Kentucky Senate approves two-year state budget 36-1

A nearly unanimous Senate on Wednesday night approved a state budget for the next two years before the document was publicly available on the legislature’s web site.

The compromise budget, which by Thursday morning was posted on the legislature’s site, emerged from a House-Senate free conference committee on Tuesday. It increases funding for the basic public school funding formula beyond what either the House or Senate had originally proposed.

The budget increases state employee pay by 3% each year but does not specifically dedicate money to raise pay for educators. Democratic Gov. Andy Beshear had sought an 11% increase for school employees. Republicans said the increase in the SEEK (Support Education Excellence in Kentucky) formula of 3% in the first year and 6% in the second year should allow most school districts to increase pay.

Senate President Robert Stivers and other Republicans said that funding teacher raises outside the SEEK formula would widen funding disparities among districts and put the legislature out of compliance with a 1989 state Supreme Court order requiring funding equalization.

Under questioning from Democratic Floor Leader Gerald Neal, Sen. Chris McDaniel, chairman of the Senate Appropriations and Revenue Committee, said the budget capped the amount of money the governor could draw from the Budget Reserve Trust Fund to respond to natural disasters. Neal noted the provision could force the governor to call the legislature into special session during an emergency.

McDaniel also said the budget does not provide funding to build two juvenile detention facilities for females, as requested by Beshear.

A news release from the Senate Republican Caucus said McDaniel and GOP leaders had “prioritized” putting the state in a position to continue reducing the income tax rate in future years. The legislature has reduced the income tax rate from 5% to 4% since 2022, which the GOP release said has “left $1.8 billion in the pockets of working Kentuckians.”

House Bill 6 — which lays out the  two-year $102 billion executive branch budget — includes general, restricted and federal funds. The Senate approved it 36-1 with only Republican Sen. Adrienne  Southworth voting no. 

The House now must approve the compromise budget before it goes to the governor who has line-item veto power.

Still to emerge from conference committee is House Bill 1, which funds numerous projects from the state’s record high Budget Reserve Trust Fund.

This article has been updated to correct an inaccurate description of the the juvenile justice law enacted by the legislature last year.