# How Kentucky’s rainy day fund showered nearly $2 billion on towns and counties **Published:** 2026-06-22T09:00:03.000Z **Source:** [Kentucky Lantern](https://kentuckylantern.com/2026/06/22/how-kentuckys-rainy-day-fund-showered-nearly-2-billion-on-towns-and-counties/) **Republished from:** [Kentucky Lantern](https://kentuckylantern.com/2026/06/22/how-kentuckys-rainy-day-fund-showered-nearly-2-billion-on-towns-and-counties/) (CC BY-NC-ND 4.0) **Canonical:** https://kentuckylantern.com/2026/06/22/how-kentuckys-rainy-day-fund-showered-nearly-2-billion-on-towns-and-counties/ By McKenna Horsley, [Kentucky Lantern](https://kentuckylantern.com) · June 22, 2026 The Republican-controlled Kentucky General Assembly backed a multitude of one-time spending projects this year — $5 million for the Louisville Zoo to build a trail system, $11 million to construct a convention center in Frankfort, millions to help small counties and cities restore or replace aging water systems. Those are just pieces of [House Bill 900](https://apps.legislature.ky.gov/record/26rs/hb900.html), which directs more than $1.7 billion from the state’s “rainy day fund,” or the [budget reserve trust fund account](https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=22575) which is based on the state’s previous revenues. The 2024 legislative session was the first budget session where GOP lawmakers filed a separate one-time spending bill from the state’s budget bills. Legislators who spoke to the Kentucky Lantern say that process isn’t going away anytime soon because it comes from a known revenue number, rather than future economic projection. They also said that over the course of two years between state budget sessions, they meet regularly with local government officials, group leaders, lobbyists and more to review funding requests. Projects that are backed by one-time funding typically have a state-wide or regional impact — particularly if it will spur economic growth. Some of the projects in HB 900 weren’t tied to a specific locality, like $11.4 million to be distributed between general aviation airports. [](https://kentuckylantern.com/2026/04/01/gop-controlled-legislature-gives-final-passage-31-billion-executive-branch-budget/kentucky-lrc-public-information-29/)Sen. Chris McDaniel, R-Ryland Heights. (LRC Public Information) The rainy day fund has become more flush in recent years, partly because of increased revenues and partly because of [reductions in state funding](https://www.lpm.org/news/2026-04-02/kentucky-lawmakers-pass-32b-state-budget-send-to-gov-beshear). which has paved the way for more one-time spending options. Its original goal was to cover any pressing economic issues, like a natural disaster, that the state could face and not swamp the regular operating costs. “We found that the budget reserve trust fund was dramatically exceeding what reasonably should be held in the budget reserve trust fund,” said Sen. Chris McDaniel, the Ryland Heights Republican who chairs the Senate Appropriations and Revenue Committee. In 2023, the rainy day fund reached new heights because of [record tax revenues](https://kentuckylantern.com/2023/08/02/kentuckys-rainy-day-fund-reaches-new-heights-due-to-tax-revenue-surplus/) collected in the previous fiscal year. Kentucky’s fund ranked as the sixth richest among all states as a percentage of general fund expenditures at the time. The fund was [$3.7 billion](https://kentuckylantern.com/2025/10/31/beshear-puts-5-million-into-kentucky-food-banks/) in October. After this legislative session, that number sits at about $2.6 billion in unobligated funds. McDaniel said that the rationale behind filing a one-time spending bill that is separate from the state budget was to “distinguish one-time spending from recurring operational spending.” “You could merge them into a singular bill, but we wanted there to be a very bright line between the regular recurring spending of the government and one-time investment,” he said. #### What’s in there? The legislature chose to fund a project in almost every Kentucky county, though some of the projects will have state-wide or regional impact. For instance, the City of Maysville is getting $18 million to build a new water treatment plant that will serve Mason, Fleming, Lewis, Robertson, Bracken, Nicholas, Harrison and Pendleton counties. Maysville Mayor Debra Cotterill told the Lantern that the city needed the project to increase water quality and capacity in the area. Because of Maysville’s location next to the Ohio River, the city’s water system provides water to nearby local water districts, and others have also asked to be connected. [](https://kentuckylantern.com/2025/08/21/kentucky-could-be-on-the-eve-of-a-data-center-boom-but-in-mason-county-details-are-sketchy/img_1943/)A mural in downtown Maysville, the county seat of Mason County, Kentucky. (Kentucky Lantern photo by Liam Niemeyer) “Part of our plant was actually built in the 1800s,” she said, and upgrading the original system would limit future capacity. While the system will serve existing residents in the area, Cotterill said the project will aid in future growth. She said the city had “lost out on a few economic development opportunities because we didn’t have the water capacity.” “That benefits across the state, not just our region, when it comes to the tax dollars, with adding industry here, and jobs, and payroll, and so forth,” she said, adding that city officials made that point with lawmakers when meeting with them about the funding request. She said connections with the city’s local lawmakers, Republicans Rep. William Lawrence and Sen. Steve West, were also key to securing the funding. On the other side of the state, the City of Edmonton is getting $6 million to support its own wastewater treatment plant upgrades and improvements. “We have been fighting an aging sewer plant for years. We ‘band-aid’ it, so to speak. … We just don’t have the sewer funding to cover the cost of redoing it completely,” said City Clerk Dawn Devore, who told the Lantern that the city asked for the funding via an application and also spoke with their local lawmakers — Republican Rep. Amy Neighbors and Sen. Max Wise. Kentucky’s capital city, Frankfort, received $11 million in this year’s one-time spending bill to build a new convention center. The previous one [was demolished](https://state-journal.com/2018/01/10/city-greenlights-capital-plaza-demolition/) in 2018 as part of a plan to redevelop the Capital Plaza area downtown. In 2024, [the General Assembly](https://frankfort.ky.gov/m/newsflash/home/detail/261)greenlit a separate $11.25 million for the project. Frankfort Mayor Layne Wilkerson said while the project will help the city, it is also important for the state. Part of the goal for the city is to provide a meeting space, but also draw in more tourism with overnight stays for conventions. “We would like to make this a roughly equal partnership between the city and the state, because both entities are going to benefit from this,” he said. He said the city told lawmakers about steps Frankfort has taken to support a new convention center, such as building a new parking structure and transit center and creating a tax increment financing district in the area. Both Edmonton and Maysville didn’t retain a lobbyist this session, but Frankfort did. Wilkerson said that city officials also spoke with local lawmakers as well to garner support for the funding and had about seven different meetings on the project this time. The City of Frankfort’s lobbyists are John Cooper and Wes Southworth of Capital Link Consultants. [](https://kentuckylantern.com/img_6986/)An empty parcel of land in downtown Frankfort is slated to be the home of a future convention center. (Kentucky Lantern photo by McKenna Horsley) When asked if the process is easy to request funding from the legislature, Wilkerson said no, because often “you’re asking for a lot of money, and it’s a big commitment from the state.” “There’s so many competing interests throughout the state, and of course, every mayor thinks that their project is worthy,” he added. “I wouldn’t say it’s easy, but I think if you have a good case to make that you can be successful.” Bob Babbage, a prominent Lexington lobbyist, said that when it comes to the process on requesting funds, legislators give strict guidelines about projects they are looking to fund and the state budget has been in a “financially strong” position the last couple of budget cycles. “These really do need to be one-time expenditures with legacy-making, difference-making potential, and with a broad level of support — local, regional and other,” Babbage said. Babbage, who did help facilitate some funding requests this year, said lawmakers are “scrupulously fair and take a great deal of time to listen and to understand” what goals are behind projects.” #### Louisville Another mayor that advocated for state funding this year was Louisville Mayor Craig Greenberg. The city got the largest chunk of the funding in HB 900. It’s also the state’s largest city with [nearly 650,000 residents](https://www.census.gov/quickfacts/fact/table/louisvillejeffersoncountymetrogovernmentbalancekentucky/PST045225). Some of the funds going to Louisville Metro Government include $90 million to revitalize Louisville’s downtown and $3 million to revitalize the 4th and Oak Corridor. More than $189 million in HB 900 is being distributed to Jefferson County, though not all of that is for the local government. Some funding is also going to organizations that are headquartered in Louisville, but have a statewide impact, such as $5 million for [Dare to Care Foodbank](https://daretocare.org/about/) to build a new warehouse. The food bank supports 13 counties in Kentucky and Indiana. Other entities in Jefferson County that received money include the University of Louisville, the Louisville Zoo, the Louisville Ballet and the Louisville Muhammad Ali International Airport. Matt Mudd, Greenberg’s press secretary, said in a statement to the Lantern that the state’s investments “are proof of what can happen when people put politics aside and focus on what’s best for communities like Louisville.” Greenberg is a Democrat. “What benefits Louisville benefits the entire commonwealth of Kentucky,” Mudd said. “Mayor Greenberg has maintained a consistent presence in Frankfort, and since taking office has prioritized building strong, productive relationships with leaders on both sides of the aisle.” Mudd added that the results of those relationships have been “two budget sessions that delivered significant state funding for projects that revitalize downtown, improve public safety, strengthen infrastructure, and support the community partners that serve Louisville residents.” Greenberg was “proud to advocate for investments that benefit Louisville residents, whether they flow through Metro Government or the organizations and institutions that expand opportunity across our community.” One Jefferson County lawmaker, House Republican Whip Jason Nemes, of Middletown, said that Greenberg “has worked well with the General Assembly.” “He works across the aisle with legislative leaders and key persons in the legislature, and that’s very helpful. The previous mayor was allergic to the legislature, and so it was a very unhelpful relationship for Louisville,” Nemes said. Greenberg’s predecessor was Greg Fischer. Nemes also believes that it was helpful for Jefferson County to have strong representatives in the majority party. The Republican Whip also pushed back on the idea that Louisville got an “unfair” share over other Kentucky communities. He said that while Louisville makes up 18% of Kentucky’s population, the amount that Louisville received in HB 900 “is nowhere near 18%.” Nemes later added that the city has never gotten “dollar for dollar” back in state funding. “New York City shouldn’t get dollar for dollar, Cincinnati or Cleveland shouldn’t get dollar for dollar, Louisville shouldn’t either,” he said. “But we are entitled to get something of a portion of the money that we help pay for too.” [](https://kentuckylantern.com/img_5220/)Louisville Mayor Craig Greenberg speaks at child abuse prevention rally to kick off Child Abuse Prevention Month at at Family & Children’s Place in Louisville on April 2, 2026. (Kentucky Lantern photo by Sarah Ladd) #### How do lawmakers decide? Kentucky’s budgets are decided every two years, and in between those sessions, lawmakers get funding requests from their constituents back home. Nemes, who also represents parts of Oldham and Shelby counties, said he’s typically aware of funding requests before they are made from his district because he checks in with local leaders. The conversations begin usually late summer after a budget session. “Most people might think it’s the glitzy and the glamorous,” he said of the perception of one-time spending. “It’s not that at all. We want to show return on investment.” McDaniel said that the “easiest points of agreement” tend to be projects with statewide impact. Also projects where local governments or organizations have agreed to cover some costs on their end also is an incentive for lawmakers to get on board. “Local matches always help because it indicates genuine desire by the local constituency and genuine skin in the game,” he added. Sen. Amanda Mays Bledsoe, a Lexington Republican who is the vice chair of Senate A&R, told the Lantern that an example of a project that will also leverage federal funding is the project to relocate an air traffic control tower at Bluegrass Airport. HB 900 allocated $5 million in state funding toward that. She added that a lot of other projects in her district, particularly the rural areas, involved infrastructure. Bledsoe added that it is difficult to balance the needs between rural areas where there are less population and higher infrastructure needs with economic drivers in more urban areas of the state, but lawmakers must manage that balance when projects are discussed. “I think moving forward I would hope we continue to advocate for larger projects that are infrastructure one-time based that spur on economic development in the regions,” she said, like the Golden Triangle between Lexington, Louisville and Cincinnati. Lexington, the state’s second largest city, is in Fayette County. It received about $58 million in the one-time funding bill for projects based there. #### Enough transparency? This year, the projects in the one-time spending bill were [publicly unveiled](https://kentuckylantern.com/2026/04/01/gop-controlled-legislature-gives-final-passage-31-billion-executive-branch-budget/) after the bill went to a conference committee between the House and Senate. Before that, [both chambers](https://kentuckylantern.com/2026/03/10/kentucky-house-oks-plan-to-spend-801-million-but-doesnt-specify-what-for/) approved [one-page versions](https://kentuckylantern.com/2026/03/18/kentucky-senate-unanimously-passes-31-billion-state-budget-and-810-million-in-one-time-spending/) of the bill that did not list details about where the funding could ultimately go. The process hasn’t been to everyone’s liking, as some argue it prevented public review of the funding before lawmakers decided the legislation. The League of Women Voters of Kentucky, a group that annually reviews transparency in the state legislature, has argued that Kentuckians were “cut out” of the legislative process on this year’s budget bills. In [an April op-ed](https://kentuckylantern.com/2026/04/22/kentuckys-budget-process-was-basically-trust-us/)written by the League’s president, Jennifer Jackson, she said HB 900 “began as a one-page bill on March 4, with broad language and little detail about plans to spend $800 million.” “It moved quickly through committee and on the floor with few substantive changes,” Jackson continued. “When the House and Senate could not resolve their differences, a conference committee replaced the bill with a 58-page version that called for spending $1.7 billion, a more than two-fold increase in taxpayer dollars. Specific projects to be funded were not detailed until the final, last-minute version, when meaningful review was not possible.” McDaniel said that the process to nominate projects is “always very transparent,” as individuals and agencies can lobby members of the General Assembly and can submit a request form for funding that is then weighed by lawmakers. “Some are big, some are small, but we think that we found a good uniform process that provides for the maximum amount of transparency possible, and then ultimately, appropriately distributes the funding roughly by House district and Senate district,” he said. The new process may get more difficult as the rainy day fund shrinks, said Jason Bailey, executive director of the Kentucky Center for Economic Policy. “The pandemic stimulus created a large, temporary surplus and lawmakers chose to make permanent cuts to our largest revenue source, the individual income tax, and fund a bunch of local projects with the proceeds,” Bailey said. “Now the rainy day fund is greatly reduced and the bill for the tax cuts has come due. “As a result, lawmakers won’t be able to keep that up that generous local spending in future sessions. The money left in the rainy day fund now has to be preserved for rainy days we know from past experience are coming at some point, whether it be a recession or more natural disasters.” But McDaniel said that the current one-time spending process is here to stay, calling it a “very good mechanism” to review those dollars and projects. “As long as it comes from the budget reserve trust fund, then we know it’s a prior year’s excess,” he said. “Anytime that we start to throw those things into a budget bill, you’re dealing with forecast revenues rather than actual.” Babbage said from the lobbyist perspective that he hopes one-time spending does continue in the future, depending on economic conditions. “I’d be hopeful, seeing what we see right now, that there could be additional one-time expenditures considered, but that’s more wishful thinking than grounded in economic data,” he said. [YOU MAKE OUR WORK POSSIBLE. 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