The 1st meeting of the Task Force on Economic Development of the Interim Joint Committee on Economic Development and Tourism was held on Thursday, October 13, 2005, at 9:00 AM, at Oakland Farm, Lexington, Kentucky. Representative Ruth Ann Palumbo, Chair, called the meeting to order, and the secretary called the roll.
Present were:
Members: Representative Ruth Ann Palumbo, Co-Chair; Senator Julie Denton; Representatives James Carr, Jim DeCesare, Brad Montell, Fred Nesler, and David Osborne.
Guests: Dan Considine, Manager, Considine Farm, Incorporated.
LRC Staff: John Buckner, Committee Staff Administrator.
Dan Considine, manager of Considine Farm, Inc., gave a presentation of the farm's operations. Mr. Considine said that the farm was rather typical of a thoroughbred farm in central Kentucky. The farm is approximately 325 acres and is leased from Oakland Farm. There are eight full-time employees and part-time labor is employed depending upon seasonal requirements.
Considine Farm is one of the leading farms in the region for importing and exporting horses. While most of this business centers upon thoroughbred racehorses, they do ship and receive all breeds, from Arabians to English Shires. Mr. Considine said that it is not unusual for the farm to ship entire planeloads of thoroughbred racehorses to Europe, Japan, Australia, New Zealand, Saudi Arabia, and many countries through the Caribbean and South America.
Shipping and receiving horses from international locations requires quarantining horses for varying lengths of time depending upon the governmental requirements of the countries involved. Some nations require a fourteen-day quarantine, others over thirty days. During this time, a horse must be physically separated and kept isolated from all other horses that are outside of its shipment group. This is done to insure that the animals do not have any contagious disease that might be of danger to other horses upon their arrival.
Mr. Considine said that extreme caution is taken at every step of the process to guarantee the validity of the quarantine, and he said that veterinarians from the United States Department of Agriculture routinely inspect the farm.
The farm is also involved with thoroughbred breeding operations. Mares and stallions are shipped to the farm, and foaling is another aspect of the farm's operations.
Representative Montell asked what actions the legislature could take that would help horse farms in Kentucky. Mr. Considine said that the sales taxes placed upon items used by horse farms is one thing that is particularly egregious. He said that if he buys hay for his cattle, he does not have to pay sales tax on the hay; however, if he purchases the identical hay for horses, then sales tax must be paid. This situation applies to all goods used in horse farming. Mr. Considine said that his farm uses tens of thousands of dollars annually in hay and feed for horses, and because the profit margin is so small, sales tax relief would be very helpful to small-scale horse farms.
Mr. Considine gave an example of purchasing wood shavings for use in stalls--if he purchases wood shavings from a vendor in Indiana, he does not have to pay sales tax; if wood shavings are purchased from a Kentucky vendor, then an extra six percent must be paid in sales tax. This has the effect of encouraging Kentucky horse farmers to make purchases from out-of-state vendors.
Mr. Considine also discussed how more thoroughbred breeding is being done outside of Kentucky. He said that this is largely because of the sales tax levied against stud fees. The tax percentage is particularly hard on breeders using stallions having lower stud fees--the percentage increase in the cost attributable to state tax makes any potential profit margin much less attractive.
Mr. Considine said that it was very ironic that the thoroughbred racehorse is the state's signature icon and what the rest of the world associates with Kentucky; however, the state does so little to help the horse industry.
The committee then toured Considine Farm, and the meeting adjourned at 10:00 AM.