Governor Ernie Fletcher’s Communications Office
Governor Fletcher Announces Support of Income Tax Exemption for Active Military Personnel

Press Release Date:  Tuesday, January 30, 2007  
Contact Information:  Jodi Whitaker

Governor also announces plans for enhanced veterans’ benefits

FRANKFORT, Ky. – Governor Ernie Fletcher today announced his support for the complete exemption of active duty and reserve military pay from Kentucky income tax.

The income tax exemption, for both federal and state military pay, would result in an average tax savings of $954 for each of the state’s 10,684 active duty military members.  

Kentucky’s 12,725 reservists and Kentucky National Guard personnel called to active duty would also benefit from the exemption with an average tax savings of $458 for each member of a reserve military component.  

Governor Fletcher made the announcement in front of more than 100 members of the Kentucky Army National Guard who returned to Louisville today following a year-long deployment to Afghanistan.

“Kentuckians always have answered the call to military duty when their country needed them,” Governor Fletcher told the soldiers.  “You understand what it is to hold patriotism deep in your heart and to answer a call to be part of something larger than yourself. Today we recognize your accomplishments.”

The soldiers of the Louisville-based Headquarters and Headquarters Company, 198th Military Police Battalion arrived at the Kentucky Air National Guard Base, and were greeted by a crowd of supporters.  The unit had been in charge of detainee operations at the coalition airbase in Bagram, Afghanistan.

The exemption would be effective on January 1, 2008.

The exemption would have no fiscal impact in FY07 and would result in a tax expenditure of $8.6 million in FY08.

Governor Fletcher also announced his support for several veterans’ initiatives.  They are:

  • Bonding the $6 million expansion of the Western Kentucky Veterans Center in Hopkins County. In 2006, the Kentucky General Assembly authorized construction of a 40-bed wing to the West Kentucky Veterans Center.  The budget appropriated state bond funds of $1,757,000 to be used to match of federal funds which may be delayed.  Governor Fletcher’s proposal would provide $4,249,000 in additional bond funding so that the facility can be constructed immediately, with the understanding that the federal funds will be received after the construction is concluded. The facility will accommodate the region’s existing waiting list for veterans.
  • $2.5 million for individual loans to Kentucky veterans up to $10,000. During the last legislative session, the Kentucky General Assembly enacted HB 314 to establish a veterans’ personal loan program trust fund within the Kentucky Department of Veterans Affairs (KDVA). The bill authorized KDVA to lend up to $10,000 to qualified veterans, a deceased veterans’ unremarried spouse or the qualified child of a veteran. The legislature, however, appropriate no funds to this program. Governor Fletcher proposes funding this program with $2.5 million.
  • Establishment of a veteran’s advocate within the Kentucky Department of Veterans Affairs to assist veterans through the state government application and interview process. Governor Fletcher’s proposal includes $61,100 to fund a staff position to assist the Personnel Cabinet in assuring and facilitating compliance with the state merit system’s veterans’ preference requirements.
  • Establish a conservator program within the Kentucky Department of Veterans Affairs to help disabled Kentucky veterans who receive benefits but are not able to manage their financial affairs. 

“These proposals are our way to remember our debt to all who have currently wear and those who have worn the uniform of the United States Armed Forces and the Kentucky National Guard,” said Governor Fletcher.  “As a veteran and as Commander in Chief of the Kentucky National Guard, it is my duty to do everything I can to help you — the Commonwealth’s new veterans.”

Governor Fletcher will visit Hopkinsville this afternoon to further discuss these initiatives.