The Kentucky General Assembly has passed the second half of the state’s 24-month spending plan, winding up a budget process that had been halted over a year ago due to the COVID-19 pandemic.
The $12 billion fiscal 2021-2022 budget that passed Monday was a continuation from the previous fiscal year with necessary modifications, said House Appropriations & Revenue Chair Jason Petrie, R-Elkton.
“Our economy has certain structural signs of strength, but we’ve also had a lot of federal money infused into our economy, which makes analysis of the economy data difficult at best,” he said. “We remain hopeful that things will get better, but we’re still not certain.”
With the economy in mind, Petrie said the budget would open up more funds for roads and the state’s reserve trust fund. With $958 million in the reserve trust fund, the state would have 29 days in emergency funds instead of 10 to 14.
Senate President Robert Stivers, R-Manchester, said the budget wouldn’t count in the billions of dollars in federal COVID-19 relief money from the American Rescue Plan.
The budget bill contained language that says the stimulus money cannot be expended without the “express consent” of the General Assembly. Stivers said the federal government hasn’t released guidance on exactly how it can be spent.
While Kentucky is expected to get $2.4 billion from the latest stimulus package, Stivers said the actual amount could be much more. He said other federal money would go directly to cities, counties and school districts.
“In the aggregate, close to $6 billion will be spent in this state in the next 14 months,” Stivers said. He added that the bill was a flat-line budget with lots of reserve cash.
Critics of the state budget said the final bill was too austere.
The Kentucky Center for Economic Policy said it didn’t include employee raises, targeted budget increases or one-time investments that Gov. Andrew Beshear had proposed using surplus monies available in large part due to prior federal aid.
Beshear is a Democrat and the legislature is overwhelmingly Republican.
The center also said the budget made an excessive deposit into the state’s rainy day fund.
“Additionally, the budget prevents the governor from using the substantial new federal funds from the just-passed American Rescue Plan without authorization from the General Assembly,” the center said. “This tactic in the legislature's budget means that they will either need to pass additional budget legislation in the remaining days of this session, or the governor will have to call them back into a special session.”
Democratic critics in the Legislature also said they would have liked to see increased access to clean water and the internet in addition to school funding and COVID-19 relief for small businesses.
“Kentucky families need our help right now more than ever,” said Rep. Cherlynn Stevenson, D-Lexington. “Small businesses need our help right now more than ever. Nonprofits need our help more than ever.”
The state has seen 420,000 coronavirus cases since the pandemic began and recorded 5,147 deaths.
Kentucky's general obligation bonds are rated Aa3 by Moodys Investors Service, A by S&P Global Ratings and AA-minus by both Fitch Ratings and Kroll Bond Rating Agency.
The bill passed the Senate 30-0-6 before being approved in the House of Representatives by a 74-23 vote. The General Assembly also passed the legislative branch and the judicial branch budgets.
All these bills now go to the governor who has 10 days, excluding Sundays, to sign the measure, veto any line items in the budget, or veto the entire spending plan.
Any vetoes will be taken up in the final two days of the session. A majority vote of elected members in the House and Senate is required to override a veto.
