Gov. Beshear: ‘Better Kentucky Budget’ Allows Commonwealth to Lead in Post-COVID Economy

Proposal lays foundation on three pillars: providing immediate relief for families and businesses harmed by the pandemic, prioritizing our people and making bold investments in our future

FRANKFORT, Ky. (Jan. 7, 2021) – Thanks to the many sacrifices made by Kentuckians during the pandemic, the State of the Commonwealth is stronger and more prepared than most to defeat COVID-19 and sprint into our future, Gov. Andy Beshear declared this evening in a speech to a joint meeting of the General Assembly.

The Governor delivered his combined State of the Commonwealth and Budget Address in a virtual speech recorded in his office due to coronavirus restrictions and delayed a day by the attack on the U.S. Capitol by domestic terrorists.

“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.”

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

Looking to the future, the Governor unveiled a three-pillared Better Kentucky Budget proposal that 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 Governor’s proposal includes measures everyone should support. The proposed budget includes relief to unemployed workers and small businesses; makes long-needed improvements 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.

During his address, before laying out details of his vision for a better Kentucky, the Governor asked those willing to say a prayer and participate in a moment of silence for the more than 2,800 Kentuckians lost to COVID-19.

He also recognized Kentuckians’ selfless actions, which, along with the smart, aggressive steps his administration has taken, suppressed three waves of infection and saved thousands of Kentucky lives.

“You don’t have to take my word for it,” the Governor said. “You can look at the devastating experiences in states that failed to take the same aggressive steps we have to stop this deadly virus. Adjusted for population, we have suffered less than half the number of deaths as the people of Tennessee and less than one-fourth the number of deaths as the citizens of North and South Dakota. Through these trials, we learned that an effective virus response is necessary to sustain and rebuild our economy.”

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.

In the years leading up to the pandemic, the previous administration, and previous sessions, closed in-person offices and cut 95 skilled employees from UI. In addition, the UI budget was slashed by $16 million. This, coupled with a once-in-a-lifetime, 1,300% year-over-year increase in claims meant many Kentuckians have had to wait too long during a difficult time for their payments. 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.

Finally, using CARES Act funding, the Governor has already repaid $152 million in UI loans, and his budget proposal adds another $100 million in repayment.

Pillar 2: Investing in Our People The Governor is prioritizing the needs of our children and families, including their education, health care and retirements.

Gov. Beshear recognized that educators and school staffers have had to overcome incredible challenges this year, quickly adjusting to online instruction when needed and making sure children were fed even when they were not in the classroom. The Governor is proposing a $1,000 raise for teachers and classified staffers, who have gone above and beyond in their duties.

He is investing in our children by 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 our hardworking 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, and welcoming them to live, work and retire here.

The Better Kentucky Budget invests in our families’ health care by fully funding Medicaid, adding 76 new social workers for child protective services, increasing the number of slots available for Michelle P Medicaid waivers and more. He said his administration will continue to address inequities in access to health care, which have been spotlighted by the pandemic.

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 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 makes bold, strategic investments in our future using $272 million in one-time funds to improve infrastructure and create thousands of jobs, all while exercising fiscal responsibility.

“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 crumbling schools, some of which date to before the 1930s, with a one-time $100 million investment to renovate or replace them. This will improve the educational experience for students and teachers, while also creating thousands of construction jobs.

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. By incentivizing these sectors, Kentucky will be more prepared to succeed in the post-COVID economy.

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 in our communities.

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.

Building a better Kentucky also means our laws do not unduly restrict us from innovation.

“I’m asking all of my cabinet secretaries to identify ways to modernize with an eye towards determining what services can remain remote. A resident of Paducah or Ashland who wants a license or certificate shouldn’t have to spend more time in their car coming to Frankfort than he or she does actually taking the test to get the certificate,” said Gov. Beshear.

And speaking of laws that unduly restrict growth, the Governor said it is time to legalize medical marijuana, pass sports betting and save historic horse racing.

The Governor also said part of building a better Kentucky is acknowledging and addressing the racism that continues to exist in this country and in this commonwealth.

“To live our motto, ‘United We Stand,’ requires us to view and treat each other as equals,” Gov. Beshear said.

Finally, Gov. Beshear urged lawmakers to come together in support of all Kentucky families, and to take the virus seriously to avoid more pain, death and disruption and to set politics aside.

“So, let me be clear: Every moment in this short session that we spend fighting is a loss for our Kentucky families. Such fighting will leave us empty-handed and further behind those states that recognize this moment and this opportunity. Our goal should be to act swiftly and with wisdom on behalf of the people of the commonwealth.

“Now is our time. We can’t play politics while our people struggle,” the Governor added.

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.

The Governor said: “We get to decide how history looks back on us in 10, 20 or 50 years. This is our chance. Let’s think and act differently so we can get different and better results.”

During his remarks, the Governor mentioned that over the past year, the words of President Abraham Lincoln, whose statue holds a place of pride in the Capitol Rotunda, have motivated him during the tough days and inspired his vision.

“I am reminded of his message to the federal legislature in 1862. He said, ‘The dogmas of the quiet past are inadequate to the stormy present. The occasion is piled high with difficulty, and we must rise with the occasion. As our case is new, so we must think anew, and act anew. We must disenthrall ourselves, and then we shall save our country.’

“While half of the country disagreed with every decision President Lincoln made, history has judged him amongst our greatest leaders.

“President Lincoln – the epitome of leadership in times of turmoil and division – reminds us of the importance of this moment. He said, ‘Leave nothing for tomorrow which can be done today.’”

Gov. Beshear concluded his remarks by reminding Kentuckians that this is likely one of the most important and formative years for Kentucky in a generation.

“Let’s get to work in building a better Kentucky,” he said.

Note: To help limit the spread of COVID-19, the Governor filmed his nearly 30 minutes of remarks at his desk in the Capitol Building in Frankfort. Based on a suggestion from KET, the speech was pre-recorded to avoid any technical issues. KET will provide full coverage and live close captioning.

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