FRANKFORT — Gov. Andy Beshear has proposed nearly $700 million in direct aid to small businesses and low-income Kentuckians as part of a multi-layered plan he presented to lawmakers for spending about $2.4 billion in federal pandemic aid being funneled to the state.
The Democratic governor has been negotiating with leaders of the Republican-dominated legislature on how to use the massive infusion from the federal relief measure championed by President Joe Biden. Kentucky's leaders face a tight timeline to reach an agreement in this year's legislative session, with lawmakers set to reconvene Monday for the last two days of work.
Meanwhile, Beshear issued a series of line-item vetoes Friday to budget bills passed by lawmakers. One vetoed provision would restrict him from spending the federal relief money without the legislature's approval. Republicans hold supermajorities in both legislative chambers and are poised to take up override votes on Beshear's vetoes next week.
Beshear has called the federal assistance a "once-in-a-generational opportunity" to improve lives. His plan for spending the federal money, obtained by The Associated Press through an open-records request, reflects a mix of direct aid to individuals and businesses along with long-term investments in water and sewer projects, broadband and school construction. Top Republican lawmakers didn't immediately respond to emails sent to their offices seeking comments.
In one of his veto messages Friday, the governor urged action as quickly as possible to distribute the federal aid to uplift Kentucky's economy.
"The sooner we deploy the resources from the American Rescue Plan Act, in combination with our vaccination program, the sooner the economy will recover and create jobs so that people can return to work," Beshear said.
Lawmakers have allocated $250 million in federal money to expand broadband service to underserved areas in Kentucky. But they haven't tipped their hand on how they would spend the rest of the federal assistance.
Beshear agrees with lawmakers on the amount for broadband. But he vetoed language in a budget bill that would allow only $50 million of the $250 million to be spent before April 1, 2022. That limitation would put Kentucky at a "competitive disadvantage" when states will be competing to "purchase and run fiber," the governor said in his veto message.
As part of his plan to spend the federal money, the governor proposed allocating $475 million in direct aid to qualifying low-income households. It would provide $500 assistance payments to individuals with adjusted gross incomes of $25,000 or less and couples earning $50,000 or less, based on their 2019 state tax returns. The payments would be exempt from state taxation.
Beshear proposed another $200 million in assistance to qualifying small businesses suffering revenue losses from the pandemic. Those payments similarly would be exempt from state taxation.
The governor's proposal calls for spending $500 million on water and wastewater projects — part of infrastructure improvements that Beshear says can be completed with the federal aid.
The assistance "gives us an opportunity to provide clean drinking water to every single Kentucky county," Beshear said this week. "It provides us the opportunity to have sufficient water and sewer to support the type of jobs that we want in eastern Kentucky and everywhere else. It gives us the type of funding to run fiber and provide broadband to every single home in our commonwealth."
His plan calls for using $50 million of federal money to provide assistance payments to the lodging sector and entertainment venues tied to the hospitality industry. Another $50 million would go for tourism marketing to help accelerate the tourism industry's recovery from the pandemic.
Another $575 million would go to repay a federal loan that kept the state's unemployment insurance program afloat when it faced an unprecedented surge in claims last year due to the pandemic.
And he proposed using $241 million of the federal money for COVID-19 testing, personal protective equipment and other mitigation efforts to combat the virus. Another $100 million would go to help nonprofit organizations that suffered financial setbacks from the pandemic.
Under the capital projects portion of the federal aid, the governor proposed spending $127 million to build new schools and renovate others.
Beshear vetoed the budget language preventing him from spending the federal relief without legislative approval. He said it violates the federal constitutional provision that says federal law takes precedence over state law.
"As a federal law, the American Rescue Plan Act will determine the circumstances of how it can be implemented," the governor said.
If lawmakers don't reach final decisions on how to spend the federal money, it could create a need for a special legislative session later in the year to make those decisions.
Parts of Beshear's new plan mirror his proposal in January that called for a quick infusion of virus-related assistance for small businesses and nonprofits, school construction and repayment of the unemployment insurance system loan. That proposal didn't make any headway in the legislature.