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Federal virus relief expected to send billions to Kentucky

Kentucky State Capitol Building
Posted at 5:39 PM, Mar 09, 2021

FRANKFORT, Ky. (AP) — Kentucky’s government is forecast to eventually receive about $2.4 billion from the latest round of federal pandemic relief, the state budget director told lawmakers Tuesday.

The state’s share gives lawmakers more funding opportunities but little time to decide how to incorporate any of it into the state budget for the coming year starting July 1. Top lawmakers are putting together a final spending plan to be presented to the legislature in coming days.

A separate infusion of about $1.6 billion from the federal aid package is expected to go to local governments in Kentucky, and Kentuckians are expected to receive about $5 billion in direct payments under the relief measure, legislative budget negotiators were told. The massive package could be approved by congressional Democrats by midweek over Republican opposition.

When state budget director John Hicks presented the funding estimates, the “buzz in the room was something that’s almost palpable,” Republican Sen. David Givens said. Senate President Robert Stivers said the federal support “totally changes the dynamics” as lawmakers craft a final budget.

But Republican lawmakers also urged caution, noting the federal support amounts to “one-time” funding and pointing to the lack of specifics on how the federal money can be used.

Gov. Andy Beshear’s office will present proposals by week’s end on how to use the federal funds, Hicks said. The Democratic governor has urged lawmakers to “be bold” in crafting a budget that improves Kentucky’s competitiveness as the economy recovers from the COVID-19 pandemic.

In discussing possible uses of the federal aid, Hicks told lawmakers: “They’re permitting state government to kind of serve in a role that sometimes the federal government plays, which is direct assistance to business and individuals as a result of the impact of COVID-19.”

Lawmakers pressed Hicks for information on the federal aid as they face looming deadlines to finish budget work. The Republican-dominated legislature is set to reconvene Thursday, with six working days left in the 2021 session.

House budget committee Chairman Jason Petrie said it would be “imprudent” to push through funding that might eventually be shown to be an inefficient use of state money because it overlapped with the availability of federal money.

“So if we don’t have ... sufficient information, then my general inclination at this point would be to go to a very conservative budget and see what these buckets are actually going to be filled with and how they’re going to be applied,” he said.

Sen. Morgan McGarvey, the Senate’s top-ranking Democrat, said the massive influx of federal support provides opportunities to make needed investments.

“It sounds like there’s enough money to provide every Kentuckian with clean drinking water,” he said. “There’s enough money to connect Kentucky to broadband. There’s enough money to help the people and businesses who have been struggling. And then there’s still money left over for us to use as one-time expenditures to do innovative things that could take Kentucky into the 21st century.”

A House-passed proposal, now pending in the Senate, calls for $250 million in state funding to extend broadband service to hard-to-reach areas. Stivers noted that states can use federal relief funding for broadband, which could make “a lot of difference on how we spend” state funds.

The federal money can have positive impacts on Kentucky, but lawmakers should be guided by the reality that the federal assistance is “one-time” support, Givens said.

“We’ve got to be mindful of the fact that as we invest these dollars and build expectations and build systems, we may not have this money coming down again, and we may have to find a different source to fund these,” he said. “And so I’m hopeful that we’ll be guided by that thought.”