Kentucky lawmakers approved a two-year, $32.4 billion spending plan on Wednesday. The measure prioritizes funding for K-12 public education, public safety, veterans’ services, and asset preservation at Kentucky universities. The measure, HB 500, is sponsored by Rep. Jason Petrie, R-Elkton.
“This is a good, solid budget that reflects the same kind of thoughtful decision-making Kentucky families practice every day around their own kitchen tables. Just like families have to prioritize needs over wants and make careful choices to live within their means, this budget focuses on meeting the core needs of our state while avoiding unnecessary spending,” Petrie said. “It ensures we are investing in what matters most, while remaining responsible stewards of taxpayer dollars and keeping our long-term financial health in mind.”
According to Petrie, that means trimming outdated and COVID-era programs including program expansions during the pandemic, eliminating duplicate grants and incentives, cutting unnecessary administrative costs and consulting contracts, and ending programs that lack measurable results. It also means recognizing when services can be delivered more efficiently by Kentucky families, businesses, and community organizations.
To further incentivize these efforts, the two-year, $32.4billion spending plan reduces expenditures across several cabinets and programs and includes a 4% base reduction in executive branch spending in the first fiscal year and an additional 3% cut in the second fiscal year. The budget proposal gives agencies flexibility in determining individual program funding to identify the best areas to make reductions.
Petrie stressed that the updated version of HB 500 protects the state’s core priorities. Per-pupil SEEK funding, Family Resource and Youth Service Centers, Medicaid, juvenile justice, corrections, and programs and services for veterans are fully exempt from these spending reductions. Also exempt are programs learning and results educational services like extended school programs, and Jobs for America’s Graduates.
The final version of HB 500 that cleared the legislature Wednesday evening also funds the Kentucky Employee Health Plan at the actuarially determined amount, which includes a 14% increase for taxpayers in the first year, and an additional 10% increase in the second year of the budget.
“We all share the goal of improving the quality of life for every Kentuckian - but we have to be honest about how we get there. We cannot simply spend our way out of the challenges our state faces, and no amount of taxpayer funding will ever be enough for those unwilling to set clear priorities,” said House Speaker David Osborne. “This measure is grounded in the belief that government must be both effective and accountable, with a focus on measurable outcomes and real results. It reflects a commitment to responsible stewardship - ensuring that state government works for the people as a disciplined partner in building a stronger future.”
House Bill 500 also exposes some of the commonwealth’s greatest challenges, including the $6 billion allocated over the next two fiscal years to pay for Medicaid. As lawmakers work on reforming the program to improve health outcomes and program management, Medicaid is second only to the amount allocated for K-12 public education.
“When we began this budget process, we knew this would be a disciplined and deliberate effort - one that balances the needs of our state with our responsibility to spend taxpayer dollars wisely. While we received more than 800 agency budget requests totaling nearly $10 billion in new spending, the final version of HB 500 reflects a more measured approach,” Petrie added. “It does not attempt to fund every request, but instead prioritizes those investments that most closely align with our state’s core goals and long-term vision. In doing so, this budget underscores our commitment to fiscal responsibility while still making meaningful, strategic investments in the areas that matter most to the people we serve.”
The budget delivers targeted investments in Kentucky’s core priorities while maintaining a strong commitment to fiscal responsibility and long-term stability. In education, it provides a significant funding increase for K-12 schools, including modest SEEK funding growth, full support for teacher retirement obligations, and continued investment in school employee health insurance. It also maintains stable funding for higher education, supports college access and dual credit scholarships, and invests in campus infrastructure.
For public employees, the budget includes a 2% salary increase in each year, fully funds pension and health insurance obligations, and takes steps to address pay compression in key state agencies. In healthcare, it sustains nearly $6 billion in Medicaid funding while expanding access through additional waiver slots for vulnerable populations and maintaining critical behavioral health services.
The budget also strengthens public safety and government services by supporting law enforcement, corrections, and juvenile justice needs, while investing in technology, facility maintenance, and infrastructure across multiple agencies. Importantly, it limits new borrowing, prioritizes essential capital projects, and focuses spending on the state’s most pressing needs - ensuring taxpayer dollars are used responsibly while continuing to move Kentucky forward.
In addition to HB 500, lawmakers approved nearly a billion dollars in funding for the judicial branch (HB 504) and $182 million in allocations for the legislative branch budget (HB 503). The legislature also passed a $7 billion operating budget for the Transportation Cabinet (HB 501); a $4.6 billion road construction and maintenance plan (HB 502); and $70 million in funding for local road projects (HJR 76).
HB 500 now goes to the Governor for his consideration. Lawmakers will return to Frankfort on April 14 and April 15 to consider overriding any vetoes.
House Bill 504 was sponsored by House Appropriations and Revenue Chair Jason Petrie. (LRC photo)
Andrew West
