Kentucky state lawmakers convene in Frankfort today for the start of the legislative session, where they will craft the next two-year state budget.
Experts said it will be challenging to address an anticipated budget shortfall and new costs expected from the rollback of funding for federal programs many Kentuckians depend on.
Jason Bailey, executive director of the Kentucky Center for Economic Policy, said families are stretched thin and funding for some services, like the popular Meals on Wheels program, was only restored after public backlash.
"What is decided for the budget is very consequential for services that Kentuckians rely on and things they care about," Bailey explained.
After years of surplus state revenue, Kentucky is expected to see a shortfall of around $156 million, according to Consensus Forecasting Group, and a new report from the Kentucky Center for Economic Policy said the state’s budget woes partly stem from an imbalanced tax system.
Bailey added new costs are being shifted onto Kentucky, particularly for SNAP, the program helping more than 500,000 kids, older adults, people with disabilities and low-wage workers put food on the table. Under the Trump administration, the state will be required to pick up the tab for SNAP, around $180 million per year, by 2028.
"We're talking about a potentially very large new outlay of resources that the General Assembly is going to have to find," Bailey stressed. "At the same time that, again, revenues are slowing down."
According to the center's analysis, the wealthiest 5% of Kentuckians now pay around $3 billion less a year in state and federal taxes under changes made a few years ago. The report’s authors said restoring a graduated income tax could help pull the state out of the red.