Kentucky Gov. Andy Beshear’s proposed two-year budget of $136. 6 billion for 2024-2026 focuses on tactics to continue the state’s economic recovery and provides for really broad new investments for education and infrastructure.
The Democratic governor’s budget proposal will be debated in the Republican-dominated General Assembly when it resumes on Jan. 2.
Beshear’s plan, which he calls “Forward, Together,” would include what he calls a record amount of school spending, adding up to an 11 percent increase over two years for all public school employees.
The budget includes $1. 1 billion over two years to fund higher salaries for instructors, bus drivers, cafeteria drivers and custodians and bring the average starting salary for instructors to $42,191 a year, according to the National Education Association. That would raise the state’s average instructor rating. salary to 25th in the U. S. , up from 40th today, according to the NEA.
“I just believe that the local economy will have an effect of an 11% increase for each and every worker at the largest employer in the county. And we have the investment to do it,” Beshear said. Not only will these increases help us recruit, but they will also have a major impact on our local communities. “
Beshear’s proposal also focuses on infrastructure investment and praised local officials for participating in systems to deliver funding, progress, and water and sewer infrastructure to communities across the state.
The budget plan includes another $500 million in grants to counties and local governments to provide clean water and wastewater systems to underserved communities. This is in addition to the $500 million already allocated since 2021 of federal dollars approved through a bipartisan committee through lawmakers.
The governor also needs $200 million over the next two years for economic progress: $100 million to prepare “megaprojects” and some other $100 million for regional and county progress.
“We know this works. Working with lawmakers, we’ve already dedicated $100 million to this kind of site development through our successful Kentucky Product Development Initiative,” Beshear said. “To date, more than 47 counties have received funding to develop more build-ready sites, and a second round of funding is on its way.”
The proposed budget would return all state tax revenues, similar to coal severance payrolls, to coal-producing counties.
It would also provide more than $75 million to the Eastern Kentucky SAFE Fund and provide more resources to communities. The investment builds on agreements reached between state lawmakers and the Beshear administration to allocate budget in the wake of devastating flooding in the east and tornadoes in the west.
For state government staff, Beshear proposed an across-the-board increase of 6% starting July 1 and another 4% starting July 1, 2025. The administration said that, combined, this would be the largest four-year increase. He is aware of this and an attempt to catch up, as public servants have not noticed any salary increase in 10 of the last 12 years.
The proposal would also fully fund state workers’ pensions and provide $209 million to be used over two years to repay pensions.
The governor also needs to use the $71 million set aside in the last legislative consultation to improve state parks. His plan includes $184 million for projects ranging from rebuilding marinas and convention centers to upgrading the state parks system’s electrical and water systems.
Beshear said this would help continue to drive the expansion of the state’s tourism sector, which had its most productive year on record, with an economic impact of $12. 9 billion and the maintenance of more than 91,600 jobs in 2022.
Kentucky’s economy has experienced a post-pandemic boom, temporarily recovering from the negative economic effects of COVID-19.
In 2021, the state saw record new investment in the personal sector, helping to propel its finances to a traditionally strong position.
An unprecedented earnings surplus recorded in fiscal 2021 and earnings estimates for 2022-2024 allocate $1. 9 billion more in general fund earnings than budgeted for the existing fiscal year, and a 7. 5% expansion rate, down from 10. 9% last year. These would be the most productive consecutive years since 2005-2006, according to the budget plan.
In the first half of the fiscal year, general fund receipts have grown more than 15% with the Consensus Revenue Forecasting Group predicting growth rates for fiscal 2023 to be 2.1% and 4.2% in fiscal 2024, which is in line with historical patterns.
The CRFG is a state mandated group comprised of people with economic expertise and which operates independently of the state legislature and governor. Legislators use these estimates to help craft a budget .
“I need all Kentuckians and lawmakers to know what it’s like to pass a budget that invests in our families, so we can turn the last four years of progress into decades of prosperity,” Beshear said.
On Dec. 12, Beshear was sworn in for a second term as governor after being re-elected in November to Republican Attorney General Daniel Cameron by a margin of 53% to 47% in the Republican-dominated state.
“We are no longer a ‘transit state’, we have a destination for global companies. We have achieved the most productive four-year era of economic expansion in our history,” he said.
As of Nov. 30, Kentucky ranked 32nd in the U. S. The U. S. largest in debt issuance, with state and local issuers selling $3. 1 billion, down 18. 7% from the $3. 8 billion sold during the same period in 2022.
In June, S.
S&P said the upgrade was supported by the state’s “sustained trend of structural balance, with operating surpluses that have led to a robust budgetary trust stabilization fund at its highest level ever, continued pension funding commitment following pension reforms, and funding these pension costs in excess of actuarially determined contributions.”
“Kentucky’s commitment and execution to its fiscal flexibility and long-term monetary stability, which we expect to continue into existing and long-term budget cycles,” said Anne Cosgrove, credit analyst at S.
In May, Fitch Ratings upgraded the Kentucky issuer’s default rating from AA-minus to AA and upgraded the state’s annual credit-backed debt and IDR-related debt from A-plus to AA-minus. Fitch attributed a strong outlook to credit.
Royden Durham, senior portfolio manager at Kentucky’s Aquila Churchill Tax-Free Fund, highlighted some of the elements that make the state attractive to investors.
“Some things just fell into Kentucky’s lap like logistics since it’s within about an hour and a half plane flight of 60% of the U.S. population. And also our bourbon tourism helped show off what a great state we have with relatively low cost,” he told The Bond Buyer in an October podcast.
“Kentucky’s earnings have grown particularly and have taken us from the 37th most business-friendly state to the 18th most business-friendly state,” Durham said. “Ford’s EV coordination with Tennessee, as well as Kentucky’s auto production infrastructure, also contributed. The benefits have been accompanied by an increase in rating. “
Kentucky is rated Aa3 through Moody’s Investors Service and AA-minus through Kroll Bond Rating Agency. Both have strong credit prospects.
Photos from The Bond Buyer’s 2023 Deal of the Year Awards Dinner.
After months of speculation, the company demonstrated that it would “shut down” its municipal underwriting and market-making activities after a “thorough review” of its municipal operations, according to a corporate memo.
The muni market finances the “fabric of our nation, and now, because of Citi’s exit, the cost of financing for state and local governments is going to go up,” a sell-side source said.
This year presents favorable prospects for first-quarter activity, with gigantic reinvestment prospects expected in January and February, adding $19 billion in maturities plus calls in January and $24. 9 billion in February, said MMA’s Matt Fabian.
North Las Vegas downgraded the rating from BBB-plus to A-minus via Fitch Ratings, which maintained its positive outlook.
A deal to provide more money for defaulted AES bonds is also under way.
A new proposal would identify a maintenance fund while prohibiting the issuance of new bonds.
Climate rule aimed at reducing transportation-related greenhouse gas emissions will restrict investment in certain projects, states said.
The cost of the empowerment scholarship accounts, which will be universally available in 2022, exceeded projections and raised concerns about how the money is spent.
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