Due to an unexpected inflow of state dollars, Governor Andy Beshear announced Wednesday that he intends to use that surplus to avoid what he calls cuts to Kentucky Medicaid program and other programs.
The influx of state funds is reportedly made available through an unbudgeted $476 million budget surplus and an ‘unexpected amount’ of corporate income tax payments, which were over $350 million. Following passage of the state budget by the Kentucky General Assembly earlier this year, numerous agencies have been called to make budgetary cuts, including to Medicaid, the Cabinet for Health and Family Services, the Department of Public Health and more.
With this unexpected windfall, the governor announced that he will apply $255 million to Medicaid, an additional $4 million to the senior meals program for the 2027 fiscal year, depositing over $400 million of the unexpected revenue to state’s Budget Reserve Trust Fund. It will also expand the number of Michelle P. Waiver slots for families of children with autism.
Governor Beshear says these funds weren’t expected, but they are welcome, and while this might normally call for action from the General Assembly, he’s taking them at their word that has more ‘flexibility’ to make this happen.
He says this reversal of funds will help Kentucky families immediately, and he calls it the right thing to do.
This additional funding was unbudgeted and unexpected following the official budget estimate in December 2025, which called for a $156 million revenue shortfall.
Dr. Steven Stack, the Commissioner of Public Health, says this will allow them to avoid the worst of the budget cuts that were anticipated.
The governor also announced that his administration has identified a source of funding to the state that he will used to restore $18 million to the State Road Aid Fund. This will hopefully help offset some of the loss of funding that accrued when the governor froze the gas tax in May and the reduction of the gas tax by 10 cents.
That move was to help lower gas prices that had risen during the ongoing conflict between the United States and Iran.