What’s the deal with the Kentucky House budget?
Despite pressure from public employee advocacy groups and a growing number of Republican lawmakers opposing HB 500, the budget bill cleared committee and headed toward a floor vote yesterday.
So what’s all the fuss about? Let’s break it down.
The Most Controversial Budget Cuts are to the Kentucky Employee Healthcare Plan (KEHP)
Despite lawmakers leaving more than $1 billion of projected revenue unspent, HB 500 caps the state’s contributions to KEHP. The state Personnel Cabinet estimates will create a $280 million shortfall in the healthcare program by the end of 2028 and notes, “there are only two ways to make up the difference: increasing premiums on KEHP members and dependents or decreasing benefits.”
According to the Cabinet, this means that 310,00 state workers, their dependents, and retirees will see a potential 78% increase in their premiums over the next two years. The Kentucky Center for Economic Policy lays out the very real impacts for state workers
Public Employee Monthly Benefit Cut
School Bus Driver $535.18
Teacher Rank III $486.04
Administrative Office of the Courts Employee $477.64
Social Worker $425.92
Correctional Officer $425.88
State Trooper $394.34
State Legislator $277.20
Legislative Research Commission Employee $239.78
What makes the KEHP even more egregious is that many public employees have not gotten raises in years and are already struggling to keep up with rising costs.
Other Significant Funding Cuts
The Kentucky Center for Economic Policy highlights that the proposed budget doesn’t just cut KEHP, it also:
Slashes funding to public education
Has an $800 million Medicaid funding gap
Leaves huge funding holes in the Medicaid and SNAP programs
Denies transformative investments in housing and universal preschool
Why Are There So Many Budget Cuts If There’s $1 Billion Going Unspent?
Legislators are eager to cut state income taxes for a fourth time since 2022, but can only do so if they meet two criteria: the state’s rainy day fund must have at least 10% of General Fund revenues from the prior fiscal year, and the budget must have more revenue than what the state spent in a fiscal year.
On January 1st, Frankfort cut taxes for the third time in four years. The Kentucky Center for Economic Policy points out that, “The cuts already enacted are huge. The reduction of the top income tax rate from 5% in 2022 to 3.5% today costs $2.1 billion a year.”
In December, a national pollster, Change Research, conducted a random survey of Kentucky voters, asking whether they were benefiting from the state’s income tax reductions. Only 9% said yes. The poll also found that 72% of Kentuckians wanted legislators to focus on “improving schools, improving healthcare, and bringing down the cost of living,” with 67% supporting a Settle Up Tax on the wealthiest 5% to help improve schools, healthcare, and other public services.
The Bottom Line: Frankfort Prioritizes the Wealthy and Powerful At the Expense of Working-Class Kentuckians
67% of state income tax cuts go to the wealthiest 20% of Kentuckians, while the working-class is disproportionately hurt by the budget that triggers the income tax cuts. Frankfort lawmakers are ignoring what a majority of their constituents want and making everyday people’s lives more difficult in favor of benefiting the wealthy.
Want to Make Your Voice Heard?
Join the Kentuckians Over Cuts Day of Action on February 25th. You can also call the Legislative Message Line at 1-800-372-7181 or go to the Kentucky Legislature website to identify and contact your state representative and senator.