Kentucky House Passes HB 500, Sending $32 Billion Biennial Executive Budget to Senate

The Kentucky House of Representatives passed House Bill 500, the executive branch operating budget for fiscal years 2027 and 2028, on a roll‑call vote of 81 yeas to 18 nays.

The bill, as amended by House Committee Substitute 1, structures the state’s near‑term operational budget across a two‑year window with an overall spending‑growth target of about 2% per year and deposits into the Budget Reserve Trust Fund (BRTF) from one‑time sources. The bill’s sponsor, the representative from Todd, described HB 500 as “a good first draft” and said the approach emphasizes immediate operational needs while using one‑time appropriations for longer‑term capital projects.

Why it matters: HB 500 sets the state’s spending priorities for core government operations, education, health services and other state programs. Passage in the House moves the bill to the Senate, where further changes are expected before conference committee negotiations.

What’s in the bill: The sponsor and budget subcommittee chairs outlined several headline investments and changes included in the committee substitute. Those highlights included: - Education: The representative from Kenton 63 said HB 500 directs approximately $7.1 billion in taxpayer funding to public education across the biennium, adds per‑student reporting requirements and authorizes capital projects at the Kentucky School for the Blind and the Kentucky School for the Deaf. - Medicaid and health: Budget language holds Medicaid steady while the representative from Hopkins 4 described additions of Home and Community‑Based Services (HCBS) and other waiver slots and targeted public‑health investments. - Personnel and pensions: The budget includes salary increments of 2% in year one and 2% in year two for many state employees and funds modernization of the Kentucky Public Pensions Authority; the representative from Christian 8 cited roughly $78.5 million to reduce the KERS nonhazardous unfunded liability and $15 million in capital for system upgrades. - One‑time funding and rainy‑day deposits: Sponsor remarks described using one‑time appropriations for capital projects and stated an intention to deposit roughly 2% of projected biennial revenues (the sponsor cited approximately $614 million) into the BRTF to support future one‑time investments.

Contentious floor items and failed amendments: Multiple members sought to add targeted investments via floor amendments but were unable to get a suspension of the rules (each suspension requires a constitutional majority of 51 votes) to bring the amendments to the floor for consideration. Notable items that were proposed but not considered: - Affordable housing: The representative from Jefferson 42 filed a floor amendment to deposit $123 million into an affordable housing trust fund and moved to suspend the rules for consideration; the motion failed (20 ayes reported). The representative from Jefferson said the budget "makes no investment in affordable housing despite a growing affordability crisis." - Education and teacher pay: Members from Fayette and others proposed teacher pay increases and pre‑K expansion (House floor amendments 12 and 14). Those suspension motions likewise fell short of the required 51 votes. - Medicaid funding and waivers: The representative from Fayette 75 raised a fiscal projection claiming the Medicaid budget would be short about $595 million in FY27 and $913 million in FY28 (a combined shortfall cited as roughly $1.5 billion) and offered House floor amendment 9 proposing an additional $435.5 million and more waiver slots. The suspension motion to consider that amendment did not receive the required votes.

Sponsor response and process defense: The representative from Todd repeatedly defended the budget as a restrained, process‑driven product, saying base reductions were targeted and that certain units (veterans affairs, Medicaid benefits, SEEK education funding, corrections and others) were exempted from base cuts. He also argued that restricted funds transferred into the BRTF are intended as one‑time backing for liabilities such as Medicaid if needed.

Vote and next steps: After debate the House voted 81‑18 to pass HB 500 as amended by House Committee Substitute 1. The bill will proceed to the Senate for further consideration; a separate onetime appropriations bill was discussed as the likely vehicle for additional one‑time expenditures (including proposals such as a thirteenth‑check for retirees), and conference committee work is expected if the Senate acts on the measure.

What the House did additionally: The chamber also adopted committee reports, processed ceremonial citations and referred new bills to committee as part of routine business before adjourning until Feb. 27.

Quotes from the floor (selected): “The process that we used has resulted in greater transparency,” the bill’s sponsor, the representative from Todd, said, calling HB 500 "a good first draft."

“When those families can afford to rent or have a mortgage, everything else in their life becomes more stable,” the representative from Jefferson 42 said while urging additional investment in affordable housing.

“The most up‑to‑date forecasts from the budget director indicate that between federal matching funds and our proposed house budget, the Medicaid budget will be short by $595,000,000 in fiscal year 27 and by $913,000,000 in fiscal year 28,” the representative from Fayette 75 said when explaining a proposed amendment to add funding to Medicaid.

Bottom line: The House approved the committee‑substitute to HB 500 and sent the operating budget to the Senate after a day of committee summaries and vigorous floor debate over housing, education and Medicaid funding priorities. The Senate and any eventual conference committee will determine the final enacted budget.