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Kentucky Horse Park needs millions from state to balance budget

January 25, 2012 | | Comments 4

By Linda B. Blackford and Beth Musgave
lblackford@herald-leader.com

As most state agencies brace for dramatic budget cuts, the Kentucky Horse Park could be getting millions of additional dollars.

In Gov. Steve Beshear’s recommended budget, the Horse Park faces no budget cuts, and instead would receive an additional $3.5 million increase this fiscal year, plus another $1.6 million each year of the next two-year budget.

State officials told lawmakers on Tuesday that the funds are needed to cover operational shortfalls that stem from utility costs for roughly 264,000 square feet of new facilities built at the park in anticipation of the 2010 Alltech FEI World Equestrian Games.

Lawmakers said they want to hear more before agreeing to increase the park’s funding.

House budget committee chairman Rick Rand, D-Bedford, said Wednesday he wants to know more about the park’s long-term business plan.

“I am concerned,” Rand said about the appropriation. “We’re going to take a good look at the Horse Park.”

State Budget Director Mary Lassiter met with Rand’s committee on Tuesday and went over the governor’s budget proposal. Although there have been more events at the Horse Park since the World Equestrian Games, Lassiter said there also are more operational costs associated with running the new facilities.

“The expectation is that they will catch up,” Lassiter said.

John Nicholson, executive director of the Horse Park, said the current-year shortfall was caused in part by the opening of an indoor arena in 2009, well before it was booked with revenue-producing events. The arena’s utility costs are about $500,000 a year, he said.

In addition, the park has attracted fewer competitors and fewer tourists than expected since the 2008 recession, which has hurt the park’s bottom line.

The park has never been entirely self-supporting. It has received General Fund money — typically between $2 million and $3 million a year — since its creation in 1978.

When Kentucky received the bid for the World Games, lawmakers agreed to spend $80 million for new roads and facilities, including a $40 million indoor arena that would allow the park to host many more events.

Not counting the World Games —which created $18.4 million in state taxes — the park’s overall contributions to state and city coffers far outweigh its appropriations, Nicholson said.

According to state studies, Nicholson said, new events in 2011 added $44 million to the economy and generated $4.2 million in state taxes. In 2010, the total economic impact of Horse Park activities was $179 million, along with $17.1 in state taxes, he said.

“The Kentucky Horse Park continues to return many more dollars to the General Fund than it ever asks for,” Nicholson said. “In the future we will be in a sustainable situation, and I think we can get in the black.”

The park has booked 24 new events through 2013, in addition to the regular shows and competitions it hosts on an annual basis. The park also contains the headquarters of 33 equine organizations.

“We certainly are sensitive to the budgetary environment,” Nicholson added. “But it’s important to remember the Kentucky Horse Park is a net contributor to the General Fund, so it is actually in a position to help that situation, not hurt it.”

In contrast, most state agencies have been asked to take an additional 2 percent funding cut this fiscal year. Beshear’s proposed two-year budget — unveiled earlier this month — calls for an 8.4 percent cut to many agencies in the first year and provides the same amount of money in the second year.

Rep. Susan Westrom, a Lexington Democrat, has long championed the Horse Park and the World Equestrian Games. Westrom said Beshear had to look at the overall budget and likely decided the Horse Park was a good investment for taxpayers.

If the Horse Park is forced to cut its marketing or other budgets, it could lose additional revenue in the future, she said.

“The investment that we are making in the Horse Park is going be paid back over the long run,” Westrom said.

First Lady Jane Beshear is another Horse Park champion. She has been involved with the facility since its beginnings, served on the World Games board and is a long-time member of the Kentucky Horse Park Foundation board.

Beshear spokeswoman Kerri Richardson said in a statement Wednesday that the first lady and the governor “understand the sizable economic impact the park provides and will continue to provide for the state.

“As the economy recovers and additional events are booked, we fully expect these facilities to become self sufficient,” Richardson said. “More importantly, the events and activities at the park bring significant tourism dollars to the Lexington area and the state, which do not show up on the Horse Park’s books, but are reflected in our sales taxes, which are improving.”

The Horse Park is not the only tourism agency that’s suffering. Beshear also is asking for an additional $5.5 million to cover a shortfall this fiscal year at the Kentucky Fair Board. The closing of Kentucky Kingdom, a Louisville amusement park, has resulted in a loss of about $2 million in revenue for the fair board. The board also lost $550,000 in rent after a hotel adjacent to the fairgrounds in Louisville was demolished, Lassiter said.

In the past, the fair board has typically been self-sustaining and not needed General Fund appropriations.

Filed Under: KY General AssemblyRick RandState BudgetState GovernmentSteve Beshear

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  1. Average Democrat says:

    The Horse Park is sucking money out of the state budget now because its expansion for the World Equestrian Games is costing more money than the public was told.

    The Fair and Exposition Center also needs a handout now because it has lost so many events to the KFC Yum Center. There is a line item in the budget to give millions to the KFEC as a result – another future cost not disclosed to the public during the selling of the Louisville Arena project.

    The tax increment financing district for the KFC Yum Center is not producing the revenue that its backers claimed it would. Now the city of Louisville and the state are going to be on the hook for additional costs in the millions of dollars for that as well.

    When will Kentuckians wise up and stop allowing so much public money to be spent for private gain and without adequate or honest disclosure of costs? Kentucky does not have the money to continue paying for these things – Kentucky presently does not even have the money for adequate education and law enforcement.

    Next up: casino gambling legislation that earmarks millions for the already-wealthy owners of racetracks, horse farms and racehorses. As with the horse park expansion and new arena in Louisville, the public will be given a fake, exaggerated projection of revenues. Once it is approved, the state will end up with less money than projected because the take for the horse set will be much bigger than was disclosed by the backers of gambling.

    If the horse industry was so vital, it could survive on its own. It cannot, because its participants are constantly asking the state for handouts. The state of Kentucky should not be subsidizing the horse industry, or any other industry. The state should not be acting to assist private enterprise like that.

    No more handouts!

  2. David Adams says:

    In case you needed any more reasons to get state government out of the tourism business, here are a few good ones.

  3. Buck Feshear says:

    So, Mr. Adams, are you advocating that Kentucky sell all its state parks to private entities?

  4. David Adams says:

    Buck, the state park system is a luxury. And it’s a good one, though with a limited constituency. We could better afford luxuries such as state parks if we were more thoughtful about the benefits we provide as a state to limited constituencies and why we provide them.