FRANKFORT, Ky. — Governor Andy Beshear unveiled a three-pillared Better Kentucky Budget proposal that he said will help take advantage of every opportunity in the post-COVID economy during his combined State of the Commonwealth and Budget Address delivered virtually Thursday night to a joint meeting of the General Assembly.
“Tonight, I address both a state and a country that are hurting,” Gov. Beshear said during his address. “Hurting from a pandemic that has swept across the world, upended our economy and taken the lives of our loved ones. Hurting from attacks on our democracy that yesterday rose to the level of a direct attack on the United States Capitol.”
The governor urged Kentuckians to reject violence and political rhetoric that incites hatred and division.
“To achieve our goal of a better Kentucky, all branches of government must be prepared to take bold action,” Beshear said. “We have not had this much opportunity for new investment in our people and our future in a generation. Let’s make it count. Let’s have courage. Let’s be bold. Let’s not fumble the opportunity.”
The governor’s proposal includes relief to unemployed workers and small businesses; makes improvements to the unemployment system; provides assistance for more Kentuckians to attend college or earn a certificate; and expands broadband. It includes raises for educators and state employees; an extra $100 million to build and renovate schools; funding increases for K-12 and higher education; full funding for retirement and Medicaid; money for additional social workers; and another $100 million for the Rainy Day Fund, which is now at its highest level ever.
Before laying out details, Beshear asked those willing to say a prayer and participate in a moment of silence for the more than 2,800 Kentuckians lost to COVID-19. He also recognized Kentuckians’ selfless actions and called attention to the steps his administration has taken to address three waves of infection to save thousands of lives.
“You don’t have to take my word for it,” Beshear said. “You can look at the devastating experiences in states that failed to take the same aggressive steps we have to stop this deadly virus. Adjusted for population, we have suffered less than half the number of deaths as the people of Tennessee and less than one-fourth the number of deaths as the citizens of North and South Dakota. Through these trials, we learned that an effective virus response is necessary to sustain and rebuild our economy.”
Despite the economic damage caused by the pandemic, which negatively affected many small businesses and families, Gov. Beshear said the hard work of his administration, especially State Budget Director John Hicks, led to encouraging state budget news that allows the state to provide relief to those still hurting and to invest.
Hicks said the budget is structurally sound and fiscally responsible with the largest ever Rainy Day Fund while using $600 million in one-time funds. The budget adheres to revenue estimates of the state’s Consensus Forecasting Group and it does not rely on new taxes, new revenue measures or spending cuts.
Senate President Robert Stivers, House Speaker David Osborne, Senate Appropriations and Revenue Chair Chris McDaniel, and House Appropriations and Revenue Chair Jason Petrie issued the following statement regarding the State of the Commonwealth and Budget Address:
“We appreciate the Governor’s diligence in crafting his version of the state budget and will continue to review the documents provided and welcome input from him as the budget process unfolds. A budget is the ultimate policy document, and this means we must invest every taxpayer dollar in a manner that reflects our state’s priorities and financial realities. This pandemic is far from over and our Commonwealth still faces great uncertainty. We question the prudence of spending millions of dollars in new programs when our economy remains extraordinarily unpredictable.
“While there is still much work to be done, the General Assembly will do so with extreme consideration and care as it develops a one-year budget that will most effectively benefit the people of the commonwealth.”
Beshear’s budget proposals were presented as three themed pillars.
Pillar 1: Immediate Relief to Families and Businesses Harmed During the Pandemic For small business relief for those that have experienced losses because of the pandemic, the Governor is proposing a fast-tracked bill to immediately make available $220 million in the Better Kentucky Small Business Relief Fund. This represents the single largest relief fund of its kind in generations.
For individual relief, the Governor is authorizing $48 million in CARES Act funding to those who have waited too long to receive unemployment benefits and to help those who missed out on the federal government’s Lost Wages Assistance Program because they made too little.
The Better Kentucky Budget also allocates $47.5 million to correct a legacy of underfunding the unemployment insurance (UI) system after the Governor’s administration inherited a UI operation running on an IT system that has been in operation since the 1970s and is functionally obsolete.
In the years leading up to the pandemic, the previous administration, and previous sessions, closed in-person offices and cut 95 skilled employees from UI. In addition, the UI budget was slashed by $16 million. This, coupled with a once-in-a-lifetime, 1,300% year-over-year increase in claims meant many Kentuckians have had to wait too long during a difficult time for their payments. The Governor’s budget includes General Fund spending of $1.1 million in fiscal year 2021 and $8.4 million in fiscal year 2022 to provide funding to restore employees to help with unemployment claims at the 12 career centers throughout the commonwealth.
“This is help they are owed and deserve and far too many have waited far too long,” the Governor said.
Finally, using CARES Act funding, the Governor has already repaid $152 million in UI loans, and his budget proposal adds another $100 million in repayment.
Pillar 2: Investing in Our People The Governor wants to prioritize the needs of children and families, including education, health care and retirements.
Beshear recognized that educators and school staffers have had to overcome incredible challenges this year, quickly adjusting to online instruction when needed and making sure children were fed even when they were not in the classroom. The Governor is proposing a $1,000 raise for teachers and classified staffers, who have gone above and beyond in their duties.
He proposes increasing the SEEK formula and funding textbooks and technology, supports preschool programs in disadvantaged areas, and restoring a teacher loan forgiveness program.
The Governor is proposing a 1% raise for our state employees. To improve compensation for local and state law enforcement and firefighters, Beshear proposes with a $600 stipend increase from the Law Enforcement and Firefighters Foundation Program funds, bringing the stipend up to $4,600. He wants a full exclusion of military pensions from the Kentucky income tax, which he said welcomes them to live, work and retire here.
The Better Kentucky Budget invests in our families’ health care by fully funding Medicaid, adding 76 new social workers for child protective services, increasing the number of slots available for Michelle P Medicaid waivers and more. He said his administration will continue to address inequities in access to health care, which have been spotlighted by the pandemic.
The Governor proposes doubling local health departments’ General Fund support, adding $12 million in fiscal year 2022 to improve their epidemiology and clinical capacity.
He proposes full pension funding for the Teachers’ Retirement System for just the second time and pension relief to quasi-governmental agencies, like child advocacy centers and domestic violence shelters, as well as local health departments and community mental health centers.
The governor includes more than $580,000 for the University Press of Kentucky and $20 million in aid to small nonprofit organizations.
Beshear’s budget would reinstate funding for the Commission on Women, reinstate the Office of Minority Empowerment and provide funds each year to reinvest in the Commission on Human Rights.
Pillar 3: Investing Boldly in Our Future The third pillar of the Better Kentucky Budget proposes strategic investments using $272 million in one-time funds to improve infrastructure and create thousands of jobs.
“The shock of COVID-19 has brought on our current transformational period, and how we lead in the next year will dictate whether Kentucky simply recovers back to the old normal or, instead, takes its place among the most productive and innovative states in the union,” Beshear said.
His budget focuses on repairing schools, some of which date to before the 1930s, with a one-time $100 million investment to renovate or replace them. This will improve the educational experience, while creating thousands of construction jobs.
He would invest in our workforce with more dollars to higher education and by creating the Better Kentucky Promise, a program that aims to provide the necessary last dollars that should allow nearly 6,300 Kentuckians to complete associate’s degrees or secure certificates.
The budget provides $50 million to fund last-mile broadband coverage. This is the first time ever that state dollars have been used to invest in expanding broadband.
“We used to think of broadband in terms of just business. Now we know it touches every part of our lives: the education of our kids, how we receive health care. This is the most important infrastructure of the future,” Gov. Beshear said.
The Governor is proposing the Emerging Industries Fund, which is designed to provide flexible resources targeted to Kentucky’s future economy and developing technologies in agritech, aerospace, health care, logistics, advanced manufacturing and other key areas. By incentivizing these sectors, Kentucky will be more prepared to succeed in the post-COVID economy.
The Better Kentucky Budget also includes $7.7 million in state bond funds to match $38.7 million in federal dollars to repair, replace and improve local drinking water and wastewater infrastructure, and $6 million in state bonds so that localities can access federal funds for critical flood control projects in our communities.
The Governor wants lawmakers to address the transportation budget via short-term and long-term solutions to create more jobs and stimulate the economy.
He said he will ask all cabinet secretaries to identify ways to modernize with an eye towards determining what services, such as obtaining licensing or certificates, can be remotely rather than in Frankfort.
The Governor called for legalizing medical marijuana, sports betting and saving historic horse racing as measure to promote economic growth.
Beshear said part of building a better Kentucky is acknowledging and addressing racism that continues to exist in this country and in this commonwealth.
“To live our motto, ‘United We Stand,’ requires us to view and treat each other as equals,” Beshear said.
He said there are many issues that Republicans and Democrats can agree on, and he looks forward to working with Senate President Robert Stivers, House Speaker David Osborne and every member of the General Assembly to set a positive tone in Frankfort and take advantage of this opportunity.