Babbage Bulletin: Budget Arrives in State House; EOY Figures in Senate Race

Bulletin

Feb 2

$29B Budget Draft Sets Tone for Rest of Session

Despite the icy conditions outside, the Kentucky General Assembly was heating its legislative agenda up as House Appropriations and Revenue Chair Jason Petrie (R-Elkton) introduced HB500, the GOP’s $29.8 billion "base-level" budget for the 2026-2028 biennium.

Characterized as a preliminary draft focused on curbing "out of control" spending, the bill proposes a leaner General Fund than the current biennium and notably excludes Governor Beshear’s $100 million request for universal pre-K. While the proposal maintains the current per-pupil funding and anticipates modest increases for K-12 education, it suggests spending reductions in areas like Medicaid and state agency travel.

The budget's introduction marks the start of a rigorous months-long process as Petrie signaled that budget subcommittees will be "more active" than in previous sessions—holding both day and night meetings to scrutinize agency needs—before the bill is amended in the House, overhauled by the Senate, and ultimately finalized through a conference committee negotiation between chambers.

The drive for fiscal accountability extends to the classroom with SB3, which advanced out of the Senate Education Committee on an 11-1 vote, mandating greater financial transparency in public schools. Sponsored by Sen. Lindsey Tichenor (R-Smithfield), the bill requires districts to post detailed spending reports and superintendent contracts online to expose potential administrative waste. The committee also approved SB1, which shifts JCPS daily control from the elected school board to the superintendent, despite Superintendent Yearwood’s testimony in opposition, citing historic mismanagement and a 2023 transportation crisis. Lawmakers tailored the measure to survive legal scrutiny after similar legislation was previously struck down by the Kentucky Supreme Court.

Parallel to financial reforms, the legislature is also addressing judicial and social policy, including with SB122. The measure requires courts to consider alternative sentences, such as probation, for primary caretakers of dependent children convicted of nonviolent felonies. Supporters view it as a way to preserve families during rehabilitation, though some members expressed concern that it could inadvertently create a "two-tiered" justice system based on parental status.

Protection of minors is further emphasized in HB4, which recently cleared the House Judiciary Committee to criminalize "grooming." The legislation defines the offense as a course of conduct used to manipulate or desensitize minors for sexual conduct, with penalties escalating for those in positions of authority. To prevent overreach, proponents clarified that the law requires proof of "malintent," specifically protecting teachers delivering approved sexual health curricula.

Local autonomy is another key theme of this session with HB103, which transfers authority over water fluoridation from the state to local boards, passing out of committee. Lawmakers heard debate weighing "informed consent" and potential health risks against warnings from dental experts that removing fluoride could spike cavity rates and Medicaid costs. In support of local decision-makers, the measure includes an immunity clause protecting water districts from civil lawsuits regardless of their choice.

Higher education, meanwhile, is poised for a significant boost via a $150 million proposal from Senate President Robert Stivers (R-Manchester) for the state’s Endowed Research Fund. SB6 aims to foster long-term economic growth by funding five-year collaborative research projects between public universities in high-tech fields like AI and pharmaceuticals. While a major Senate priority, the investment must still be reconciled with the House's "bare-bones" budget approach as negotiations move toward a final package.

Lastly, the House State Government Committee voted to overhaul the KentuckyWired broadband project through HB314. The legislation seeks to stabilize the project and ensure more accountability for the state’s investment in fiber optic infrastructure, abolishing the project's current executive directorship and moving oversight to the Commonwealth Office of Technology following years of litigation and cost overruns.

Barr Breaks Ahead in KY (Senate) Derby

In the high-stakes race to succeed retiring Senator Mitch McConnell, Rep. Andy Barr has solidified his position as the financial frontrunner, ending 2025 with a commanding $6.47 million in cash on hand. Barr’s dominant lead is fueled by significant support from Wall Street and the burgeoning cryptocurrency industry, with his campaign committee alone outraising competitors and receiving aggressive air cover from the "Keep America Great" PAC.

Lexington tech entrepreneur Nate Morris remains a formidable challenger by continuing to leverage his personal wealth, loaning his campaign over $1.4 million in the final quarter of 2025 to bring his total personal investment to more than $4.4 million. While Morris trailed Barr in cash on hand as of December 31, his financial outlook shifted dramatically when billionaire Elon Musk recently contributed $10 million to the "Fight for Kentucky" PAC—the largest single donation Musk has ever made to a federal candidate other than Donald Trump.

In contrast, former Attorney General Daniel Cameron continues to struggle with a persistent fundraising deficit, ending the year with just $630,000 in the bank—less than a tenth of Barr's war chest. Despite being consistently outspent at every reporting period, the Cameron campaign maintains that "money doesn’t vote," leaning on his enduring leads in public polling that show him as the best-known and most well-liked candidate in the GOP primary field.

As the May 19 primary approaches, the race has effectively evolved into a three-way clash of styles: Barr represents the established "McConnell machine" with deep traditional ties; Morris is positioning himself as a tech-backed pro-Trump outsider with extensive business ties; and Cameron remains the grassroots favorite fighting to maintain his polling edge without the massive resources of his rivals.