LEXINGTON, Ky. — The Kentucky General Assembly passed HB 869 on the final day of the 2026 legislative session, approving new tax credits and subsidies for real estate developers and alternative fuel producers in a rushed approval process that critics say lacked transparency and public input.

The legislation was one of two voluminous revenue bills enacted in less than two weeks. Lawmakers approved the measure after the Republican supermajority passed a $32 billion state budget and directed $1.7 billion in spending from the budget reserve trust fund in what critics characterized as last-minute decision-making without adequate committee review.

Real estate developers emerged as the biggest beneficiaries under HB 869, which establishes a new refundable and transferable tax credit for the redevelopment of mixed-use buildings in urban areas. The credit amounts to 20 percent of rehabilitation expenses with a $25 million cap per developer and an annual overall cap of $50 million. These credits do not require developers to create jobs, maintain Kentucky operations or have any tax liability to receive payments.

The legislation also provides new income tax credits for alternative jet fuel and agriculturally based jet fuel producers, building on existing subsidies already available to the industry. The new credit is capped at $20 million annually and begins in 2029, placing its fiscal impact outside the current budget period. Commercial airports would receive rebates of up to 75 percent of sales taxes paid on such fuels with no cap on the incentive.

Combined, the three credits will reduce annual revenues by $74 million when fully phased in, drawing down state funds even as the approved budget requires most state agencies to absorb a 4 percent cut in 2027 and an additional 3 percent cut in 2028.

The rush to pass the legislation created complications. Twelve of the 73 sections in HB 869 were required solely to correct errors from HB 757, the revenue bill passed just 11 days prior. One provision in HB 757 initially included language broad enough to provide sales tax credits for regular race meets at tracks like Churchill Downs and Keeneland before HB 869 narrowed the scope to golf events only.

The bills were approved through a "free conference committee," a process allowing final non-amendable votes without public oversight in the session's waning hours. Critics argue the rapid legislative pace removes the public from the equation and creates error-prone decision-making where special interests hold sway.