LEXINGTON, Ky. — The Kentucky General Assembly approved the state's spending plan for the next two fiscal years Wednesday, with House Bill 500 passing the Senate 38-0 and the House 73-21, according to the Kentucky Legislative Research Commission.

The executive branch budget prioritizes what lawmakers described as "disciplined fiscal management" while making key investments in public education, health care, infrastructure and public safety, said Rep. Jason Petrie, R-Elkton, chair of the House Appropriations and Revenue Committee.

The legislation allocates $6.2 billion in general fund dollars toward Medicaid over the two-year period, with an additional $290 million reserved for future contingencies. The budget also includes 2% salary raises for state employees in both fiscal years 2026-27 and 2027-28, and increases the school funding formula, known as SEEK, to $4,626 per pupil in the first year and $4,792 in the second year.

Other provisions include increased contributions to public pension and retirement systems to reduce long-term liabilities, and funding for the Dolly Parton Imagination Library with emphasis on children in foster care.

Despite bipartisan passage, some House Democrats raised concerns about adequacy of funding for mental health services and Medicaid. Rep. Lisa Willner, D-Louisville, noted that student mental health funding has not increased since 2020 and expressed disappointment that a proposed juvenile justice facility for high-acuity youth in mental crisis was not included.

House Minority Floor Leader Pamela Stevenson, D-Louisville, argued the budget contains a "known gap of $400 million" in Medicaid funding despite state resources to cover it. House Speaker Pro-Tempore David Meade, R-Stanford, countered that allocated funds plus the $290 million backstop provide adequate resources.

The General Assembly also passed three companion bills Wednesday: House Bill 501 for the transportation cabinet budget, House Bill 503 for the legislative branch budget, and House Bill 504 for the judicial branch budget. All four measures now await the governor's consideration.