House passes $64B budget, leaving $1.14B unspent; does not include Covington’s life sciences funding

Staff report

Kentucky’s Republican-led House passed by an 85-to-8 vote its own version of a new two-year $65 billion state budget which goes to the Senate for consideration. It leaves $1.14 billion unallocated and there are hints of tax cuts. The final version will be hashed out by conferees from both chambers, but the Senate is now clearly in the driver’s seat.

A key piece of funding is missing which had been included in a largely ignored Governor’s budget — the $10 million for Covington’s life sciences lab. Needless to say, Covington officials and the team of high-tech partners who worked on the project and succeeded in having it included in the Governor’s budget are preparing to advocate for the return of that investment. And are questioning why the NKY caucus did not advocate for its inclusion.

Gov. Andy Beshear included $10 million in his proposed two-year budget for the project which was months in the making, the design and construction of a “wet” lab for hands-on scientific work that would attract high-tech start-ups and life-changing research and development. Its proponents were a partnership led by the City of Covington and four nationally renowned bio-tech firms located in the city, Bexion, Gravity Diagnostics, CTI Clinical Trial and Consulting Services, and BioWish Technologies. Other partners in the proposed lab include Northern Kentucky University, Northern Kentucky Tri-ED, the Kentucky Small Business Development Center, and the NKU Collaborative for Economic Engagement.

In Northern Kentucky, employment in the Life Sciences cluster grew over 82 percent from 2014 to 2019, with a majority of company growth in this sector located in the urban core of Covington, according to a new labor analysis from Northern Kentucky Tri-ED. The jobs are high paying and the sector is prime for growth.

See the NKyTribune’s story about the project here.

The Kentucky House filed its own budget less than a week before Gov. Andy Beshear’s, in a blatant disregard for normal practice. The Governor’s office was not informed of the actions, which the Governor’s spokesperson called a violation of “long-standing practice and state law.” House Democratic leaders decried the action as “beyond petty.”

Kentucky’s House and Senate, however, both have Republican supermajorities that can easily override the Governor’s veto. Apparently, the House is enjoying its chance to bully legislation through, with little public discussion or input. The bill was put on an unprecedented fast track, clearing a committee and the full House in 12 days of a 60-day legislative session.

The House budget plan increases education spending and includes a 6% pay raise for state employees. But unlike the Governor’s proposed budget it does not fund statewide pre-K for 4-year-olds and would not mandate a raise for schoolteachers.

GOP leaders have signaled they want to focus on making changes to the state’s tax system, capitalizing on huge revenue surpluses.

The House spending plan would deliver on “needed investments,” said Republican Rep. Jason Petrie, chairman of the House Appropriations and Revenue Committee. “We have to the best of our ability budgeted to the needs of Kentucky.” He said the bill would leave $1.5 billion in the state’s budget reserve trust fund and $1.14 billion in “unappropriated” funds that would not be spent. The GOP is talking about how to best return that money to the taxpayers.

The House GOP plan would increase the current $4000-per-pupil funding under SEEK to $4,100 in the first fiscal year and $4,200 in the second year. It calls for the state to continue covering the entire cost of full-day kindergarten and would increase the amount of state funding for local school districts’ transportation costs.

The Governor’s education proposal added nearly $2 billion in education spending for pre-kindergarten through 12th grade.

The House-passed budget would provide an additional $50 million each year of the next budget cycle to universities and community and technical colleges under the “performance-based” funding model. It would earmark $350 million each year to help the schools maintain buildings.

The House budget would provide funding to hire an additional 100 social workers each year of the two-year budget cycle to help overcome a workforce shortage. And it proposes a $15,000 pay increase for state police troopers and motor vehicle inspectors and an $8,000 raise for dispatch telecommunicators. The Governor has pointed to those items as priorities.

House Speaker David Osborne, pointing to the state’s huge revenue surplus, told reporters that the legislature is “ready to tackle meaningful tax reform that will advance our pro-growth, pro-business policies.”

Senate President Robert Stivers also has raised the prospect of tax cuts.

Read the 2022 Budget Bills online here.