Gov. Beshear makes infrastructure budget proposal

Published 3:51 pm Tuesday, October 3, 2023

If Gov. Andy Beshear gets his way, over $1.075 billion of the commonwealth’s next biennial budget will go to infrastructure needs like cleaner water, high-speed internet, affordable housing, roads and bridges.

On Tuesday, Beshear presented his infrastructure budget proposal – the Better Kentucky Infrastructure Plan. He previously presented education and public safety proposals for the two-year budget covering the 2025 and 2026 fiscal years.

What does the budget proposal include?

There are eight items on Beshear’s infrastructure wish list. Most are funded through the state’s General Fund, but some include monies from federal grants.

Cleaner water

Cost: $500 million in state funds over two years

Like much of its infrastructure, Kentucky’s water systems are aging.

The Beshear administration has used federal American Rescue Plan Act funds to improve water and sewer systems across the commonwealth since 2021.

However, Beshear wants to keep the momentum going – as ARPA funds run dry – with state funds. If the legislature agrees to pass this budget item, it will be the largest amount of General Fund dollars ever invested in clean drinking water.

Beshear said that funding this in the budget means that key infrastructure projects can happen without raising rates for families in cities and counties that need improvement.

High speed Internet

Cost: $1.1 billion in federal BEAD funding, matching private funds in an equal amount

High-speed internet is another part of Beshear’s Better Kentucky, in place since he took office.

The last round of broadband funding was $400 million, half private investment and half federal dollars.

This round will be structured the same, as long as the General Assembly approves distribution of the already-appropriated federal funds to the Office of Broadband Development, which will then allocate grants to areas according to need, Beshear said.

Beshear said his goal is to get high speed Internet in every home and business across Kentucky.

Career and technical education centers

Cost: $100 million in state funds over two years

Career and technical education has become increasingly important in Kentucky, as four-year university tuition continues to rise and major industrial employers move to the commonwealth.

Kentucky has dedicated $245 million to build and renovate career and technical education centers across the past two budgets, with 33 schools benefiting to date.

“It is a game changer for those communities,” Beshear said. “It is a game changer for the school system. And it helps us build that world-class workforce we need to continue to bring in these companies.”

Affordable housing

Cost: $10 million in state funds over two years

Some of Kentucky’s fastest growing regions are experiencing a housing crunch, particularly after natural disasters hit western and eastern Kentucky in 2021 and 2022, respectively.

Beshear’s budget would give $10 million to the Kentucky Housing Corporations Affordable Housing Trust Fund to alleviate the crisis.

If passed, it would be the first General Fund investment in the affordable housing trust fund in nearly 20 years.

Beshear said the $10 million could multiply.

“Historically, the leverage has been for every $1 of public funds, we’ve seen nine other dollars invested in these programs,” he said. “If you think about that leverage and if it continues, this should supercharge the construction of affordable housing across the commonwealth.”

Major road and bridge projects

Cost: $200 million in state funds over two years

President Joe Biden visited northern Kentucky in December 2022 to announce one of the largest federal infrastructure grants in history to improve the Brent Spence Bridge.

Beshear said that investment would not have been possible without Kentucky being able and willing to provide matching funds to show it had “skin in the game.”

Now, he wants to do the same for the other two major infrastructure projects currently underway in the state – the I-69 project and the Mountain Parkway four-laning.

The goal is to speed up the time table on these projects by offering matching funds, which may improve the projects’ chances of winning federal grants.

City and county bridge repairs

Cost: $50 million in state funds over two years to the Transportation Cabinet

Beshear said that the three major infrastructure projects aren’t the only ones on his mind. He also wants to continue investment in city- and county-level issues, like bridges.

The Transportation Cabinet would disseminate these funds, if approved, to local areas based on need.

“Our investments in our roads and bridges help drive economic growth, while making sure our families are traveling safely to work, to school and to church,” Beshear said.

Local and regional economic development sites

Cost: $200 million in state funds over two years

One competitive advantage Kentucky has over other states is its speed in preparing build-ready sites for new employers, Beshear said.

He wants to dedicate $100 million to the Kentucky Product Development Initiative to help close major economic development deals, and another $100 million for county and regional site development needs, including build-ready sites.

The state has already funded one round of this program, impacting 47 counties.

“These funds are helping our communities to be ready for what comes next. And that means good paying jobs for our families,” Beshear said.

Globally competitive talent development system

Cost: $15 million in state funds in the first year of the budget

Finally, Beshear’s budget includes a talent development system, proposed by regional chambers of commerce.

If approved, the money would be used to launch a national marketing campaign, as well as fund regional targeted campaigns to recruit and retain top talent in Kentucky.

Can Kentucky afford this?

According to State Budget Director John Hicks, yes, it can.

Hicks said that last week, the Consensus Forecasting Group met to discuss its preliminary revenue estimate for the upcoming biennial budget.

In other words, they shared their predictions for how much money the state has available to spend.

The projection for the current year (fiscal year 2024) includes $1.2 billion more in General Fund revenue than anticipated in the last budget.

“So that’s part of the resources that we’re looking at to accommodate what the governor is announcing today, particularly in these larger one-time investments,” Hicks said.

“It’s an opportunity to use that additional funding to make investments, increasing productivity, jobs and income for Kentucky’s families.”

On top of that, Hicks said there is $3.7 billion in the rainy day fund, amounting to 25% of annual revenues – the largest percentage the state has ever seen.

“So, all of this is more than affordable, and we can put even more money into that rainy day fund,” Beshear said.

He added that of his budget announcements, his education budget proposal is the priority, as it is the foundation for the state’s economic future.

“Our school systems desperately need this funding in order to attract the individuals and the talent that we need all across the state,” Beshear said. “We can’t stay No. 2 in per capita economic development if we’re 44th in starting teacher pay.”

What do Republicans have to say?

Republican challenger Daniel Cameron, for one, said Beshear was offering “more empty promises and government programs as the key to unleashing Kentucky’s future.”

House Speaker David Osborne was also quick to respond Tuesday after Beshear’s announcement.

He said that the legislature’s policies since 2017, when Republicans became the majority, are responsible for the historic economic investment, record jobs, surplus state revenue and largest budget reserve trust in history – not Beshear.

“Once again, he throws out policy that he hasn’t talked to anyone about, will do nothing to try to pass it, only to take credit for the work that we ultimately do,” Osborne said, referring to the governor.

“However, as he should be aware, the legislature’s work on both the budget and the 2024 legislative agenda began several months ago and will continue after we convene the 2024 Regular Session in January.”