Budget Cycle

Governor Submits Budget
January (10th legislative day)
Fiscal Year Begins
July 1 

Governor Signs Budget 
10 days after presentment

Budget Links

FY2025-2026 (enacted)
FY2025-2026 (proposed)
FY2023-2024 (enacted)
FY2021-2022 (enacted)
FY2021 (enacted)
FY2019-2020 (enacted)

Proposed Budget - Fiscal Years 2025-2026

On December 18, Kentucky Governor Andy Beshear released a proposed budget for fiscal years 2025 and 2026. The budget recommends general fund spending of $17.2 billion in fiscal 2025, including $2.1 billion in one-time spending, a total increase of 21.6 percent over revised fiscal 2024, and $16.3 billion in fiscal 2026, a decrease of 5.1 percent from fiscal 2025. Over the biennium, the budget appropriates $136.6 billion from all funds. The consensus revenue estimate for the general fund in fiscal 2025 is $15.5 billion, a decrease of 0.03 percent compared to revised fiscal 2024, driven primarily by a reduction in the personal income tax rate, and in fiscal 2026 is $16.0 billion, an increase of 2.9 percent over fiscal 2025. Including beginning balances and other adjustments, general fund resources are projected at $17.5 billion in fiscal 2025 and $16.3 billion in fiscal 2026. The largest categories of general fund appropriations are education (39.9 percent), Medicaid (16.8 percent), criminal justice system (11.7 percent), and postsecondary education (9.3 percent). The Budget Reserve Trust Fund is projected to be $3.7 billion in fiscal 2026. The general fund ending balance is $287.1 million in fiscal 2025 and $1.8 million in fiscal 2026. The recommended budget also notes it is structurally balanced, as recurring spending in both fiscal years is less than recurring revenues. 

Proposed Budget Highlights 

The governor’s Forward, Together budget proposal prioritizes education and families while also making investments in infrastructure, job growth, public safety, and health care. Additionally, the budget supports local governments and state employees. These investments, focused on moving the commonwealth forward, are proposed without spending any of the record-largest Rainy Day Fund. 

Investing in Education

  • Calls for an 11.0 percent salary increase for all school personnel and an 11.0 percent increase in the minimum teacher salary. An additional $545.0 million is provided each year to ensure every school district has sufficient funding for the increases.
  • Includes $172.0 million each year to fund universal preschool for all 4-year-olds, estimated to provide preschool to an additional 34,000 children.
  • Provides an 18.0 percent increase in funding for the K-12 education funding formula (SEEK) including:
    • $126.4 million in fiscal 2025 and $114.2 million in fiscal 2026 to raise the base per-pupil amount to $4,368 (4.0 percent increase).
    • $124.4 million each year to fully fund pupil transportation costs (45.0 percent increase).
  • Allocates $26.3 million each year to restore a teacher loan forgiveness program.
  • Provides $60.0 million in fiscal 2025 and $78.9 million in fiscal 2026 added to the base budgets of the nine public postsecondary education institutions, a nearly 8.0 percent increase.

Protecting and Expanding Health Care

  • Fully funds the Medicaid program, including Medicaid expansion. Provides an additional $395.0 million General Fund for fiscal 2026 to fund the return of the higher state share following the expiration of the enhanced federal share, and to accommodate higher health care costs to continue current services.
  • Provides $51.6 million each year to add additional slots in two programs that provide health care services to populations who have mental or intellectual disabilities.
  • Includes $220.0 million in fiscal 2025 and $235.0 million in fiscal 2026 to provide for a rebase of nursing home reimbursement rates effective July 1, 2024, as mandated by the federal government.
  • Allocates $41.2 million over the biennium to provide mobile crisis intervention services throughout the commonwealth.
  • Includes funding for the newly created Office of Medical Cannabis, which begins January 1, 2025 in the commonwealth.

Protecting Children and Families

  • Adds 100 new social workers to reduce average caseloads.
  • Includes $9.8 million each year for a 12.0 percent rate increase for foster homes that serve children who cannot be placed in a family-based setting.
  • Allocates $10.0 million each year to increase foster care rates for relative caregivers who agree to take a child that is already in the state’s custody.
  • Provides $10.0 million each year to continue providing nutritional meals for senior citizens in the community without having a waitlist.
  • Includes approximately $68.0 million in fiscal 2025 and $73.0 million in fiscal 2026 for child care assistance.

Enhancing Public Safety

  • Includes $8.3 million in fiscal 2025 and $14.1 million in fiscal 2026 for a $2,500 pay increase in fiscal 2025 and an inflationary increase in fiscal 2026 for State Police.
  • Provides $11.1 million in fiscal 2025 and $21.7 million in fiscal 2026 to add 75 troopers in each year, adding 150 positions over the biennium.
  • To implement legislation from the 2023 session, the budget provides capital funding for two new female-only juvenile detention centers, for renovations of an existing center, and to retrofit four existing centers to ensure safe segregation of male high-level offenders from male low-level offenders. 
  • Provides $3.9 million each year to add approximately 450 additional juvenile alternatives to detention placements and staff to coordinate services.
  • Allocates $9.8 million in fiscal 2025 and $19.8 million in fiscal 2026 to enable closing an older correctional facility and opening and operating an expanded correctional complex.
  • Provides $5.3 million in fiscal 2025 and $5.2 million in fiscal 2026 to expand reentry services in jails and to the entire adult correctional institution inmate population.

Economic Development and Infrastructure Investments

  • Adds $100.0 million for the Kentucky Product Development Initiative, which provides funds to counties to finance site acquisition, site preparation and development improvements.
  • Includes $100.0 million in fiscal 2025 to support approved mega projects.
  • Provides $500.0 million General Fund in fiscal 2025 for the Better Kentucky Cleaner Water program for water and wastewater projects throughout the commonwealth.
  • Includes $300.0 million General Fund for Major Transportation Infrastructure Projects.
  • Allocates $50.0 million General Fund over the biennium to fund a county and city bridge improvement program.

Local Governments and State Employees

  • Recommends nearly $90.0 million each year to address salary compression by providing a variable percentage increase to state employees based on length of service.
  • Proposes a 6.0 percent across-the-board salary increase for state employees effective July 1, 2024 and a 4.0 percent increase effective July 1, 2025.
  • Includes $19.2 million in fiscal 2025 and $42.4 million in fiscal 2026 to ensure no health insurance premium increase for state employees.
  • Fully funds the actuarially determined contributions for all state employees for all retirement system plans.
  • Includes an additional $209.0 million over the biennium to pay down pension liabilities.
  • Provides more than $800.0 million to reduce the debt of deferred maintenance.
  • Proposes to return 100 percent of state coal severance tax revenues back to coal-producing counties.
  • Includes $100.0 million General Fund in one-time spending to provide matching funds to local government and nonprofit entities for competitive federal grant applications.
  • Recommends $10.0 million General Fund over two years to the Affordable Housing Trust Fund.