Kentucky has allocated half of its federal stimulus money. Where will the rest go?

This article was originally posted by Daniel Desrochers on the Herald-Leader.

When Kentucky lawmakers learned they would be receiving more than $2.4 billion in federal stimulus money, imaginations started running. It was the legislative budgeting equivalent of winning the lottery — an unexpected windfall and they didn’t even have to do the dirty work of raising taxes.

“We need to think big and we need to think bold,” said Senate President Robert Stivers, R-Manchester.

He spoke with a yearning desire about the possibilities for economic development that could come with the money. He talked about the University of Pittsburgh Medical Center, which gets millions in grant funding from the National Institutes of Health. He talked about Boston, which is currently experiencing a boom of research and development jobs that are transforming the seaport area of the city. He talked about North Carolina’s research triangle, with its low unemployment rates.

By the time the General Assembly wrapped up its session Tuesday, it had allocated about $1.3 billion of the federal money Kentucky is set to receive.

Most of the money went to the urgent — but less glamorous — needs of the commonwealth: $300 million for broadband access in under-served communities; $250 million for clean drinking water and better wastewater infrastructure; $575 million to pay off the state’s unemployment insurance loans from the federal government; $127 million for upgrades at school facilities.

“I think we’re off to a good start,” Gov. Andy Beshear said Wednesday, adding that he thinks the money for clean drinking water will be “transformational.”

The next challenge is figuring out what to do with the rest. While lawmakers have painted pictures of using the money to create the booming economy of tomorrow, there are still lingering questions about how they can even spend the money.

“I think we have to wait for more federal guidance,” said Senate Minority Leader Morgan McGarvey, D-Louisville. “We want to make sure we are meeting people’s needs and spending money now, but we also have to make sure we’re using the money wisely for investments in the future.”

Federal restrictions on the money have brought some of the soaring ideas down to earth. In talking about some of their ideas, lawmakers focused largely on infrastructure — things like water and broadband — along with using investments in research to spark economic development.

On Wednesday, Beshear said he was pushing for the legislature to provide direct relief to small businesses and people who have struggled during the pandemic — a discussion, he said, that has mostly centered around the other sources of help those people have been able to receive.

His goals were echoed by House Minority Leader Joni Jenkins, D-Shively, who said she wanted to use the money for Kentuckians who lost income because of the pandemic.

House Speaker David Osborne, R-Prospect, urged caution.

“I know that there will be a rush to appropriate the remaining money but we have the opportunity and obligation to contemplate policies that will benefit Kentuckians for generations,” Osborne said in a written statement.

Sen. Reggie Thomas, D-Lexington, also said the legislature still needs to figure out how the money can be spent, but advocated for spending even more on internet connectivity and infrastructure, such as clean drinking water.

“Kentucky needs to use this money to get ahead of the curve,” Thomas said.

Several lawmakers have raised the possibility of using the money to promote research, which they say will bring in federal grants and cutting-edge jobs. Like Stivers — who raved about the University of Kentucky’s research building which was funded in part in the 2018 legislative session — Jenkins suggested a public-private partnership to promote new research.

“Using this hybrid approach, we can leverage public money with private donations and set up a series of proven programs that communities could tap into as they see fit,” Jenkins said in a written statement. “This could be used to increase tourism, or to buy workforce training equipment, or to expand parks, or to rehabilitate a community eyesore.”

Both the governor and lawmakers have been cagey about whether there will be a special legislative session this year to allocate the money. Because the state has until 2024 to spend much of it, lawmakers could wait to allocate the remainder of the money during next year’s session.

Beshear, who is the only one able to call a special session, may be reluctant to bring the legislature back without a firm deal on how the money would be spent.

“It’s too early to say whether we will need a special session,” Beshear said Wednesday.