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. Instead, it would receive a $3.5 million increase this fiscal year, plus an additional $1.6 million each year of the next two-year budget.
State officials told lawmakers Tuesday that the money was needed to cover operational shortfalls that stem from utility costs for roughly 264,000 square feet of new facilities built at the park for 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 wanted to know more about the park's long-term business plan.
"I am concerned," he 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 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 $2 million to $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 million 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 probably 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 typically has been self-sustaining and not needed General Fund appropriations.