Ruairi Kern Taylor (25) was sentenced to three years and three months’ imprisonment in December last year and, because of the time spent behind bars on remand, immediately became eligible for parole.
The board, though, in a decision provided to the Otago Daily Times, declined early release.
"Mr Taylor has indulged in rather unusual behaviour which has caused risks to others," panel convener Jim Thomson said.
"We believe that it is essential that he receive help to lessen this risk."
Police laid a charge of attempted murder against Taylor after he told a Corrections staffer that he planned to decapitate his victim and wave the disembodied head around so he would be shot by other officers.
The woman who interviewed him said the man became animated and "smirked" as he talked about his intentions.
"I’ve been planning to kill someone for three to four months before I did it," Taylor said.
"This was the first police officer I came across that was a good target."
The Crown, however, dropped the attempted murder allegation and the defendant admitted a raft of other charges.
Taylor quit his job at a Tapanui business on September 4, 2019, bought a tomahawk from a shop in Gore, strapped a knife to his leg and set off in his Subaru, the court heard at sentencing.
He found Constable Steven Treloar, who was sitting in his patrol vehicle, having pulled over a motorist.
The defendant blasted "religious music" on his stereo and slammed into the back of the stationary police car.
The injured Const Treloar called for back-up and fled from the axe-wielding criminal on foot.
Taylor - who told the Parole Board he was not a practising Muslim - yelled "Allahu Akbar" (God is great) but gave up the pursuit after 40m.
He returned to the vacant police car and smashed it up with the weapon, causing more than $30,000 worth of damage, before he was arrested.
When interviewed, Taylor suggested "he was a victim in some way and that his actions were the fault of the failing mental health services", panel convener Jim Thomson noted.
While at the Otago Corrections Facility, the inmate had been in directed segregation, due to concerns about his mental health and the risk he might pose to other prisoners.
But he was described as "generally compliant".
Mr Thomson directed a psychological assessment before the next parole hearing in June.
It would look at Taylor’s level of risk and how he may best be managed while behind bars, as well as assessing potential release proposals.
