Kentucky Gov. Andy Beshear

Kentucky Gov. Andy Beshear arrives for his budget address, Jan. 28, 2020.

FRANKFORT, Ky. (WDRB) -- Gov. Andy Beshear said his two-year budget proposal keeps promises to fully fund state pensions, give a $2,000 raise to public school teachers and break the decade-long cycle of cuts to state colleges and universities.

Beshear, a Democrat, gave his budget address Tuesday night to a joint session of the Republican-controlled legislature, hailing the $24.6 billion spending plan as an “education first” approach.

He pledged that his budget contains no spending cuts for the first time since the 2006-08 biennium and adheres to independent economists’ revenue estimates — while counting on some new money from proposals advanced by Republicans.

Speaking in the Kentucky House of Representatives, Beshear laid out a broad initiative that would spend on ailing rural communities and urban neighborhoods alike, boost salaries for public workers and help programs meant to keep children safer.

“I believe that these are common values that are held by people of all parties,” Beshear said.

But for all its ambition, the governor’s budget is merely a starting point in a process largely shaped by Republicans. The spending plan will be crafted by House and Senate leaders who create their own versions in the months ahead. Republicans in those chambers need only a majority vote to pass a budget that reflects their priorities.

House Speaker David Osborne said in an interview on KET he hopes the House will send the Senate its version by March 1. The 60-day legislative session ends April 15. 

Beshear can veto the legislature’s plan, but lawmakers can override the governor’s veto with a second majority vote.

Top Republicans expressed dismay after the address that lawmakers hadn't been briefed on the plan beforehand and skepticism about the promises Beshear made.  Osborne singled out Beshear's plan to fund $18 million in school building work required by last year's school safety bill, accusing the governor of selectively choosing what to pay for.

"To choose to ignore the mental health side of this is woefully short,” Osborne said, according to the House Republicans' Twitter account. 

To make ends meet, Beshear’s proposal relies on one-time sources such as sweeping in surplus money from special accounts — like fees collected by the state Department of Insurance and occupational licensing boards — and the proceeds of lawsuit settlements.

The governor also wants to net an additional $73 million to $75 million per year through tax hikes, some of which have significant backing already from Republican lawmakers.

Under Beshear’s budget, legalizing and taxing sports betting would bring in $37.1 million in the next two fiscal years. A GOP-led wagering bill unanimously passed a House committee earlier this month.

Beshear also seeks to increase the state’s cigarette tax by 10 cents per pack, tax vaping products and raise other tobacco taxes.

In all, those moves would bring in about $94 million, according to estimates.

The governor also is seeking to raise a flat tax on Kentucky-registered limited liability entities, which include many small businesses, to $225 per year.

The administration’s budget assumes no revenue from legalizing full-blown casino gaming, which he campaigned on. Republican Senate leaders have said a casino proposal cannot pass their chamber.

The plan includes modest, 1% increases in basic state K-12 school funding and in allocations to state colleges and universities. The 1% increase is only a fraction of what universities requested, but Beshear seeks to end a 13-year trend of declining state support for higher education.

The increase in K-12 funding to local school districts would be $80 million in all, or about $40 per student.

The budget would allocate $35 million for the University of Louisville to aid its takeover of the KentuckyOne Health system, including Jewish Hospital assets. A bill sponsored by Osborne also provides $35 million for the deal. The bill, which has bipartisan support, targets surplus funds in the state’s general fund. The governor’s budget would borrow the money through bonds that would be repaid.

Beshear’s budget fully covers the requested amounts by Kentucky’s public pension systems to continue paying off their billions of dollars in unfunded liabilities. The budgets under Beshear’s Republican predecessor, Matt Bevin, also fully funded the systems, pumping hundreds of millions of dollars into them. But the state must continue to make full pension contributions for the next three decades to completely pay off the liabilities.

Beshear’s general fund and capital budget proposals also:

  • Allocate $11 million for textbook funding that was eliminated in the previous budget
  • Provide more than $30 million to hire 350 more children’s social workers, increasing staffing by 27%
  • Increase a stipend for more than 8,000 local and state police and more than 3,800 firefighters
  • Add $4 million for improvements at the Kentucky Exposition Center grounds home to the Bourbon and Beyond, Louder Than Life and Hometown Rising music festivals

The governor's plan includes $400,000 annually for Waterfront Park operations. The legislature removed state funding for the award-winning park in 2014 but restored it in 2016, only to have Bevin veto it. The money wasn't included in 2018.

As he indicated last week, Beshear has budgeted more than $4 million this year to fund Kentucky’s rollout of the Real ID driver’s licenses. More than $30 million during the full two years of the spending plan also is budgeted.

The funds come as the Kentucky Transportation Cabinet opens regional offices for the airplane-friendly driver’s licenses, an approach started under the Bevin administration. Last September, state officials abandoned a plan to have each county’s circuit court clerk handle license applications.

Beshear is not seeking a gas tax increase to expand a road fund expected to be $1.5 billion a year.

The governor’s full road plan hasn’t been released, but the administration says it seeks to speed up the Mountain Parkway expansion project in eastern Kentucky and the I-69 bridge between Henderson, Kentucky, and Evansville, Indiana; and put $100 million into safety improvements to rural roads.  

Reach reporter Chris Otts at 502-585-0822, cotts@wdrb.com, on Twitter or on Facebook. Copyright 2020 WDRB Media. All rights reserved.