The long-awaited two-year budget bill of the Kentucky House Republican supermajority was filed on Tuesday, with its sponsor indicating the legislation and budget process will be significantly different than years past.
Rep. Jason Petrie, the GOP chair of the House budget committee from Elkton, described his bill as a “bare bones budget,” with no line items, that would evolve in the coming weeks of the session as people make their case for appropriations in budget subcommittee meetings.
“This will be a time period during this session for agencies, for legislators, for other interested parties to come talk to their representatives and put their best case forward on any request that's been made inside the operational budgets for the commonwealth,” Petrie said.
The timeline of all that is unclear. The budget dropped on day 15 of the 60-day session and must make its way through a committee and floor vote in both the House and Senate, before heading to the governor’s desk. Budget bills also always go through conference committees when the House and Senate versions differ.
The current budget bill includes across-the-board cuts to many state agencies, including groups like the Economic Development Cabinet, which would face a $4.5 million cut on average over the biennium, to the Kentucky Infrastructure Authority, with an average $2.9 million cut.
Wednesday morning in the Senate budget committee, State Budget Director John Hicks gave a more detailed version of Democratic Gov. Andy Beshear’s budget proposal, which spends significantly more than the current GOP budget bill. The difference in spending is largest in two areas: education and Medicaid.
Beshear wants to appropriate $1.4 billion over the budget period to launch universal public pre-K, with another $400 million for K-12 employee raises and a 2.5% increase to the per-pupil SEEK funding formula for K-12 spending in each fiscal year.
Meanwhile, the Republican proposed budget would keep SEEK funding steady, with no increase for inflation, over the course of two years, at $4,586 per student. The budget would also decrease transportation funding by $40 million from their 2026 levels. According to the Kentucky Center for Economic Policy, a left-leaning think tank, that would mean school buses would be funded at 74% of the required level. School transportation funding came under scrutiny after the 2023 bussing fiasco in Jefferson County.
After Hicks’ presentation, Senate budget committee chairman Chris McDaniel, a Republican from Ryland Heights, said that two of the governor’s education spending proposals were problematic.
As in past budget years, McDaniel said Republicans are likely to balk at mandated salary increases for school staff, as those are outside the legally required mechanism for SEEK funding and could create “inequity” in the system.
McDaniel also highlighted that Beshear’s pre-K plan would start out slow and ramp up over the next eight years at a higher cost, as he quizzed Hicks on what the price tag would be at full implementation.
“The idea that we would begin to implement pre-K for all without knowing where that was headed exactly is a bit problematic,” McDaniel said.
The governor’s budget also would direct more than $6 billion of state money toward Medicaid over two years, ramping up with an additional $420 million from the General Fund in the second fiscal year, when portions of federal cuts from the “One Big Beautiful Bill” go into effect. That increase is despite the fact that they project Medicaid enrollment to decrease by nearly 30,000 in the second year due to new work requirements under the bill.
According to the Kentucky Center for Economic Policy, the House GOP budget bill appropriates $815 million less for Medicaid than the governor’s budget, while also not specifically budgeting the nearly $10 million for the estimated state cost of new technology needed to implement the new work reporting requirements.
Beshear also called for more than a thousand new Medicaid slots for various waiver programs that allow people to remain in their home instead of being institutionalized, but these are not yet in the House GOP bill. The new slots would address, but not solve, lengthy waitlists.
Steve Bechtel, the chief financial officer for Kentucky’s Department for Medicaid Services, told lawmakers in a House budget subcommittee meeting Wednesday that he found the proposed House budget’s level of spending on Medicaid “concerning.”
“The forecast that we've done in the past, we've been within less than 1% of that budget in our actual spend,” Bechtel said. “I'm not here to tell you policy. It's not my job. My job is to tell you what the current policy, how much it's going to cost.”
Republicans in Frankfort have long been wary of the increasing price tage of Medicaid in Kentucky, creating the Medicaid Oversight and Advisory Board last year to delve into the spending that takes up an increasing percentage of the state budget. GOP Rep. Ken Fleming of Louisville, who co-chaired the advisory board, said the Medicaid program needs to find savings through a more efficient administration, not cut services.
“It's not on our calendar and it's not on our menu to cut services,” Fleming said. “In fact, the savings that we're realizing or seeing is all internal savings in terms of changing your systems and how you're approaching in terms of you doing your business.”
Andrew McNeill, the president of right-leaning Kentucky Forum for Rights, Economics & Education, said the GOP House budget bill was a step in the right direction to fiscally sound policy that keeps spending under control.
“The process over the next few weeks laid out by (Petrie) is appropriate and smart,” McNeill said. “Input is welcomed but it must face the reality that we need more transparency as to what's being funded in the base budget and why exactly any new spending is justified.”
