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Beshear officials, lawmakers debate budget and federal relief

The Kentucky State Capitol on 4/9/20, lit up green in memory of those who died from COVID-19.
The Kentucky State Capitol on 4/9/20, lit up green in memory of those who died from COVID-19.

Gov. Andy Beshear’s administration is still making the case for the legislature to take up his budget plan, though Republican lawmakers are poised to go their own way.

Beshear has proposed using record-high budget surpluses and infusions of cash from the federal government to spend on hero pay for workers during the pandemic, education and raises for state employees.

But Republican leaders of the legislature argue that Kentucky’s economy isn’t doing as well as Beshear claims, and that lawmakers should take a more conservative spending approach.

John Hicks, Beshear’s budget director, said the governor is trying to reinvest in the state after almost two decades of budget cuts.

“We’re catching up from a significant retrenchment and austere budgets we’ve had where we’ve hardly raised the base per-pupil for K-12 education. We’re taking this opportunity to make these targeted investments,” Hicks said.

Beshear’s budget spends about $2 billion more than the version proposed by House Republican leaders, largely because it taps nearly all of the $1.1 billion remaining in Kentucky’s share of the federal American Rescue Plan Act.

The money would largely go to a $400 million “hero pay” program for essential workers who had jobs in industries like public health, child care, safety and grocery stores during the pandemic.

The House Republican version spends about half of Kentucky’s ARPA money, largely on clean water and school facilities projects.

Sen. Danny Carroll, a Republican from Benton, said that the state’s economy is artificially propped up by federal relief money

“Obviously, trillions of dollars infused into our economy nationwide. It’s hard to really argue it’s an accurate portrayal of where our economy actually is right now,” Carroll said.

Sen. Stephen Meredith, a Republican from Leitchfield, said Kentucky should use its extra money to fund tax cuts.

“Was any thought given to reducing the tax burden for the average citizen of Kentucky?” Meredith asked. “If we could do that it would increase consumer spending because we would be putting money back into the average Kentuckian’s pocket.”

Republican leaders of the legislature have hinted they will consider a tax reform proposal later in the legislative session that could include tax cuts.

In 2018, lawmakers passed a combination of tax cuts and increases—flattening income taxes and expanding the sales tax to 17 services from dog grooming to car repairs.

Sen. Chris McDaniel, the Republican chair of the Senate budget committee, said in a statement that he likes parts of Beshear’s plan, like raises for state employees, but “there’s a lot of things to not like about it.”

“There’s major expansion in the size and scope of government, there’s continued overreach inside of government, and there’s a lack of consideration that those tax dollars came from hardworking Kentuckians,” McDaniel said.

The House Appropriations and Revenue Committee is scheduled to vote on the House Republican budget Thursday morning. The Senate has yet to release its spending plan.