increase for foster parents, which would cost about $10 million per year.
Under Beshear’s proposed budget, $15 million would be allocated towards a “talent attraction media campaign” to showcase quality of life benefits and career opportunities in the state.
Public safety & justice
On the heels of a $15,000 raise followed by a 6% pay bump, Beshear is proposing another pay increase of $2,500 to Kentucky State Police troopers, followed by an inflationary adjustment the next year. Beshear also put forth a request to hire 150 more troopers, boosting the current count of just over 1,000.
In total, those moves would cost about $54 million over the next two years.
The budget proposal for the Department of Juvenile Justice is highlighted by funding for two new female-only facilities in Fayette County and Western Kentucky as well as $3.9 million each year to add about 450 alternative placements to detention for youths.
This story was originally published December 18, 2023 at 8:05 PM.
