Public Policy: Bluegrass Budget Blitz – Lane Report

Authors: Bob Babbage and Rebecca Hartsough

The dust settled during the legislative session in Frankfurt when the General Assembly unveiled a long list of policy goals, most notably a two-year budget.

The spending plan includes billions in one-time investments for economic development, infrastructure, education, health and workforce initiatives across the state. The House and Senate took an unprecedented $2.7 billion from the budget reserve trust fund – also known as the rainy day fund – to support major regional and local projects.

The Republican majority has made efforts to ensure the two-year spending plan keeps the state on track to meet year-end triggers for a state income tax cut, a key GOP economic policy goal. Financial projections predict that state revenues and the rainy day fund balance will allow for another cut from the current 4% to 3.5% next year.

Below is a summary of the most important assumptions of the session budget for 2024:

ECONOMIC DEVELOPMENT

• • Mega development projects
  Allocating $100 million to support approved projects exceeding $10 million.
• • Kentucky Product Development Initiative
  $70 million for economic development projects.
• • GRANT program
  $200 million to cover local matches for counties, cities and nonprofits applying for federal grants
• Downtown Louisville
  $100 million for downtown Louisville revitalization projects.
• Shelby County
  $25 million for an energy development project (approval pending the 2025 General Meeting).
• Hardin and Warren Counties
• $50 million for the Kentucky Economic Development Finance Authority loan pool to support economic development in Hardin and Warren counties from megaprojects. The funds will go towards improving critical infrastructure such as water and wastewater requirements.
• Clay County
  $10 million for Clay County for economic development projects in the area.
• Ashland Conference Center $25 million for the city of Ashland to build a new conference center complex.
• Congress center in Frankfurt
  $11.25 million for the city of Frankfort to support construction of a new convention center.

EDUCATION

• K-12 funding
  The state’s primary K-12 funding mechanism, known as the SEEK formula, sees increases of 3% in the first year and 6% in the second year. The budget also funds student transportation costs at 90% in the first year and 100% in the second year.
• University of Kentucky
  $40 million to support the Applied Energy Research Center, support the Kentucky Nuclear Energy Development Authority and strengthen the Energy Planning and Inventory Commission; $11 million annually for the Kentucky Cattleman’s Association to build the Cattlemen’s Cattlemen’s Innovation Center at the University of Kentucky C. Oran Little Research Farm.
• University of Louisville
  $20 million to support the construction, renovation and operation of the university’s cybersecurity program; $10.6 million to the Kentucky Manufacturing Extension Partnership; $25 million to support cancer treatment, research, screening and education programs at the Rural Cancer Education and Research Center.
• Eastern Kentucky University $25 million to support the aviation program.
• Morehead State University $2.5 million for new space research satellites for the university’s space science program.
• Murray State University
  $60 million to build a facility for the veterinary technician program; $10 million per fiscal year to build and renovate the cybersecurity program.
• Western Kentucky University $20 million for the university’s Innovation Campus program; $4.4 million for LifeWorks Transition Academy and Bridge Program.
• Commonwealth Biomedical Center of Excellence
  $125 million to build a Commonwealth Biomedical Center of Excellence in the town of Covington in partnership with Northern Kentucky University and the University of Kentucky. The center is to house the new headquarters of Chase College of Law at Northern Kentucky University, as well as the headquarters of the UK College of Medicine.

RAILWAYS, AIRPORTS, RIVER PORTS

• Improvement and development of railways
  $15 million in grants to improve and modernize rail systems in Kentucky; $15 million for projects that improve connectivity and rail service.
• Airports
  $2.5 million for Barkley Regional Airport (PAH); $5 million for Blue Grass Airport (LEX); $20 million for Cincinnati/Northern Kentucky International Airport (CVG); $5 million for Louisville Muhammad Ali International Airport (SDF); $2.5 million for Owensboro Daviess County Regional Airport (OWB); $10 million for the Leitchfield-Grayson County Airport to purchase land for runway expansion to promote economic growth.
• River ports
  $15 million for public river port improvements and modernization; $3.5 million to Paducah-McCracken Riverport for the Riverport West project; $1.3 million for the Owensboro Riverport Authority to build a river port water loop.

WATER AND SEWAGE INSTALLATIONS

• Kentucky Water and Wastewater Assistance
  $150 million for water and wastewater system problems or economic constraints (WWATERS program).

FLATS

• Kentucky Rural Housing Trust Fund
  $10 million for housing development.
• $10 million for Lexington Housing Affordability for a Transformative Housing Affordability Partnership.

HEALTH

• Middlesboro Cancer Center
  $12 million to Appalachian Regional Healthcare to build a cancer treatment center in the city of Middlesboro.
• Pikeville Medical Center
  $12 million for Pikeville Medical Center to upgrade facilities, including obstetrics, labor and delivery, surgical intensive care unit, and psychiatric and mental health units.
• Regional Substance Use Disorders Pilot Program
  $20 million for the Barren River Area Development District to develop and implement a regional substance use disorder treatment services pilot program.
• Kosair for children
  $30 million for the Home of the Innocents to expand the Kosair Comprehensive Child Care Center.

Bob Babbage and Rebecca Hartsough work with the co-founder of Babbage, a leading government relations firm.