Port Authorities, the Budget, Medicaid, HB 1 and More!

2026 Legislative Update #3

The 2026 session of Kentucky's general assembly is now in full swing! A lot of substantive issues to cover in this edition.

Please keep in touch during session. The legislative calendar is updated daily online. Constituents can contact me via the General Assembly’s Message Line at 1-800-372-7181. Kentuckians with hearing loss can use Kentucky Relay by dialing 7-1-1. La línea telefónica en español para obtener información legislativa es 1-866-840-6574.

The deadline for bill filing comes next week. The House will have until March 4 to introduce new bills. The Senate deadline is March 2.

Why are we spending $125 million to move the Chase law school?

On Thursday, I filed HB 761 to modernize Kentucky's Riverport Authority Statute. This legislation is a pro-growth measure aimed at expanding economic development tools while strengthening transparency and governance of Kentucky’s Riverport Authorities.

The bill was prompted by mounting concerns over the Northern Kentucky Port Authority’s role in relocating Northern Kentucky University programs from Campbell to Kenton Counties.

I believe the proposal to move Chase College of Law and the University of Kentucky medical program from NKU’s main campus to a so-called Commonwealth Center for Biomedical Excellence in Covington is a tremendous waste of taxpayer dollars. At a time when Kentucky faces a tight budget and potential cuts to higher education in HB 500, we cannot justify spending $125 million to move a couple programs six miles down the road, and without adding new jobs to Northern Kentucky or without any public accountability.

The original proposal and appropriation from Kentucky’s General Fund appeared in a very late version of the state’s budget in 2024 without any apparent substantive feedback from NKU, UK, Campbell County, Highland Heights, or Covington.

Originally intended to be located on a lot at the old IRS site owned by Covington, the NKY Port recently rejected Covington’s below-market offer of $2.3 million and instead has chosen to pay $3.8 million for a lot owned by the Butler Foundation. This price is reported to be more than twice the asking price on a per-acre basis than the other considered sites and more than twice the sale price of other sites sold or under contract in Covington’s Central Riverfront area.

The proposed project creates unresolved financial exposure issues for NKU, including questions about potential lease structures. Kentucky public universities traditionally build and own projects directly, or through their foundations, and finance them through bonds issued through state mechanisms. Using the NKY Port is an unprecedented development model.

Highland Heights and Campbell County stand to lose out on current occupational tax revenue from the relocation of faculty. And NKU’s tax-exempt status means Covington Independent Schools will lose out on much needed property tax revenue that would have otherwise been collected from one of the city’s most valuable properties.

Oversight concerns driving reform

Currently, Kentucky statute authorizes Riverports to “establish, maintain, operate, and expand necessary and proper riverport and river navigation facilities” and other activities to attract river-oriented industry (KRS 65.530). The NKY Port does not appear to be acting within the guidelines set by the General Assembly.

Kentucky law does not give special purpose governmental entities such as the NKY Port a general power to transfer or delegate policy-making authority to another organization, especially not a private entity. The BE NKY Growth Partnership, an independent nonprofit corporation, claims that it currently manages the NKY Port. This is the opposite of how local governments are supposed to work in Kentucky.

Sustainable economic development requires public trust

My bill supports development that is strategic, measurable, and aligned with the long-term interests of Kentucky taxpayers. Specifically, it would expand the allowed activities of Riverport Authorities to engage in general economic development projects, ensure that the Riverport Authorities retain their policy-making power, require compliance with local comprehensive plans, clarifies the prohibition on conflicts of interest, and, for multi-county Riverport Authorities such as the NKY Port, add municipal representation to the board and require a written code of ethics.

When projects of this magnitude involve significant taxpayer investment and the long-term trajectory of public universities, the process must meet the highest standards of transparency, fiscal discipline, and public accountability. Kentucky’s competitiveness depends on disciplined decision-making and public trust.

What's next?

The proposed legislation and background have been covered in depth by WVXU and the Northern Kentucky Tribune. I expect a robust community conversation around the issue.

The bill will likely be assigned for hearings to the House Standing Committee on Transportation. I welcome any feedback on the bill as this starts the process through the legislature.

Budget Update

This week, the House passed HB 500 - the two-year spending plan for the executive branch cabinets. I voted NO. While it is certainly an improvement over the initial version of this bill, it falls far short of investing in the opportunities and services that Kentuckians need and want from their state government. On the positive side, the bill would slightly increase public school funding and fully fund teachers' retirement. However, it does not include teacher raises, fully funded senior meals, or expanded pre-K. It includes major cuts to postsecondary education, including NKU, and to the Kentucky State Police that would hinder recruitment and training of new cadets.

HB 2 would make major changes to Kentucky Medicaid and indirectly effect health insurance policies available on the exchange. It passed the House but I voted NO. Kentucky is facing cuts of $800 million to $2 billion per year in federal Medicaid funding. In order to make up for that lost funding, HB 2 attempts to cut costs in Kentucky's program by adding new cost-sharing and copays, new documentation and eligibility requirements, cuts to dental and prescription drug benefits, among other changes. Democrats proposed a solution to use part of our rainy day fund to fully fund Medicaid for a period of time until we see what the next Congress may do or until we can be more thoughtful with Medicaid reform. During floor debate, I reminded my colleagues that Kentucky Medicaid provides coverage for about one-third of Kentuckians, including many who work. From data across the country, expanding Medicaid is proven to be good for the economy. It increases entrepreneurship and increases self employment 14-22%. It helps small business - 19% of Medicaid recipients work at small businesses. A strong Medicaid program also saves us money because patients get treated earlier and don't show up later with more severe issues at emergency rooms.

HB 504, the judicial branch budget was less controversial. It passed the House and I voted YES.

These bills now go to the Senate. I expect a significant number of revisions to these budget bills in that chamber. If you have concerns about what is in these bills, now is the time to contact your Senator.

We have not yet debated our road plan & budget, the legislative branch budget, or our one-time appropriations. We will be considering these bills in the coming weeks.

Other Recent Action

SB 172 was signed by the Governor on February 19, the first bill to become law this session. I voted YES on this bill which may help reduce utility costs.

HB 1 is Kentucky’s formal opt-in to a federal tax credit program. It passed the House and Senate this last week. I voted YES primarily because it could be helpful to small independent school districts.

Congress passed a scholarship tax credit in the One Big Beautiful Bill last year. I don’t think this is good federal policy, but I am not in Congress and it is currently the law of the land. It allows for a $1700 federal tax credit if a taxpayer donates to a scholarship granting organization (SGO). SGOs can then provide scholarships for a K-12 child at any public or nonpublic school. Each state has to opt in and send a list of qualified SGOs to the federal government.

Ohio and Indiana, and 25 other states have already opted in. Right now, a Kentucky resident can donate to an Ohio SGO and get a federal tax credit. If Kentucky doesn’t opt in, we are simply leaving potential federal funding on the table that could benefit our schools.

Scholarship money could be used to help kids with extracurriculars, transportation, out of district tuition, and other fees. For example, there could be a scholarship fund set up to help out-of-district kids to pay tuition at Ft. Thomas Independent schools (currently $3800 per year). Newport Independent could use a scholarship fund to support participation in dual credit programs at NKU and Gateway.

There were several items I would have liked to change in HB 1. I believe it should be the Governor (or Secretary of Education and Labor) that vets and sends a list of qualified SGOs to the feds (not the secretary of state). I also believe there could be better guardrails with the opt-in. House democrats offered several amendments to improve this bill. Unfortunately, the bill sponsor pulled a procedural stunt preventing debate on our amendments. We have been working with Senators to try to get some changes in that chamber. I would encourage you to reach out to your Senator if you would like to see improvements to this bill.

Despite the bill's shortcomings and the flawed process, given the current federal law, I think it was better for people in Campbell County that Kentucky opts in to the program. It does not effect Kentucky taxes or our state funding for public schools. I believe this bill meets constitutional standards relating to funding of common schools laid out in recent decisions by the Kentucky Supreme Court.

Rep. Tina Bojanowski, Louisville Democrat and a public school educator, also voted YES and gave a great speech on the House floor. I deeply respect her judgement on education policy and she is planning to start her own SGO for her school.

Other bills of note that passed the House this week:

HB 141 increases Type 1 diabetes awareness education in public schools. I voted YES.

HB 168, also known as Keegan’s Law, addresses boating under the influence. I voted YES.

HB 185 seeks to reduce recidivism by making job application and occupational licensing disqualification standards more transparent. I voted YES.

HB 455 establishes guardrails for AI-assisted mental health care. This was an issue on which we heard a lot of testimony over the summer in the AI Taskforce. I appreciate the bill sponsors for working on a thoughtful bipartisan approach. I voted YES.

HB 510 expands protections for patients and families on organ donation decisions. I voted YES.

HB 521 modernizes Kentucky’s stalking statute to account for online activity. I voted YES.

As always, you can find the details of all bills and my voting record on the LRC website.

As always, I am committed to keeping my constituents up to date about what’s happening in Frankfort. I will provide regular updates throughout our 60-day session. Previous updates are archived on my Facebook page. If you have questions, concerns, or need help with some aspect of state government, please let me know.

You can reach me at matt.lehman@kylegislature.gov or leave a toll-free message at 1-800-372-7181 during normal business hours.

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