As the deadline to establish regulations for a $12-million Thoroughbred breed incentive program in Kentucky fast approaches, a debate over the scope of the fund--and whether there could be political fallout--continues.Kentucky Sen. Damon Thayer, who authored the legislation that shifts about $15 million in general fund stud-fee taxes to incentive programs for Thoroughbreds, Standardbreds, and other breeds, said he planned to meet with Gov. Ernie Fletcher in early November to make the case for a Thoroughbred program that is national and international in scope. Such a scheme has the support of the Kentucky Thoroughbred Association and the Kentucky Thoroughbred Farm Managers' Club.The Kentucky Equine Education Project, meanwhile, advocates an incentive fund whereby most of the money would stay in Kentucky, at least until other revenue sources are discovered. KEEP, a multi-breed organization created to educate the public and legislators on the importance of the horse industry to the state, has gained considerable clout since it was formed in May 2004.Thayer said he has provided Fletcher's staff with statistics that support his position. Thayer said he and some staffers walked the parking lot at the recent Keeneland September yearling sale and spotted license plates from all over the country. He also said there were buyers from 45 different states."The program needs a strong national and international component," Thayer said. "There are two opinions inside the industry, and we need a compromise. But statistics show 70% of Kentucky-breds race out of state. The program needs a component that recognizes Kentucky's role as the leading producer of bloodstock in the world."Said Jim Navolio, executive director of KEEP: "We endorse a Kentucky-only program with the current funding authorized by the legislature, but we offer as a compromise that any new money go to fund a national and international (breed incentive) program."That "new money" could come from revenue from expanded gambling in the state. KEEP will make a push during the 2006 General Assembly session for casino gambling at licensed racetracks via a constitutional amendment that would dedicate revenue for state programs and the horse racing industry.KEEP, led by chairman Brereton Jones, a former Kentucky governor, contends some key state legislators could be reluctant to support the industry's gaming initiative should most of the breed incentive funds go out of state. Thayer, a Republican and executive with the National Thoroughbred Racing Association, disagrees."I think it's a red herring," he said. "I don't think (breed incentives) will have any bearing on expanded gambling. The two issues are unrelated. If expanded gaming happens--and I think that's a big if--it's going to be because Kentucky needs revenue to fund Medicaid and education. It's not going to be because the horse industry needs help."Trying to make this political is regrettable. I'm going to stick with the policy side of the issue."Fletcher is a Republican. The state Senate is controlled by Republicans, but the House is led by Democrats, including Rep. Larry Clark, the Speaker Pro Tempore who was critical of the horse racing industry when it attempted to win support for expanded gambling in 2004.One of Clark's arguments was the industry wasn't united. During a September press conference, KEEP said it not only has the support of the entire horse industry on expanded gambling, but other special interest groups as well."We definitely believe the legislature expects the general fund money it put into the incentive programs to be used to build economic development efforts in Kentucky," Navolio said.Representatives of KEEP, the KTA, and the farm managers' club continue to meet to hammer out a compromise. The Kentucky Horse Racing Authority is charged with enacting the components of the three incentive programs by Jan.1, 2006. The money for the programs began accruing in July.