Proposed Budget Highlights
The governor’s budget proposal prioritizes helping Kentuckians with rising costs, investing in education, maintaining a fiscally responsible budget, protecting health care, creating jobs, and enhancing public safety. The budget utilizes targeted investments from the rainy day fund to help residents address rising cost pressures.
Helping Kentuckians with Rising Costs
- Includes an investment in the state’s Affordable Housing Trust Fund that combined with private dollars would create a billion dollars of new housing.
- Proposes a new Rural Hospital Assistance Fund to assist rural and certain urban hospitals bridge financial risk and hopefully ensure continued operations.
- Allocates funds to assist with rising food costs, utility assistance, and federal premium tax credit assistance.
Investing in Education
- Provides funds in fiscal 2028 to support the initial phase of Pre-K for All, preschool for four-year-olds. The initiative includes a planning year in fiscal 2027 and the funding will provide for 9,683 additional four-year-olds to attend pre-K for school districts that are ready. Funds are provided via the sports wagering excise tax.
- Directs an 11.6 percent increase in the K-12 school funding formula (SEEK), including funds to raise the base per pupil amount by 2.5 percent each fiscal year.
- Supports a 3 percent salary increase in fiscal 2027 for all full-time school personnel. An additional 3.75 percent that educators currently pay into the Teachers’ Retirement System’s medical insurance trust fund will be retained by them, increasing compensation again in fiscal 2028.
- Avoids general fund budget reductions for postsecondary education and continues to devote 100 percent of lottery funds to student financial aid.
Protecting Health Care
- Fully funds the Medicaid program, including additional general funds required for fiscal 2028.
Includes funds in each year to help prepare for Medicaid changes required by the federal One Big Beautiful Bill Act (OBBBA), including community engagement and work requirements and more frequent eligibility redeterminations.
- Allocates funding for 500 additional slots in the Michelle P. waiver program, 250 additional slots in the Supports for Community Living program, and 500 additional slots in the Home- and Community-Based Services program.
Protecting Children and Families
- Includes funding to fully fund the relative and fictive kin foster care reimbursements passed in the 2024 legislative session, addressing the increased costs for reimbursements and the increase in caseload of social service workers.
- Provides funding in each year for the increased administrative cost share of the Supplemental Nutrition Assistance Program (SNAP) as required by OBBBA.
- Allocates funds in each year to continue providing nutritional meals for senior citizens in the community with the goal of no waitlist.
Enhancing Public Safety
- Provides funding to support the conversion of worked overtime from compensatory time to paid overtime for sworn troopers to improve recruitment and retention.
- Provides capital funding to transition to a regional model for juvenile detention centers as provided by enacted legislation during the 2023 session as well as to construct a new facility to establish psychiatric treatment services for juveniles in detention needing mental health and medical services.
- Includes funding in the capital budget to construct a new reentry campus at Northpoint Training Center. The facility will provide a model program, serving up to 400 inmates through targeted vocational technical education programs while also providing intensive reentry services to prepare inmates for jobs upon release.
- Allocates funding to establish a Kentucky Cyber Resilience Task Force to enhance the ability to detect, respond to, and recover from cyber incidents.
Creating and Attracting Jobs
- Contains funds for site development to create build-ready, job-ready sites through the Kentucky Product Development Initiative.
- Includes funding to support approved mega projects with funding used to ensure sites and infrastructure are attractive to projects considering no more than two other states and at least one site in the Commonwealth.
- Creates and funds a new rural economic development fund to bring jobs to rural areas.
Investing in Public Employees
- Proposes a 2 percent across-the-board salary increase each year for state employees.
- Allocates general funds each year for the increase in health insurance employer contributions.