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The Kentucky Association of Counties

Governor’s 2021 budget address highlights broadband, COVID and unemployment relief

Last night, Governor Beshear provided his 2021 State of the Commonwealth Budget Address virtually.

The Governor’s budget proposal includes relief to unemployed workers and small businesses, makes changes to the unemployment system, funds efforts to expand broadband, provides raises for educators and state employees and reinforces the state’s Rainy Day Fund.

“To achieve our goal of a better Kentucky, all branches of government must be prepared to take bold action,” said 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.”

You can read the Governor’s speech here.

The budget proposal includes investments using $272 million of one-time funds, including:

  • $50 million to expand broadband to Kentucky communities that are unserved or underserved to provide access to internet connectivity
  • $100 million for the renovation or replacement of school facilities
  • $22 million to leverage private investment in emerging industries to create good-paying jobs
  • $100 million in the state’s Rainy Day fund-bringing its balance up to the highest levels ever

The Governor has also proposed that $220 million be directed to the Better Kentucky Small Business Relief Fund, to help small businesses that have experienced losses as a result of COVID. “I’m asking the General Assembly to pass this funding in a separate bill to make it available immediately, said Gov. Beshear.

Other areas of interest in the Governor’s proposal include:

Compensation for law enforcement and firefighters – Provides local and state law enforcement officers and local firefighters with a $600 stipend increase from the Kentucky Law Enforcement and Firefighters Foundation Program funds, bringing the stipend up to $4,600.

Corrections – The General Fund budget for jail and community beds in the Corrections budget decreases by about $40 million over the enacted fiscal year 2021 due to a decline in the forecasted inmate population.

Returning coal severance tax revenues to counties – The Governor’s budget continues the fiscal year 2021 treatment of returning coal severance tax revenues to the counties, after reserving amounts needed for debt service on past capital projects that benefitted Kentucky’s coal counties and the administration of those programs. 

Public transportation funding for local governments – Due to the loss of state matching funds toll credits, the Governor’s budget includes $8.4 million from the General Fund to ensure that Kentucky’s local governments are able to obtain federal public transit grants, with most federal programs providing 80% in federal dollars. 

Broadband expansion – The budget includes a first-time $50 million public investment in expanding broadband to provide affordable internet connectivity to unserved and underserved areas of the state where the marketplace has determined to not be cost-effective.

Roads and bridges – The proposed budget includes $78.9 million more for the Biennial Highway Construction Plan in fiscal year 2021 than the current budget resulting from a higher Road Fund revenue estimate and from utilizing the flexibility of CARES Act money. In fiscal year 2022, there is $38 million more in the Biennial Highway Construction Plan than in the Governor’s February, 2020 budget recommendation.

Salary increases for state employees – A $1,000 salary increase for teachers is provided in fiscal year 2022 as well as a $1,000 salary increase for classified employees.

Local health departments – The Governor’s budget doubles the General Fund support by adding another $12 million in fiscal year 2022 to improve their epidemiology and clinical capacity.

Unemployment Insurance – The Governor’s budget recommendation includes General Fund of $1.1 million in fiscal year 2021 and $8.4 million in fiscal year 2022 to provide funding to restore 90 employees that were cut in previous years.  The capital budget includes $47.5 million for the replacement of the existing Unemployment System that been in operation since the 1970’s. Combined with at least $152 million from CARES Act funding with $100.9 million in the Governor’s budget, a total of $252.9 million is provided for the payment of interest and principal for advances under Title XII of the Social Security Act during calendar year 2021. With this funding contributing employers will not have to pay the statutory surcharge that would be used to pay interest on advances for calendar year 2021.

Budget Reserve Trust Fund – An unexpected General Fund surplus at the end of fiscal year 2020 resulted in the largest deposit from a surplus ever made to Kentucky’s “Rainy Day Fund”, in the amount of $162.5 million. This brought the balance of the Fund to $465.7 million, which is four percent of the revised fiscal year 2021 revenue estimate. That ratio is also the highest amount in the Fund’s history. To further build, protect and preserve the Budget Reserve Trust Fund, the Governor’s budget recommendation provides $100 million in direct appropriations in fiscal year 2022.

Read the Governor’s full proposed budget here.

Kentucky Association of Counties
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Phone: (502) 223-7667 Toll Free: (800) 264-KACo (5226) Fax: (502) 223-1502
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