Gov. Beshear Reverses General Assembly’s Medicaid Cuts, Directs More Dollars Toward Michelle P Waiver Slots and Senior Meals

Funding available through unbudgeted and unexpected budget surplus and corporate income tax payments; Governor also takes steps to restore Road Fund

FRANKFORT, Ky. (July 22, 2026) - Today, Gov. Andy Beshear announced that Kentucky's surging economy has resulted in an unexpected influx of state funds that he will apply to reverse the General Assembly's cuts to Medicaid, further support senior meals, and close the gap and fund additional costs for Michelle P. Waiver slots. The funding is made available through an unbudgeted $476 million budget surplus and an unexpected amount of corporate income tax payments totaling over $350 million. The Governor also announced his administration has identified a source of funding to restore the Road Fund following his executive order to temporarily reduce the state gas tax.

"Thanks to strong fiscal management by my administration and an economic surge for the state late in the fiscal year, we have more than $781 million in surplus funds available right now to correct mistakes made by the General Assembly," said Gov. Beshear. "I am taking action and using these unexpected funds to prevent the 4% cuts to Medicaid, further invest in senior meals, and help families on the Michelle P. Waiver. These investments are the right thing to do - and we still have over $400 million in unexpected dollars remaining, which I will deposit into our Budget Reserve Trust Fund."

Medicaid, Michelle P. Waiver Slots and Senior Meals
Since the General Assembly passed the state budget in April, Kentucky has suffered from major budget cuts to Medicaid, behavioral health services and senior meals. While the Governor put forward a budget in January that funded the Department for Community Based Services; maintained both the full funding and full services for health providers; fully funded Medicaid; expanded the number of Michelle P. Waiver slots for families of children with autism; and provided the dollars needed for senior meals, the Republican supermajority created and passed their own budget.

In the months since, the Governor and his administration have taken steps to address the cuts as they have been able, but the lack of budgeted funding has caused these to be "Band-Aid" fixes that required further action from the General Assembly.

Today's news that the state received an unprecedented amount of corporate income tax payments totaling over $350 million, combined with the Governor's announcement in early July that his administration secured the seventh consecutive budget surplus, provided the Governor and his administration enough funding to address devastating cuts and underfunding in the General Assembly's budget. This additional funding was unbudgeted and unexpected following the official budget estimate in December 2025, which called for a $156 million revenue shortfall.

The Governor shared today that he will:

• Apply $255 million from the unbudgeted funds to close the Medicaid gap and reverse the General Assembly's cuts;
• Close the gap and fund the additional costs of existing Michelle P. Waiver slots that were underfunded;
• Add an additional $4 million to the senior meals program for fiscal year 2027; and
• Deposit over $400 million of the unexpected revenue to the state's Budget Reserve Trust Fund.

The Governor was joined by Dr. Steven Stack, secretary of the Cabinet for Health and Family Services, who spoke on the importance of this funding.

"In the budget that the General Assembly passed, there were numerous shortfalls. For Medicaid, not a single new dollar was provided to sustain inflationary growth over the next two years. These are cuts we do not want to be forced to make and I'm very grateful that Gov. Beshear is announcing action today that will make it possible to avoid some of the worst impacts," said Dr. Stack. "Because of the Governor's actions, we will not be implementing a 4% Medicaid provider fee schedule cut. I want to thank the Governor for his leadership and for his unwavering commitment that healthcare is a fundamental human right. But legislative action remains necessary in the next session. To all those who have spoken up: Please continue to advocate about the importance of these services in your life."

Dr. Matthew Burchett, an optometrist based in Richmond, also joined the Governor and discussed the challenges of providing care for rural communities: "I want to thank Gov. Beshear for recognizing the importance of maintaining strong access to health care for Kentucky's Medicaid patients. When Medicaid remains strong, patients receive care before small problems become large ones. In my own practice, I see this every day. Medicaid allows children to receive comprehensive eye exams, and glasses they need to succeed in school. And for working-age adults, good vision is essential to earn a living. The funding announcement today is especially meaningful for rural Kentucky."

Rebecca Lowe, a Frankfort parent whose 8-year-old son, Finn, has autism, was at today's briefing to talk about the importance of Medicaid for her family and others like them.

"This past year, Finn's Medicaid was cut. Over the last year, we have spent $30,860.50 of our own money just to keep Finn safe," Lowe said. "We have to choose between services for our son and basic daily living costs. Kentucky families deserve better. Finn may be nonverbal, but his mama's not. I will continue to use my voice to speak for Finn and others with different abilities for the rest of my life."

While Gov. Beshear is taking steps to address the cuts, future reductions still pose a threat to these essential services that Kentucky's most vulnerable depend on. The Governor and Dr. Stack encouraged individuals and providers to continue to speak out on why the General Assembly should continue to prioritize this funding in the future.

To contact their legislators, Kentuckians can click here.

Restoring The Road Fund
Following the news on Medicaid, the Governor also announced that his administration has identified a source of funding coming to the state that can restore $18 million to Kentucky's Road Fund.

"I believe that government is here to help our people. When others raised concerns about the hit to the state road fund when I lowered the gas tax to help our families with rising gas and diesel prices, I shared that I would find a way to make up any potential hit," said Gov. Beshear. "Today, I am proud to share that we've found the dollars that will restore revenue with counties and cities that might have seen an impact."

Recognizing the strain rising gas prices were putting on Kentucky families, the Governor took several steps in early May to provide relief.

First, the Governor signed an emergency regulation to freeze the gas tax at 26.4 cents per gallon ahead of an expected increase to 27 cents per gallon on July 1. The action was projected to save Kentuckians about $1.7 million combined each month.

Gov. Beshear also signed an executive order declaring a state of emergency related to gas prices. The order reduced the gas tax by 10 cents, resulting in a 10 cents per gallon price decrease for Kentuckians. The order was expected to save Kentuckians $26.8 million combined over a one-month period. The Governor also extended the executive order through June 30 for communities where local officials made a request.

To enforce the reduction and ensure providers didn't keep the 10 cents, Gov. Beshear also activated the state's price-gouging statute.

The Governor also sent two letters urging leadership in Congress and members of Kentucky's congressional delegation to suspend the federal gas tax until the end of the year.

In a proactive step, the Governor also signed an executive order to freeze the 2026 motor vehicle assessment rate ahead of an expected increase on Jan. 1, 2027.

These actions came just weeks ahead of a May 27, 2026, price decrease in Jefferson County and parts of Bullitt and Oldham counties after the Governor's request to the U.S. Environmental Protection Agency for the Louisville area to be removed from the federal Reformulated Gasoline Program received approval in February. For 30 years, Kentuckians living in these counties were paying 10 to 25 cents more per gallon.

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