Lawmakers start budget work with surpluses, more federal aid
FRANKFORT, Ky. (AP) — As Kentucky lawmakers prepare for a busy session dominated by the need for a new state budget, they find themselves in a unique yet enviable situation — large pots of unspent money are overflowing.
But first they’ll take up a once-a-decade issue that hits close to home.
The redrawing of congressional and legislative maps in response to shifting population trends across Kentucky will dominate the opening days of the 2022 session, which will be gaveled in on Tuesday. Those decisions will define the political landscape for candidates in the coming decade.
Top Republican lawmakers hope to wrap up redistricting in the first week of the 60-day session, then turn the attention to stacks of other issues including education, taxes, workforce development and sports wagering. Recovery efforts for tornado-stricken parts of western Kentucky also will be on the agenda.
“We’re going to break from the gate fast and probably keep up a very fast pace all the way until the end,” Senate Majority Floor Leader Damon Thayer said by phone Monday.
The grueling work of writing the next budget likely won’t be completed until late in the session, which wraps up in mid-April. Top lawmakers signaled they want to return to passing a two-year budget, after the uncertainties of the COVID-19 pandemic led to one-year budgets the past two years.
Much of the budget work will revolve around what to do with unprecedented amounts of surplus state money as well as another huge round of federal pandemic aid. With Republican supermajorities in the House and Senate and Democrat Andy Beshear in the governor’s office, that debate is sure to be laced with political considerations.
Republican lawmakers have the clout to push through spending decisions or other legislation by overriding any vetoes from Beshear if they stick together.
Unlike previous years, when state revenue collections were sluggish or uncertain due to economic conditions, the Bluegrass State finds itself awash in cash. Beyond the usual disagreements over how to spend state money, conflicts could be brewing over how much of the surplus should be spent.
Despite economic setbacks from the COVID-19 pandemic, the state amassed a $1.1 billion General Fund surplus when the prior fiscal year ended in mid-2021. Those surpluses are projected to grow. The General Fund pays for most state services, including education, health care and public safety.
Thayer urged a continued “cautious approach” in spending state budget surpluses. That stance conflicts with the views of Beshear and Democratic lawmakers, who want to invest in priorities they’ve been touting since before Beshear was sworn in as governor.
“We still feel that this economy is artificially propped up by federal dollars,” Thayer said. “So we don’t need to go on a big spending spree with these state dollars. We need to get to the other side and let the economy seek its natural course before we go spending a lot of this money.”
Top Democratic lawmakers on Monday listed universal access to pre-kindergarten as among their priorities in this year’s session. Beshear has signaled the time is right to make “historic investments” in public education. The governor will present his budget plan to lawmakers later this month.
“This is an important point in Kentucky,” said Sen. Morgan McGarvey, the top-ranking Senate Democrat. “We have the opportunity this session -- with the influx of federal dollars, with the surplus in the budget for the ‘rainy day’ fund overflowing -- to invest in the future of Kentuckians.”
Republican Rep. James Tipton is pushing to secure state funding to cover the entire cost of full-day kindergarten as a permanent commitment. Last year, lawmakers pumped considerably more state money into full-day kindergarten, but the extra spending was limited to one school year.
Besides the massive state surplus, lawmakers will decide what to do with an additional $1.1 billion flowing to Kentucky from the federal pandemic-aid package known as the American Rescue Plan. The governor has proposed using $400 million from the next round of aid to provide bonuses for frontline workers in Kentucky who stayed on the job throughout the pandemic.
Last year, Beshear and GOP lawmakers agreed on spending more than $1 billion of Kentucky’s allotment of pandemic federal assistance. Kentucky earmarked hundreds of millions of federal dollars for use on broadband and water and wastewater projects.
In addition, the infrastructure measure passed by Congress will funnel several billion dollars more to Kentucky over the next five years.