(FRANKFORT, Ky.)-The Kentucky House of Representatives took a major step with the passage of the House version of the state’s two-year spending plan, House Bill 500 HCS, on Thursday, February 26. The bill reflects a focus on making state government more efficient in order to focus on priority areas like education, healthcare, public safety, and community stability.
As its sponsor advised all along, the budget that passed was substantially different from the version filed in late January. In the weeks since it was filed, budget review subcommittees and staff gathered input from stakeholders and crafted a version that intentionally allocates taxpayer resources in ways that preserve and strengthen essential public services without overextending government. While the budget process is far from finished, this committee substitute represents a strong next step.
The two-year, $31.56 billion plan protects the state’s core priorities. It provides an increase for per-pupil SEEK funding, and holds funding Family Resource and Youth Service Centers, Medicaid, juvenile justice, corrections, and programs serving veterans at current rates. Educational programs with measurable results, such as Read to Achieve, extended school programs, and Jobs for America’s Graduates, also remain protected.
It sets the stage to trim outdated programs, eliminate duplicate grants and incentives, reduce unnecessary administrative costs and consulting contracts, and end programs that lack measurable results. At the same time, it recognizes opportunities for services to be delivered more effectively by families, businesses, and community organizations. The measure calls for budget reductions across several cabinets and programs, including a 3% reduction in executive branch spending each year. Agencies are given flexibility to identify where reductions can be made. By streamlining government operations and right-sizing expenditures, the state can free up funding to benefit Kentucky families and communities.
The plan also addresses employee benefits by funding the Kentucky Employees Health Plan (KEHP) at actuarially determined levels, with a 14% increase in cost in the first year and an additional 10% in the second year. Lawmakers continue to request the data behind the KEHP estimates, as well as other executive branch’s budget proposals, and issued subpoenas for details on the rising costs of the health plan.
In addition, HB 500 HCS underscores some of the Commonwealth’s most pressing challenges. Medicaid alone will require $6 billion over the next two years, second only to K-12 public education, highlighting the need to balance essential services with responsible fiscal management.
Could we have spent more? Of course. And, the proposal passed by the House reflects an almost 2% increase in overall state spending and leaves a surplus in both years, just in case we need to allocate more for an unexpected expense.
Is this shift to focus on spending because we need more revenue? No. Kentucky has a spending problem, not a revenue problem – as illustrated by a recent auditor’s report that exposed more than $800 million in Medicaid spending made in error, or another that detailed $39 million in questionable advertising and luxury travel expenses across the executive branch.
HB 500 HCS now goes to the Senate for consideration. In the meantime, if you are a “by the numbers” reader, here are a few details about HB 500 HCS that might interest you:
Overall:
- $31.56 Billion Two-Year Budget
- $369 Million Increase for K-12 Public Education
- $5.99 Billion for Medicaid
- Public Safety Fully Protected
- 3% Executive Branch Reduction Each Year, Except:
- Per-Pupil/SEEK
- Medicaid Benefits
- Juvenile Justice & Corrections
- Veterans Programs
K-12 Public Education:
- $7.1 Billion Two-Year Allocation
- $369 Million Increase in Each Year
- 2% SEEK Increase in Each Year
- $398 Million in Transportation Funding*
- $134.87 Million Increase Over Two Years for Teacher’s Retirement
- Fully Funds Kentucky Employee Health Plan at Actuarially Recommended Amount
*Based on estimates from KDE
Human Services:
- $5.99 Billion – Medicaid Funding
- 125 New Michelle P. Waiver Slots
- 150 New Community Living Waiver Slots
- 175 New Home Community Based Services Waiver Slots
- $101.5 Million To Cover Additional SNAP Costs
- $40 Million Increase to State-Run Psychiatric and ICF/ID Facilities
- Specifically Identifies Funding for Children’s Advocacy, Rape Crisis, Domestic Violence Shelters
- Identifies Funding for Child Care Benefits and Relative/Fictive Kin Caregivers
Veterans Services:
- $10.6 Million for Staffing Support at the Thomson-Hood Veterans Center
- $13.2 Million for Staffing Support at the Western Kentucky Veterans Center
· $100,000 General Fund in Each Year for the Homeless Veterans Program
Public Safety:
- $16.7 Million for Kentucky State Police Salary Adjustments
- $10 Million Body Armor Grant Program
- $6.5 Million for Jefferson County Juvenile Justice Center Support
- $13 Million Increase for Corrections Medical Funding
- Increased Funding for Crime Lab Upgrades
As always, I can be reached anytime through the toll-free message line in Frankfort at 1-800-372-7181. You can also contact me via email at Chris.Freeland@kylegislature.gov and keep track through the Kentucky legislature’s website at legislature.ky.gov.
