Locals say military tax exemption long overdue

By MARTY FINLEY
The News Enterprise

February 1, 2010

HARDIN COUNTY — A token of appreciation passed down from the state will save military families money in the future, and local leaders say it is a long overdue gesture.

Beginning this year, the military pay of active duty soldiers, reservists and members of the National Guard who claim Kentucky as their home is exempt from state income tax.

The exemption was signed into law late last year and received support from local legislators, including Sen. Elizabeth Tori, R-Radcliff.

"The cost of exempting active military pay from the state income tax is but a small one for state government but a real boon to military families who already are sacrificing so much for our freedom and well-being," Tori said last year. "I am so pleased, after several years of working on the issue, to finally see our efforts come to fruition."

Rep. Tim Moore, R-Elizabethtown, last week said the exemption will make Kentucky more attractive to military families and more competitive for growth, while also recognizing those who are worthy of the exemption.

The legislation languished in the Kentucky General Assembly for years as the state tabulated potential revenue losses.

But Radcliff-Hardin County Chamber of Commerce Executive Director Jo Emary said it would have been harmful for the state to nix the proposal and "clench fists" around those dollars.

"I think that would be so small of us to do that," she said.

With a significant military presence, Kentucky can benefit financially from this move by attracting and keeping military families who make their home of record in the state, she said.

"In the end, we win," she said.

More importantly, it is the step Kentucky needed to make to honor those who have sacrificed so much, she added.

The Radcliff-Hardin County Chamber of Commerce partnered with the Hopkinsville-Christian County Chamber of Commerce to push for the legislation's passage, though Emary said her chamber played a small role compared to the work Hopkinsville chamber officials did.

The Christian County area is expecting a noticeable impact in its competition with Tennessee — which has no state income tax — for military families.

Fort Campbell spreads into both states, and Hopkinsville-Christian County Chamber of Commerce Interim President Carter Hendricks said the lure of tax breaks in Tennessee drew off-post families away from Kentucky.

Since the bill's passage, the chamber has poured about $50,000 into a marketing campaign focusing on the exemption.

Hendricks hopes the chamber's campaign spurs soldiers to spread the word, too.

The area has recorded increases in its percentage of military families, and "we think this legislation would only boost that momentum," he added.

But Elizabethtown and Radcliff ultimately could see a larger return in the long term. Unlike Fort Campbell, Fort Knox is firmly planted in the state and will see little competition from another state for military families, Hendricks said.

The projected loss of $16 to $18 million statewide will be tough to combat short-term, but it ultimately should be offset by the attracted growth and dollars funneled back into the state's economy by those families, he said.

"I have no doubts it will pay for itself," he said.

Those economic impacts are still a mystery on the local level, but Elizabethtown Finance Director Steve Park said he does not foresee much effect, if any, on city revenue, a forecast echoed by Radcliff Chief Financial Officer Chance Fox.

Elizabethtown-Hardin County Chamber of Commerce President Rik Hawkins said the economy should not be the priority when discussing the exemption.

"That is secondary to the fact that it's the right thing to do," Hawkins said.

Hawkins said many military families are seemingly forgotten while their loved ones are deployed, and this is a way for the state to honor the service and sacrifice of its military population.

"I have a deep appreciation for what they do for our families," he said.

An additional tax break was recently enacted by the federal government. Known as the Military Spouses Residency Relief Act, it allows military spouses who move with service members to retain voting and tax rights in their state of record. That offer already is extended to service members.

Marty Finley can be reached at (270) 505-1762.

This story, written by Marty Finley, was provided to One Knox courtesy of The News Enterprise. Read more stories from The News Enterprise at www.thenewsenterprise.com.