Page 1 of 2 LRC 2024-BR193-HB42
COMMONWEALTH OF KENTUCKY FISCAL NOTE STATEMENT
LEGISLATIVE RESEARCH COMMISSION
2024 REGULAR SESSION
MEASURE
2024 BR NUMBER 193 HOUSE BILL NUMBER 42
TITLE AN ACT relating to a sales and use tax exemption for veterans' service animals.
SPONSOR Representative Emily Callaway
FISCAL SUMMARY
STATE FISCAL IMPACT: YES NO UNCERTAIN
OTHER FISCAL STATEMENT (S) THAT MAY APPLY: ACTUARIAL ANALYSIS
LOCAL MANDATE CORRECTIONS IMPACT HEALTH BENEFIT MANDA TE
APPROPRIATION UNIT(S) IMPACTED:
FUND(S) IMPACTED: GENERAL ROAD FEDERAL RESTRICTED
FISCAL
ESTIMATES
2023-20234 2024-2025 2025-2026 ANNUAL IMPACT AT
FULL
IMPLEMENTATION
REVENUES (Indeterminable) (Indeterminable) (Indeterminable)
EXPENDITURES
NET EFFECT (Indeterminable) (Indeterminable) (Indeterminable)
( ) indicates a decrease/negative
PURPOSE OF MEASURE: HB 42 proposes to exempt from sales and use tax any veterinarian
services and charges sold to or purchased by a disabled veteran in relation to the veteran's service
animal. "Service animal" includes only dogs or miniature horses that are individually trained to do
work or perform tasks that are directly related to the disability and for the benefit of an individual
with a disability.
FISCAL EXPLANATION : In order to estimate the potential fiscal impact of 2024 Regular
Session HB 42, it is necessary to determine the number of disabled veterans who have a service
animal and the associated costs of veterinarian services and charges in relation to the veteran’s
service animal.
There are approximately 74,100 veterans in Kentucky with a disability service rating based on 2021
data from the US Department of Veterans Affairs, which is the most recently available data. To
estimate the number of veterans in Kentucky with a disability service rating in 2025, the 2021 data
was inflated by the growth rate between the two years of most recently available data. After inflating
the 2021 data, it is estimated there will be approximately 77,400 veterans in Kentucky with a
disability rating in 2025. To the extent the number of veterans in Kentucky with a disability rating in
2025 differs, the actual fiscal impact will differ from the estimate. However, no data exists regarding
the number of veterans who have a service animal. Page 2 of 2 LRC 2024-BR193-HB42
According to the American Society for the Prevention of Cruelty to Animals, the average cost for
canine routine medical expenditures in 2021 was approximately $225. Routine medical expenditures
include, but are not limited to, vaccines and wellness visits. To estimate the average cost for canine
routine medical expenditure in 2025, the 2021 data was inflated by the Consumer Price Index for
veterinary services. After inflating the 2021 data, it is estimated that the average cost for canine
routine medical expenditures will be approximately $320 in 2025. To the extent the average cost of
canine routine medical expenditures in 2025 differs, the actual fiscal impact will differ from the
estimate.
If it were assumed that every disabled veteran in Kentucky had a service animal, then at a maximum
and with full implementation, the sales tax loss would be approximately $1.5 million. Because the
implementation date of HB 42 is August 1, 2024, only ten months of collections would be realized in
FY 2025. Therefore, the maximum sales tax loss in FY 2025 would be approximately $1.2 million.
This assumes that every service animal is a dog and every dog incurs the average routine medical
costs mentioned above. To the extent that average medical costs are different, the sales tax loss
would differ. To the extent that disabled veterans have a small horse as a service animal, the sales tax
loss would differ.
The estimate likely represents the maximum impact because it is unlikely that every disabled veteran
in Kentucky has a service animal. Since the number of disabled veterans in Kentucky with service
animals is unknown, and the total veterinary expenditures by disabled veterans in Kentucky with
service animals is also unknown, the potential sales tax loss associated with HB 42 is negative and
indeterminable.
DATA SOURCE(S): US Department of Veterans Affairs, the American Society for the Prevention
of Cruelty to Animals, LRC Economists and Appropriations and Revenue Staff
PREPARER: Katy Jenkins NOTE NUMBER: 39 REVIEW: JH DATE: 2/1/2024