Kentucky Senate Passes its Version of the State Biennium Budget
March 19, 2026The Kentucky Senate unveiled and unanimously passed its version of the state budget for the next two fiscal years. The three state government branch budget bills, 2026 HB 500, 2026 HB 503, and 2026 HB 504, were approved by the Senate without any opposition. HB 500, the Commonwealth’s biennium budget, was amended by the Senate with relatively few changes from the House’s previous two proposals.
While introducing his chamber’s budget blueprint, Senator Christian McDaniel (R-Ryland Heights) outlined Senate priorities in contrast to the Kentucky House’s version.
The Senator stated that this session’s biennium budget is a result of prior budgets being written with an eye on the future. He stated that their fiscal discipline and responsibility have resulted in the Commonwealth experiencing skyrocketing investment, consistent budgetary surpluses, pension shortfall corrections, and pay raises for state employees. He added that all this occurred while lowering taxes for everyday Kentuckians.
The Senate budget will fully fund all defined calculations, provide pay increases of 2% for state employees in both fiscal years, and provide funding for a one-time 13th check on the July 2026 retirement allowance payment for both KRS and SPRS retirees. The monthly retirement allowance will be multiplied by a percentage depending on the Tier of the recipient.
The budget proposal will reduce governmental expenditures by 4% in FY 2026-2027 and 7% in FY 2027-2028. However, many executive branch departments and programs are exempt from budgetary cuts. Some of these include:
- The Kentucky Departments of Veteran Affairs, Revenue, Public Advocacy, Kentucky State Police, and the Office of the Secretary of State
- Medicaid Benefits
- Commonwealth Attorneys and County Attorneys
- Adult Corrections and Juvenile Justice
- SEEK and LARS
- Local Jail Support
- Registry for Election Finance
- Post-Secondary Institutions and the Post-Secondary Performance Fund
- Family Resource Youth Centers, Voluntary Services, and Community Services
The budgetary items included in the Senate’s version that benefit cities include:
- One-time General Fund appropriations of $5 million in each fiscal year to complete the state-wide deployment of Next Generation 9-1-1 (NG-9-1-1) Services
- Sufficient funding to implement the provision for School Safety as outlined in 2024 SB 2
- $10 million in KLEFPF funds in each fiscal year to fund the Body Armor Grant Program
- General Fund appropriations of approximately $1.8 million in FY 2026-27 and $1.4 million in FY 2027-28 to support the Cyber Resilience Task Force
- General Fund appropriations of $720,000 in FY 2026-27 and $697,500 in FY 2027-28 for the County Fair Grants Program.
- Restricted Fund appropriations of $800,000 in FY 2026-27 and $600,000 in FY 2027-28 to support an Artificial Intelligence Initiative
- Carry forward language for the Kentucky Product Development Initiative (KPDI) General Fund appropriation (2022 HB 1)
- Sufficient funding to implement the provisions of the Financial Assistance Program for Nuclear Energy-Related Projects (2024 SB 198)
- General Fund Appropriations of $2.5 million in each fiscal year to support the development and launch of a Talent Attraction Pilot Initiative
- General Fund Appropriations of $1.44 million on FY 2026-27 and $1.39 million in FY 2027-28 for the Operation UNITE program
- Kentucky Law Enforcement Foundation Program Fund (KLEFPF) payments of $4,653 in FY 26-27 and $4,746 in FY 27-28 for each full-time participant, and $2,327 in FY 26-27 and $2,373 in FY 27-28 for each part-time participant. This represents a 2% increase from FY 25-26
- Restricted Fund appropriations of $354,000 in FY 2026-27 and $10,000 in FY 2027-28 to support a law enforcement simulation system for DOCJT.
- Restricted Fund appropriations of $1.036 million in FY 2026-27 for the acquisition of mobile data terminals and docking stations for KSP. This will be funded by the excess proceeds from the sale of state-owned real property operated by the Department of Juvenile Justice. This contrasts with the House proposal, which used KLEFPF dollars.
- The Nuclear Reactor Site Readiness Program will fund three proposals that are deemed a necessary government expense (NGO) and will be paid for from the General Fund Surplus Account or the Budget Reserve Trust Fund Account, and will not exceed $75 million over the FY 2026-28 fiscal biennium.
- Firefighters Foundation Program Fund (FFPF) payments of $4,653 in FY 26-27 and $4,746 in FY 27-28 for each qualified professional firefighter. This represents a 2% increase from FY 25-26
- $15,300 in each fiscal year for each qualified volunteer fire department
- Restricted Fund appropriations of $750,000 in FY 2026-27 and $1.5 million in FY 2027-28 to support the modernization of the pension administration system for KPPA.
A graphic outlining the differences between the House and Senate versions can be found here.
