Legislature’s budget efforts pay off with another record budget surplus
For far too long, our state’s leaders relied on a tax-and-spend approach to governing that left the state generations behind in progress and ill-prepared for unexpected opportunities and challenges. Common sense tells us that you cannot tax your way to prosperity, and the approach left us unable to invest in our schools, roads, and other basic services. That changed several years ago when Kentuckians signaled their desire to see change and sent a new conservative majority to the State House. In the time since, lawmakers have passed policies aimed at building our economy and growing our communities.
We continue to see proof that those policies are working and further evidence came in the form of two announcements earlier this month. First, for the first time in a decade, Kentucky is seeing more money arriving to than leaving the state. That is according to 2022 data reported by the Internal Revenue Service. Essentially, the number of tax returns submitted from Kentucky is growing, as are the number of people and the adjusted gross income listed on them. This is an important gain.
In addition, with the end of the state fiscal year on June 30, all numbers indicate that we have yet another billion-dollar budget surplus, General Fund revenue growth of 2.8% and Road Fund revenue growth of 6.9%. Of course, this is great news for the Commonwealth and the undeniable result of your hard work and the legislature’s work to craft responsible spending plans, lower taxes, invest in the people of Kentucky, and place a historic amount of money in our budget reserve.
We expected these gains based on data provided by our own economists. However, seeing these policies work allows us to continue moving forward with efforts to both leave more tax dollars in the paychecks of hardworking Kentuckians and return them to communities in the form of improvements to our infrastructure. Earlier this year, we passed HB 1, which invested more than $2.7 billion over the next two years to improve road, rail, river, air, and water infrastructure, as well as make targeted investments in school facilities, public pensions, tourism, and community development.
Both of these announcements provide proof that we can improve our quality of life and strengthen our economy by being intentional with every dollar we allocate, as we did once again with the state budget passed earlier this year that went into effect on July 1.
The $128.4 billion, two-year spending plan, House Bill 6, passed the House by a vote of 72-26. The proposal provides a two-year spending plan with funding for the vast majority of state agencies and programs. As you can imagine, the measure was the result of almost two years of work aimed at crafting a responsible budget that balances the state’s current needs and its long-term well-being.
The new budget continues our commitment to priority issues and includes record funding for K-12 public schools, and strategic investments in public safety, infrastructure, and health services. HB 6 also makes major investments in mental health and substance abuse recovery, as well as other programs that serve the state’s most vulnerable
This budget ensures that essential services are not just maintained but enhanced, that necessary programs are strengthened, and that investments are made in the future of our communities. The measure also ensures that every dollar invested benefits the people of this Commonwealth. The bill reflects our dedication to efficiency and accountability, and should instill confidence in the state’s ability to navigate through challenges and take advantage of opportunities.”
Education Funding: Once again, the budget includes increased per pupil K-12 funding by 3% in the first year and 6% in the second, fully funded school transportation costs in the second year based on numbers provided by the Kentucky Department of Education, and increased access to funds for school districts with a limited ability to raise revenue by increasing the Tier 1 equalization.
Emergency Preparedness: We know all too well how disasters have impacted Kentuckians as storms have taken their toll on Western and Eastern Kentucky, so I’m particularly pleased that we were able to provide for enhanced disaster preparedness. The budget includes additional funding for the Kentucky National Guard, Kentucky Emergency Management, and more than $16 million for the newly created statewide search and rescue team that we created as a result of legislation I sponsored in 2023. I am incredibly pleased to see this search and rescue team move forward and appreciate the work done by existing teams to create this network. We saw how fast response times can mean the difference between life and death during the flooding in Eastern Kentucky, an experience that helped drive home the need for this program as I worked with budget leaders to get funding included this year.
Law Enforcement: Every one of us deserves to feel safe in our home and out in our community. And, we all recognize that we have to invest in the men and women who enforce the laws that keep us safe. This budget includes $22.5 million in additional funds over the biennium to the Kentucky State Police (KSP) for pay increases for troopers and commercial vehicle enforcement officers. It also has an additional $22.6 million to support classes of 75 Trooper cadets in each fiscal year and provides funding for the purchase of new cruisers. We also put an additional $27.9 million in for raises and new positions in commonwealth’s attorney and county attorney offices, a new case management system, and the rocket docket system.
Health and Human Services: We have an obligation to protect our most vulnerable, as well as to ensure that they have access to the services that help them lead successful, independent lives. The budget provides money for a hundred new social worker positions over the next two years, more than $50 million towards the Child Care Assistance Program, and financial support to expand waiver programs that help those with developmental and intellectual disabilities thrive in at home.
Public Pensions: The budget continues the commitment to funding the state’s public pensions at not just the statutorily required level, but at the actuarially required level. I will add that, in addition to HB 6, we also included a combined $230 million in funding towards the overall pension debt in the Kentucky Employees Retirement Fund, the KSP Retirement Plan, and the Kentucky Teacher’s Retirement System with HB 1. While the legislature has allocated more than $20 billion towards public pensions since 2017, the state still carries a liability of more than $30 billion. Our commitment to these funds is bringing them closer to solvency, but also has an effect on how much we can spend in other areas.