Budget Highlights: Investing in Rural Kentucky

By Representative Daniel Elliott

Our commonwealth has experienced tremendous growth over the past seven years, despite the impact of the pandemic and nearly crippling inflation. However, we still have far to go in ensuring that all communities have an opportunity to improve the quality of life for their residents. Of course, the needs differ from community to community, as urban, suburban, and rural Kentuckians have different priorities and different goals. For example, rural areas face challenges like limited access to healthcare, education, and employment opportunities. Infrastructure, including roads and internet connectivity, is often underdeveloped.

Economic instability, population decline, and an aging population further strain limited resources. Additionally, rural communities often struggle with retaining young talent and attracting investment for sustainable growth. With these challenges in mind, lawmakers have been working to identify ways to support the efforts already going on in rural Kentucky, as well as incentivize future efforts.

One of the most effective ways to do so is to use the budget as a tool for building up our rural communities. This does not mean subsidizing failed programs, but rather finding what works and figuring out how we can build on it. Here are a few examples of the funding initiatives that will benefit rural communities included in this year’s budget, HB 6.

• Includes an additional $1.23 million for additional staff positions within the Kentucky Infrastructure Authority.
• Provides an additional $30.8 million in FY 25 and $25.3 million in FY 26 for expansion of the Clean Water State Revolving Fund
• Increases funding by $84.7 million in FY 25 and $41.1 million in FY 26 for expansion of the Drinking Water State Revolving Fund
• Includes an additional $217.2 million in FY 25 and $868.9 million in FY 26 for broadband deployment as part of the federal Broadband Equity Access and Deployment Program (BEAD)
• Provides $2 million over the biennium for a one-time addition to the Kentucky Mountain Regional Recreation Authority (for a total of $1.75 million in FY 25 and $1.25 million in FY 26
• Increases funding for the Rural Mental Health, Suicide Prevention, and Farm Safety Program by $500,000 in each fiscal year and moves the program to the Department of Agriculture
• Appropriates funding of $150,000 in FY 25 to create a comprehensive agricultural plan
• Increases funding by $153,900 in FY 24, $443,900 in FY 25, and $443,900 in FY 26 for additional personnel for emergency preparedness within the Department of Agriculture
• Increases support by $1.5 million over the biennium to hire additional personnel for regulatory field services within the Department of Agriculture.

In addition to HB 6, HB 1 includes $260 million for water and wastewater infrastructure projects in the first year, with another $84.7 million in the second year; $35 million in each fiscal year for airport capital improvements across the state; $100 million in each fiscal year for the GRANT program; $50 million in each year to support approved mega-development projects; $10 million in each year to the Kentuckiana Works program to support workforce training; and $35 million in each fiscal year towards economic development efforts through the Kentucky Product Development Initiative.

We also approved legislation aimed at supporting local communities, including:

Water or Wastewater Assistance for Troubled or Economically Restrained Systems (WWATERS):

HB 563 is aimed at helping struggling rural water and wastewater systems that do not qualify for normal funding. The measure creates two revolving loan funds. The first will address maintenance and upgrade needs and can be awarded as a grant, loan, no-interest loan, or forgivable loan. The second is an emergency fund to restore service after disasters.

Expanding economic development opportunities in rural Kentucky:

Attracting jobs and economic investment to rural Kentucky has to be a priority to ensure success throughout the state. HB 13 updates the Kentucky Product Development Initiative (KPDI), a program designed to help local communities develop potential economic development sites, to make it more accessible to smaller counties. We also provided $35 million in each year of HB 1, an investment bill.

Matching funds through the Kentucky GRANT program:

Lawmakers created the Kentucky Government Resources Accelerating Needed Transformation Program (GRANT) program to help communities match the funds required to obtain access to federal grants. Rural communities throughout the Commonwealth often struggle to obtain federal assistance because they lack the money necessary for a required match. We provided more than $200 million in the previous budget to use as seed money, and continue to emphasize what an opportunity the program is. After some evaluation, it appears the program would be a better fit for the Economic Development Cabinet than it is for the Department of Local Government.

As always, I can be reached anytime through the toll-free message line in Frankfort at 1-800-372-7181. You can also contact me via e-mail at Daniel.Elliott@lrc.ky.gov and keep track through the Kentucky legislature’s website at legislature.ky.gov .

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