FRANKFORT (AP) — A legislative committee on Wednesday bet on a longshot bill to provide tax relief for Kentucky’s horse industry, choosing it over a more modest option with a smaller price tag amid lean budgetary times.
The House Agriculture and Small Business Committee approved a version that would exempt horse owners from paying state sales tax on feed, fertilizers, machinery and other items used in their operations.
The industry and its supporters say it the bill is fair, given that other livestock sectors in Kentucky are exempted from paying the state’s 6 percent sales tax on some costs of operations.
Republican Rep. Steven Rudy said producers of alpacas, llamas, buffalo, emus and ostriches receive those exemptions, but the tax breaks don’t apply to the state’s world-renowned equine sector.
“It is ridiculous that for this many years, our signature industry has been treated like a stepchild,” he said.
Rudy and other committee members insisted on advancing the much broader and costlier tax exemptions for the horse sector, despite the bill’s long odds at a time when much of state government is facing budget cuts.
The broad range of sales tax exemptions would deprive the state of an estimated $34.6 million annually. Horse industry supporters say the tax breaks would spur greater economic activity that would largely offset the lost revenue. But similar bills died in past years because of their impact on the state’s treasury.
Due to the hefty price tag, the bill’s lead sponsor, Democratic Rep. Mike Denham, proposed more modest tax relief. His alternative would have exempted equine medications from the state sales tax. That version would cost the state about $3.5 million each year in revenue, he said, making it more realistic in austere times.
He said it was a more pragmatic approach that might have a chance of becoming law.
“I’ve been down here long enough to know that a bite of the apple is better than no apple at all,” said Denham, a veteran lawmaker who has pushed for the broader tax breaks for the horse industry for years.
But the committee balked at the more limited proposal, which didn’t receive a vote.
The more ambitious version that advanced is expected to be referred to the House Appropriations and Revenue Committee, which will consider tax-related measures while also crafting its version of a state spending plan in coming weeks. The horse industry so far has been left out of another bill under review that would apply the sales tax exemption for medications to other livestock sectors.
The equine bill is House Bill 112.