Gov. Andy Beshear unveiled his proposal for how the state should spend its money over the next year, calling on lawmakers to slightly increase education funding, overhaul the state’s unemployment system and provide direct payments to businesses and people struggling during the pandemic.
Beshear’s budget would also give $1,000 raises to teachers and 1% raises to other state employees.
Beshear proposed paying for the new spending by using more than $600 million in one-time funds, largely from federal CARES Act money.
But ultimately the final budget will be decided by Republicans in the legislature, who command veto-proof majorities in both the state House and Senate.
Beshear called on lawmakers to “put aside squabbling and petty partisanship.”
“Every moment in this short session we spend fighting is a loss for our Kentucky families. Such fighting will leave us empty-handed and further behind those states that recognize this moment and this opportunity,” Beshear said.
“Our goal should be to act swiftly and with wisdom on behalf of the people of the commonwealth.”
Financial uncertainty at the beginning of the coronavirus pandemic forced lawmakers to pass a one-year spending plan, instead of the normal two-year budget.
Now the legislature will have to pass another one-year budget, and though revenue did not drop as steeply as predicted early on in the pandemic, it’s only estimated to grow by about $50 million over the next year.
That’s not as much as the writers of the $12 billion annual budget would like.
Beshear’s plan would use one-time CARES Act money to fund several initiatives, like $240 million in aid to small businesses and nonprofits, $400 supplements to people who receive less than $176 in unemployment benefits and $1,000 for people who applied for unemployment before November but haven’t received benefits yet.
Beshear said the funds could be leveraged for other initiatives, like $50 million to expand broadband in underserved communities, $100 million for school renovations, a 1% increase to the SEEK school funding formula and a 2% increase in funding for higher education.
The money would also be used to double $12 million in assistance the state provides to local health departments.
“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.
Beshear also proposed $47.5 million to replace the state’s unemployment insurance system and $9.5 million to hire 90 employees to help process unemployment claims.
The governor also wants to use $100 million in state funds and $152 million in CARES Act money to help pay the $865 million federal loan Kentucky took out to help pay out a surge in unemployment claims.
After Beshear’s address, Republican House Speaker David Osborne acknowledged that Kentucky is in a better financial situation than he expected at the beginning of the pandemic, but thought the governor’s budget went too far.
“I think you will see us take a very, very conservative approach and we’ll still have a very lean budget going forward,” Osborne said.
“I think the use of one-time moneys is very disconcerting, especially on one-time expenses.”
Lawmakers will begin their budget writing process on Friday, when the budget committees from both legislative chambers will hold a joint session.
Later in the legislative session, the House will unveil a budget bill, and then the Senate will revise it. Budget-writing years usually end with lawmakers from both chambers and the governor’s office hammering out final details behind closed doors.
