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Friday, January 8, 2021

Gov. Beshear delivers State of the Commonwealth, budget proposal

Governor Andy Beshear delivered his combined State of the Commonwealth and Budget Address in a virtual speech recorded in his office yesterday. 

“Tonight, I address both a state and a country that are hurting,” Gov. Beshear said during his address. “Hurting from a pandemic that has swept across the world, upended our economy and taken the lives of our loved ones. Hurting from attacks on our democracy that yesterday rose to the level of a direct attack on the United States Capitol.”

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The Governor urged Kentuckians to reject violence and political rhetoric that incites hatred and division.

The Governor unveiled a three-pillared Better Kentucky Budget proposal that he said will help ensure "we take full advantage of every opportunity and lead in the post-COVID economy."

“To achieve our goal of a better Kentucky, all branches of government must be prepared to take bold action,” Gov. Beshear. “We have not had this much opportunity for new investment in our people and our future in a generation. Let’s make it count. Let’s have courage. Let’s be bold. Let’s not fumble the opportunity.”

The proposed budget includes relief to unemployed workers and small businesses; makes adjustments to the unemployment system; provides assistance for more Kentuckians to attend college or earn a certificate; and expands broadband. It also includes raises for educators and state employees; an extra $100 million to build and renovate schools; funding increases for K-12 and higher education; full funding for retirement and Medicaid; money for additional social workers; and an additional $100 million for the Rainy Day Fund, which is now at its highest level ever.

The Kentucky legislature, now a Republican supermajority, issued a statement shortly after the Governor's address. Senate President Robert Stivers, House Speaker David Osborne, Senate Appropriations and Revenue Chair Chris McDaniel, and House Appropriations and Revenue Chair Jason Petrie said they appreciated the Governor’s diligence in crafting his version of the state budget and will continue to review the documents provided and welcome input from him as the budget process unfolds. 

"A budget is the ultimate policy document, and this means we must invest every taxpayer dollar in a manner that reflects our state’s priorities and financial realities. This pandemic is far from over and our Commonwealth still faces great uncertainty. We question the prudence of spending millions of dollars in new programs when our economy remains extraordinarily unpredictable.
“While there is still much work to be done, the General Assembly will do so with extreme consideration and care as it develops a one-year budget that will most effectively benefit the people of the Commonwealth.”

Despite the economic damage caused by the pandemic, which negatively affected many small businesses and families, Gov. Beshear said the hard work of his administration, especially his State Budget Director, John Hicks, led to encouraging state budget news that allows the state to provide relief to those still hurting and to invest.

Director Hicks said the budget is structurally sound, fiscally responsible including the largest ever Rainy Day Fund and includes $600 million in one-time funds. The budget also adheres to the revenue estimates of the Consensus Forecasting Group and it does not rely on new taxes, new revenue measures or spending cuts.

Pillar 1: "Immediate Relief to Families and Businesses Harmed During the Pandemic"
For small business relief for those that have experienced losses because of the pandemic, the Governor is proposing a fast-tracked bill to immediately make available $220 million in the Better Kentucky Small Business Relief Fund. This represents the single largest relief fund of its kind in generations.

For individual relief, the Governor is authorizing $48 million in CARES Act funding to those who have waited too long to receive unemployment benefits and to help those who missed out on the federal government’s Lost Wages Assistance Program because they made too little.

The Better Kentucky Budget also allocates $47.5 million to correct a legacy of underfunding the unemployment insurance (UI) system after the Governor’s administration inherited a UI operation running on an IT system that has been in operation since the 1970s and is functionally obsolete.

The Governor’s budget includes General Fund spending of $1.1 million in fiscal year 2021 and $8.4 million in fiscal year 2022 to provide funding to restore employees to help with unemployment claims at the 12 career centers throughout the commonwealth.

“This is help they are owed and deserve and far too many have waited far too long,” the Governor said.

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Pillar 2: "Investing in Our People" 
The Governor is proposing a $1,000 raise for teachers and classified staffers.

He is increasing the SEEK formula and funding textbooks and technology. The Governor is supporting preschool programs in disadvantaged areas and restoring a teacher loan forgiveness program.

The Governor also is proposing a 1% raise for state employees. He is seeking to improve compensation for local and state law enforcement and firefighters, who are always on the front lines, with a $600 stipend increase from the Law Enforcement and Firefighters Foundation Program funds, bringing the stipend up to $4,600. He also provides a full exclusion of military pensions from the Kentucky income tax, recognizing the service that our men and women in uniform have provided to our country and the commonwealth.

His budget proposal will fully fund Medicaid, adding 76 new social workers for child protective services, increasing the number of slots available for Michelle P Medicaid waivers and more. 

The Governor is supporting the selfless local health departments by doubling their General Fund support, adding another $12 million in fiscal year 2022 to improve their epidemiology and clinical capacity.

To support healthy retirements, the Governor is providing pension relief to critical quasi-governmental agencies, like child advocacy centers and domestic violence shelters, as well as local health departments and community mental health centers. The Governor’s Better Kentucky Budget also includes full pension funding for the Teachers’ Retirement System for just the second time.

The Governor's budget includes more than $580,000 for the University Press of Kentucky and $20 million in aid to small nonprofit organizations.

In doing what is right, Gov. Beshear’s budget reinstates funding for the Commission on Women, reinstates the Office of Minority Empowerment and provides additional funds each year to reinvest in the Commission on Human Rights.

Pillar 3: Investing Boldly in Our Future 

The third pillar of the Better Kentucky Budget uses $272 million in one-time funds to improve infrastructure.

“The shock of COVID-19 has brought on our current transformational period, and how we lead in the next year will dictate whether Kentucky simply recovers back to the old normal or, instead, takes its place among the most productive and innovative states in the union,” said Gov. Beshear.

His budget focuses on repairing schools, some of which date to before the 1930s, with a one-time $100 million investment to renovate or replace them. 

He is investing in our workforce with more dollars to higher education and by creating the Better Kentucky Promise, a program that aims to provide the necessary last dollars that should allow nearly 6,300 Kentuckians to complete associate’s degrees or secure certificates.

The budget provides $50 million to fund last-mile broadband coverage. This is the first time ever that state dollars have been used to invest in expanding broadband.

“We used to think of broadband in terms of just business. Now we know it touches every part of our lives: the education of our kids, how we receive health care. This is the most important infrastructure of the future,” Gov. Beshear said.

The Governor is proposing the Emerging Industries Fund, which is designed to provide flexible resources targeted to Kentucky’s future economy and developing technologies in agritech, aerospace, health care, logistics, advanced manufacturing and other key areas. 

The Better Kentucky Budget also includes $7.7 million in state bond funds to match $38.7 million in federal dollars to repair, replace and improve local drinking water and wastewater infrastructure, and $6 million in state bonds so that localities can access federal funds for critical flood control projects.

The Governor also wants lawmakers to address the transportation budget. He said doing so will require both short-term and long-term solutions, but it is time to create more jobs and stimulate the economy.

The Governor also said it is time to legalize medical marijuana, pass sports betting and save historic horse racing.

The Governor said there are many issues that Republicans and Democrats can agree on, and he looks forward to working with Senate President Robert Stivers, House Speaker David Osborne and every member of the General Assembly to set a positive tone in Frankfort and take advantage of this opportunity.

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