2026 Legislative Session Update: Key Policy Priorities

With ten legislative days remaining in the 2026 session, Commerce Lexington continues advocating for policies that strengthen the region’s economic competitiveness and quality of life. Priority issues include housing, talent attraction and retention, and childcare for working families, along with strategic budget investments to support long-term regional growth.
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State Budget:
The General Assembly is advancing major spending bills: House Bill 500 (Executive Branch budget), House Bill 900 (one-time project spending) and House Bill 502 (transportation project). 
 
House Bill 500 outlines more than $30 billion in state budget spending over the next two years starting July 1, 2026.  The House approved an amended version following several weeks of budget review subcommittees.  The Senate advanced its version this week.  Because the House is unlikely to concur with Senate changes, legislative leaders will negotiate differences in a conference committee. ​

House Bill 900 appropriates approximately $800 million from the Budget Reserve Trust Fund for state and local projects and is expected to serve as the vehicle for one-time investments.  The Senate version of House Bill 900 makes minimal changes, increasing total spend from $801 million to $810 million. However, the bill lacks specificity regarding how funds will be allocated, identifying only broad project categories.  This bill is also likely to be addressed in a conference committee. 
 
Commerce Lexington continues to advocate for strategic investments that support long-term economic growth and regional competitiveness. Key priorities include continued funding for the Kentucky Product Development Initiative (KDPI) and a pilot talent attraction marketing grant program.  The Chamber is also advocating for targeted one-time investments in high-impact projects such as the Blue Grass Airport terminal expansion, infrastructure for Expansion Area 3 to support new housing development, a new Children’s Museum, and regional business park infrastructure to increase shovel-ready sites. Continued investment in the University of Kentucky is also a priority, including asset preservation and a new interdisciplinary research facility bringing together expertise in science, engineering, and computational fields.

Tax and Revenue Legislation:
House Bill 757 proposes changes to Kentucky’s tax structure. The bill redefines sales tax obligations for remote sellers based solely on sales volume, expand taxable services such as data brokering, and establish new excise taxes on activities including fantasy contests and predictive markets. The legislation also modifies several tax credits and incentive programs, phases out certain tax increment financing participation,  establishes new taxes or limits affecting tobacco products, and natural resource industries.  The legislation prohibits school districts from levying additional occupational licenses taxes. 

Housing Affordability:
Housing affordability and supply remain critical challenges for the Lexington region, which needs more than 20,000 additional housing units to meet workforce demand. Commerce Lexington supports Senate Bill 9, sponsored by Senator Amanda Mays Bledsoe, which would create new infrastructure financing tools to support housing development. The bill passed the Senate and is awaiting action in the House. Additional housing legislation addressing regulatory barriers - including House Bills 530, 617, and 618 - also remains under consideration. House leadership has indicated provisions from multiple bills may be combined into a comprehensive housing package.

Talent Attraction:
House Bill 576, sponsored by Representative Robert Duvall, co-chair of the Workforce Attraction Taskforce, establishes the Kentucky Talent Recruitment Grant Program, allowing communities and economic development organizations to apply for funding to support talent attraction and student retention initiatives. Commerce Lexington supports HB 576 as an important first step toward a statewide strategy to position Kentucky as a premier place to live and work.  The grant program also provides an opportunity for additional funding support for the Greater LEX talent initiative.  The bill passed the House and now awaits Senate action.

Childcare Accessibility:
Childcare access remains a significant workforce issue, with median annual costs exceeding $12,000 in many Kentucky counties. House Bill 6 and House Joint Resolution 50, sponsored by House Families and Children Chair Samara Heavrin, aim to strengthen the state’s childcare system and support workforce participation. Key provisions would make Kentucky’s free childcare program for childcare workers permanent, enhancing the Employee Child Care Assistance Partnership, which allows employers to help cover childcare costs while receiving a state match. The legislation also addresses issues including childcare workforce development, faith-based childcare providers, military families, and improvements to the Kentucky All STARS quality rating system. House Joint Resolution 50 requires a comprehensive review of childcare regulations. Both proposals await action by the full Senate.

Additional legislation includes Senate Bill 160, sponsored by Senate Families and Children Chair Danny Carroll, which would provide greater regulatory flexibility for providers and additional support for new childcare centers during startup.  This bill awaits action by the full House. 

Commerce Lexington will continue working with legislators in the final weeks of the session to advance policies that support economic growth, workforce development, and a strong quality of life in the Bluegrass region. The General Assembly is scheduled to remain in session over the next two weeks, followed by a 10-day veto recess. Lawmakers will then return to Frankfort for the final two days of the 2026 legislative session on April 14 and April 15, when final action on legislation and potential veto overrides will occur.