Kentucky Gov. Ernie Fletcher, will include provisions for breed development in tax plan.

Kentucky Gov. Ernie Fletcher, will include provisions for breed development in tax plan.

Associated Press

Kentucky Tax Plan Includes Breed Provisions

A tax modernization plan unveiled by Kentucky Gov. Ernie Fletcher during his "state of the commonwealth" address Tuesday night includes provisions for breed development programs for the horse industry.

Sen. Damon Thayer said the package has changed somewhat since he first floated it in mid-January. It now calls for three breed development programs: one for Thoroughbreds, one for Standardbreds, and one for all other breeds. An earlier proposal lumped the Standardbreds in with all other breeds.

The money for the programs would come from an existing 6% tax on stud fees that generates about $14 million a year in Kentucky. That money, which goes to the state's general fund, would go to 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%, Thayer said. Based on typical tax receipts, the scheme would produce $11.2 million for Thoroughbreds, $1.8 million for Standardbreds, and almost $1 million for other breeds.

The splits and the decision to have three funds rather than two came about after discussions with members of the Kentucky Equine Education Project, a multi-breed organization that seeks to educate the public and lawmakers on the importance of the horse to the state's economy, as well as representatives of each breed. KEEP's legislative wish list includes breed development programs.

"I've been working the last 10 days (on the proposal) with KEEP and the Fletcher administration," Thayer said.

Should the tax modernization plan be approved by the legislature and include the breed development provisions, money for the programs would begin to accrue July 1. Monthly payments would be made based on tax receipts.

The Kentucky Horse Racing Authority, which would administer the funds, would then have six months to solicit input from the breeding industry and devise a structure and regulations for the programs, which would officially begin Jan. 1, 2006.

Thayer said language that would have eliminated a tax on the sale of yearlings and 2-year-olds in Kentucky isn't part of Fletcher's tax modernization plan. However, that tax has been modified under new language. Kentucky residents would continue to pay the tax, but non-residents would no longer need to remove the horses from the state within a certain time period to be exempt from the tax.

In an earlier interview, Thayer said elimination of a tax on feed, fencing, and farm equipment wasn't in the mix for the current legislative session.