A proposal to create a breeders' incentive fund for Kentucky and a modification on the tax of yearlings and 2-year-olds is one step closer to reality after the state Senate unanimously approved Gov. Ernie Fletcher's tax bill 37-0 Feb. 28.
The bill now goes before a conference committee, where key members of the House and Senate will attempt to resolve any differences before each chamber takes a final vote.
David Switzer, executive director of the Kentucky Thoroughbred Association, said the conference committee could meet no sooner than tomorrow afternoon (Wednesday) or Thursday morning.
Switzer said he did not expect any changes to the breeders' incentive portion of the bill or to the tax on yearlings and 2-year-olds. "As far as the breeders' incentive program is concerned," he said, "I wouldn't think there would be any changes because it was in the House version the same way it was in the Senate version."
The language calling for three breed development programs in Kentucky remained the same in the Senate bill as was originally introduced in the House bill. The bill calls for three breed development programs: one for Thoroughbreds, one for Standardbreds, and one for all other breeds.
The money from the program would come from an existing 6% tax on stud fees that generates about $14 million a year. That money, which now goes to the state's general fund, would go to establish the breed development funds.
The Kentucky Thoroughbred Breeders' Incentive Fund would get 80%, the Kentucky Standardbred Breeders' Incentive Fund 13%, and the Kentucky Horse Breeders' Incentive Fund 7%.
Based on typical tax receipts, the Thoroughbred fund could see $11.2 million. Money for the programs could begin accruing July 1, should it pass the conference committee and move on to both chambers without any changes.
As for the tax on the sale of yearlings and 2-year-olds, Kentucky residents would continue to pay the 6% sales tax on all horses bought at public auction, but non-residents would no longer need to remove the horses from the state within a certain amount of time to be exempt from the tax.