Kentucky Gov. Andy Beshear has recommended in his first budget a $36.9 billion total spending plan for fiscal 2021, a plan the new Democratic governor may have trouble defending in the Republican-controlled Legislature even though it’s a small increase.
Beshear’s budget represents a 1.8% increase over the current fiscal year. His spending proposal for the 2021-2022 biennial budget totals $74.5 million.
The general fund budget for fiscal 2021 is $11.9 billion, a 1.5% increase, some of which would be supported by proposed increases in sin taxes on smoking products and new taxes on sports betting.
“This is a responsible budget,” Beshear told House and Senate lawmakers Tuesday. “It is a budget that not only ends years of painful cuts, it also makes a major investment in public education, fully funds expanded Medicaid, makes a historic investment in protecting our children, directs dollars to breaking cycles of poverty, and I believe will move us forward as a people.”
In addition to increased spending for education, including $2,000 raises for teachers, his budget recommends putting more funds toward helping certain agencies deal with spiking pension costs. General state employees wouldn’t see increases in their salaries.
Beshear’s also requesting the state issue $1.06 billion of bonds to finance capital projects around the state and at universities over the biennium. Some $867 million of debt would be available to issue in fiscal year 2021 under his plan.
In his proposal, Beshear said he has included four-revenue raising measures: various taxes and license fees on sports betting, a cigarette tax hike, a new tax on vaping, and an increase in the minimum tax paid by limited liability entities. LLE’s are not corporations but receive the same legal protections.
The proposed taxes on tobacco and vaping products and the LLE tax increase are estimated to bring the state $110.6 million in new revenue over the biennium, according to budget documents.
Beshear supports Kentucky legalizing sports wagering, and joining 14 states and the District of Columbia that have already implemented such measures.
House Bill 137, which has 37 sponsors, would dedicate 95% of the funds raised through wagering to the Kentucky Retirement System, which is among the worst funded in the country.
HB 137 would authorize betting at horse tracks, professional sports venues, fantasy sports and online poker, and on college sports. Revenues would come from initial license and annual renewal fees, 9.75% taxes on wagers at venues and 14.25% taxes on wagers placed online or by phone.
A fiscal analysis says the state could see an estimated $14.6 million in fiscal 2021 and $22.5 million in 2022.
“My hope, moving into the future, is that we can embrace full expanded gaming to compete with Indiana, Ohio, and the rest of our neighbors — Republican-led states that are taking Kentucky dollars,” Beshear said.
It’s uncertain how much support Beshear will get in the Republican-controlled General Assembly.
Sen. President Robert Stivers, R-Manchester, and House Speaker David Osborne, R-Prospect, both expressed concern that the governor hadn’t discussed his executive budget with them before releasing it publicly.
The GOP has supermajorities in both chambers. The Senate has 29 Republicans and nine Democrats. The House has 61 Republicans and 37 Democrats, although two seats are vacant.
Beshear, who was the state’s attorney general from 2015 until last year, defeated incumbent Republican Gov. Matt Bevin, Libertarian John Hicks and write-in candidate Blackii Effing Whyte in the November 2019 general election runoff.
Beshear defeated Bevin by 5,136 votes, returning the governor’s office to the Democratic Party after a four-year hiatus. Andy Beshear’s father, Steve Beshear, was Kentucky’s governor from 2007 to 2015.
