Gov. Andy Beshear said in his annual State of the Commonwealth address Wednesday evening that Kentucky’s economy is still booming, but faces new headwinds due to federal shifts.
The Democratic governor called for several major investments in the next two-year state budget that would fund new affordable housing, aid struggling rural hospitals, fund a new universal pre-K program and support Kentucky food banks.
While Beshear said the state of the commonwealth is strong, and touted economic growth, he also decried federal policy under the Trump administration.
“But often on sunny days, there are storm clouds on the horizon,” Beshear said. “Bad tariff and trade policy are impacting our national economy, slowing or pausing many projects, and other states are shedding both investments and jobs.”
Governors normally give their annual address to a joint session of lawmakers in the House chamber of the Capitol Building, which is now closed for major renovations. Beshear instead spoke at the Thomas D. Clark Center for Kentucky History to lawmakers and invited guests — though the top Republican leaders of the House and Senate chose not to attend.
This was the last budget address from Beshear, who is term limited, though he did make one offhand reference to his aspirations to run for president in 2028.
Beshear’s budget ask, with roughly $16 billion in annual spending, will face hurdles as the General Assembly’s Republican supermajority crafts its own budget plan in the 2026 session, which kicked off Tuesday. GOP House Speaker David Osborne of Prospect told reporters Wednesday they have not yet finalized their bill and it is unlikely to be filed this week.
Beshear said the national affordability crisis requires responding with $500 million in various funds to encourage more affordable housing, assist struggling rural hospitals, alleviate increased health insurance costs from expired federal tax credits on Affordable Care Act plans and pay for utility costs for low-income Kentuckians.
“While most dreams at night are short, the American dream is about a long, healthy life where you raise your kids and eventually spoil your grandkids,” Beshear said. “That’s why we’ve continued efforts to expand health care to keep our people healthy and happy.”
Beshear’s proposal would draw $900 million over two years from the state’s budget reserve trust fund. This “rainy day fund” has ballooned in recent years and closed out the last fiscal year at $3.76 billion in June 2025.
The fund is forecast to sit at 24% of annual spending by the end June 2026, but Beshear’s plan would reduce it to 17%. The Government Finance Officers Association recommends states set aside at minimum 16% of general fund spending.
Osborne and GOP Senate President Robert Stivers from Manchester issued a joint statement after Beshear’s address. Neither attended the speech in person, although they wrote they “appreciate the governor’s comments.”
“Kentucky is well positioned because of the sound, fiscally responsible policies enacted by Republican supermajorities — often overriding gubernatorial vetoes to do so,” Osborne and Stivers wrote. “These policies have produced a record budget reserve trust fund and allowed us to responsibly lower the state income tax. Our legislative focus will remain on protecting core investments, ensuring responsible stewardship of taxpayer dollars, and avoiding commitments the Commonwealth cannot sustain.”
A few members of the Republican supermajority were in attendance at the Wednesday night address, including Sen. Phillip Wheeler from Pikeville. Wheeler said the governor’s job is ultimately to execute the policies and budget passed by the General Assembly, not the other way around. He also blasted Beshear for criticizing President Donald Trump’s tariff policies.
“Make no mistake that the policymakers of Kentucky are, in fact, the members of the Kentucky General Assembly, and we're driving the train,” Wheeler said.
Beshear’s proposal also begins to brace for impending federal cuts and cost shifting. He requested more than $100 million over two years to pay for shifted administrative costs for the federal Supplemental Nutrition Assistance Program, formerly known as food stamps. It’s a lower cost than previously estimated. Beshear’s budget assumes the state’s SNAP error rate will fall below the threshold established in the giant federal tax and spending bill passed earlier this year that would’ve cost the state even more federal funds.
Because Beshear said he expects food insecurity to increase thanks to increased work requirements for SNAP recipients, he also called for $50 million to aid Feeding Kentucky, a network of food banks that serve every Kentucky county.
“Actions by the Trump administration to the SNAP program are going to result in soaring costs and 114,000 Kentuckians are going to go hungry from losing their food assistance,” Beshear said. “We can’t let that happen.”
Beshear pushes hard for universal Pre-K
Beshear is again renewing his push for a universal pre-K program, although at a significantly lower cost than he had asked for in previous budgets. The governor’s budget called for $40.5 million in the fiscal year beginning July 2027 for the “initial phase” of his Pre-K for All program, which would be implemented over several years.
“For those that say Pre-K for All is political, let me remind you: 4-year-olds can’t vote. They aren’t registered,” Beshear said. “So if you’re against this because you think it gives me a win, what you’re really doing is handing these kids a loss.”
There will be several different versions of the universal pre-K program proposed in the legislature over the course of the session; for example, one version would allow districts to opt-in as their capabilities allow and another would start with lower income students and slowly allow high income families to join the program over time.
Beshear said his program could be paid for out of sports wagering tax revenue alone, although those are currently allocated to pay down the pension debt. Despite Beshear’s campaigning over the last year, Republican leadership has so far appeared unmoved. Osborne said Wednesday afternoon that they have yet to see a detailed proposal.
“I can't tell you how it would be received, or what it would look like. The governor has yet to give us one ounce of detail on any request that he may make,” Osborne said. “The few times that he communicated with us, we do listen. Doesn't mean we always do it, but we do listen.”
Stivers said earlier this week he remains uninterested in such a program and is skeptical of the purported benefits.
“We are looking at various things to deal with the childcare issue, but I do not think it'll be universal pre-K, because we believe it is a flawed concept,” Stivers said.
Just as Beshear has requested a smaller sum to start his pre-K program, he has also requested lawmakers fund a raise for all teachers — a 3% salary increase starting July 1 compared to the 11% salary increase he called for, but did not obtain, in the last budget cycle. Beshear also called on lawmakers to reverse a 2025 change to how educators pay into the retirement system that he says would give teachers back 3.75% of their paychecks.
More funds for economic development, as EV battery plant closes
Beshear touted economic development gains over the last several years, saying Kentucky has become an “economic powerhouse.”
But it’s also been a difficult few weeks after Ford announced it was closing its massive electric-vehicle battery manufacturing plants in Glendale, which Beshear touted for years as the crown jewel of his economic development achievements.
That’s after the state provided an upfront $250 million loan that would be forgiven should the company, which was initially a joint venture between Ford and South Korea’s SK On, hit certain employment targets it will almost certainly fail to meet. Ford now plans to convert the plants to building battery storage products and hopes to hire back some of the 1,600 laid off workers when they reopen in two years.
Even with this major setback to Beshear’s biggest economic achievements, the governor said he needs more money to draw companies to the state. He proposed $70 million for site development and $100 million to attract “mega projects” to the state.
“We know a simple truth: There ain’t nothing Democrat or Republican about a good job,” Beshear said.
Before Beshear’s address, Stivers took a shot at the governor, saying his only successful economic proposal has been landing the Glendale plants, “and that's now become the biggest boondoggle of economic recruitment in the state's history.”
“We gave him what he wanted, worked with him to do that,” Stivers said. “So we kind of want to see from the governor's office how they as the executive branch are going to claw back this money that we fronted.”
Stivers and Osborne both harkened back to former Gov. Matt Bevin’s touting Braidy Industries’ proposed $1.7 billion aluminum rolling mill in Ashland, which was abandoned before construction even started.
“I don't put it on the governor any more than he put the failure of Braidy on Gov. Bevin,” Osborne said.
Osborne said everyone hopes for the best on Ford’s Glendale plant, noting they invested billions of dollars in building the plants and will spend billions more retooling them to produce different battery storage products.
“That's all great for our sales tax numbers, but it doesn't do anything to put jobs in there,” Osborne said. “And I think the big metric will be if those jobs come back — and I believe they will, but as of right now, we don't know.”
Beshear hints at presidential run in final budget address
The governor’s address repeatedly touted the success of Kentucky as an example for the nation, and at least once hinted at his flirtation with running for president in 2028.
“This is my seventh State of Commonwealth and my last budget address — in this job,” Beshear said, drawing laughs and applause from the audience, made up mostly of supporters.
Beshear criticized President Donald Trump’s tariffs, cuts to federal programs and “bullying” as part of the challenges Kentucky is dealing with, contrasting that with success Kentucky has had through “finding common ground.”
“Folks around our country are no longer looking down on Kentucky, they’re looking up to us,” Beshear said. “They are looking to find hope beyond the chaos. And they’re finding that hope right here.”
Republican Secretary of State Michael Adams — the only GOP constitutional officer to attend the speech — told reporters afterward that it seemed like the speech of a 2028 presidential candidate.
“It’s not all criticism, I think it's good to have people running for president talking about opportunity. We need people running for governor in a year talking about opportunity, as well,” said Adams, who himself is considering a run for governor next year.
Beshear wants investments in reentry programs, juvenile justice and more
Beshear also laid out plans in his address and an earlier budget briefing to fund specific projects related to juvenile justice, education and foster care. Here are some of those proposals:
- Two new female-only juvenile justice facilities to aid in the separation of violent and non-violent youth offenders as well as a “high-acuity” youth facility for detained kids with the most severe mental health and medical issues.
- A new facility, in partnership with the Kentucky Community & Technical College System, to provide intensive reentry services and education at the Northpoint Trainer Center.
- New drivers testing locations.
- Funding for relative and fictive kin foster care reimbursements to implement Senate Bill 151, which passed with bipartisan support in 2024. Lawmakers have expressed much frustration over Beshear’s refusal to implement the legislation without a specific appropriation.
- A 2% increase for all state employees, starting on July 1 each year.
