Division of the Budget
Landon State Office Building Phone: (785) 296-2436
900 SW Jackson Street, Room 504 larry.campbell@ks.gov
Topeka, KS 66612 Division of the Budget http://budget.kansas.gov
Adam Proffitt, Director Laura Kelly, Governor


January 27, 2021


The Honorable Adam Smith, Chairperson
House Committee on Taxation
Statehouse, Room 185A-N
Topeka, Kansas 66612
Dear Representative Smith:
SUBJECT: Fiscal Note for HB 2091 by House Committee on Taxation
In accordance with KSA 75-3715a, the following fiscal note concerning HB 2091 is
respectfully submitted to your committee.
HB 2091 would create a new refundable food sales tax credit and repeal the existing non-
refundable food sales tax credit beginning in tax year 2021. The new tax credit amount would be
determined by tax filing status and could be claimed by all taxpayers with income at or below the
following federal adjusted gross income levels:
Filing Status Income Level Credit Amount
Single $30,000 $ 60
Head of Household 40,000 180
Married Filing Jointly 40,000 240
Married Filing Separate 30,000 60
The bill would allow the income level and tax credit amounts to be adjusted annually
beginning in tax year 2022, according to the cost-of-living adjustments from the federal Internal
Revenue Service (IRS). The bill would require each county treasurer to include information from
the Department of Revenue about claiming the refundable food sales tax credit in the annual
property tax statement. The Department of Revenue would have the authority to write rules and
regulations to implement the bill.
The Honorable Adam Smith, Chairperson
Page 2—HB 2091

Estimated State Fiscal Effect
FY 2021 FY 2021 FY 2022 FY 2022
SGF All Funds SGF All Funds
Revenue -- -- ($53,900,000) ($53,900,000)
Expenditure -- -- $229,934 $229,934
FTE Pos. -- -- -- 3.00
The Department of Revenue estimates that HB 2091 would decrease State General Fund
revenues by $53.9 million in FY 2022, $55.5 million in FY 2023, and $57.2 million in FY 2024.
To formulate these estimates, the Department reviewed tax return data from tax year 2019.
The Department created a simulated tax table for all taxpayers that would be eligible for the new
refundable food sales tax credit. The Department of Revenue estimates that more than 540,000
tax returns would claim $63.9 million in new refundable food sales tax credits beginning in FY
2022. The Department estimates that the number of tax returns grows approximately 1.0 percent
each year and the cost of living adjustment would increase by 2.0 percent each year.
The bill would repeal the current non-refundable food sales tax credit after December 31,
2020. The current non-refundable food sales tax credit is restricted to taxpayers that earn $30,615
or less and are over the age of 55, or disabled or blind, or have at least one dependent under the
age of 18 living with them the entire year. Under the provisions of the federal Tax Cut and Jobs
Act of 2017, the IRS no longer collects the number of dependent exemptions claimed on federal
income tax returns, which places the burden to verify and audit dependent exemption data for the
current food sales tax credit on the Department of Revenue. The Department of Revenue indicates
that 70,090 taxpayers claimed $9,847,101 in non-refundable food sales tax credits in tax year 2018.
Repealing this tax credit would save approximately $10.0 million in State General Fund refunds
in FY 2022.
The net effect of repealing the current non-refundable food sales tax credit and creating the
new refundable food sales tax credit are estimated to reduce State General Fund receipts by $53.9
million in FY 2022 ($10.0 million for repealing the current non-refundable food sales tax credit
minus $63.9 million for the new refundable food sales tax credit).
The Department of Revenue indicates that it would require a total $229,934 from the State
General Fund in FY 2022 to implement the bill and to modify the automated tax system. The bill
would require the Department to hire at least 3.00 new Customer Service Representative FTE
positions to review and process state returns that include the new refundable food sales tax credit.
The required programming for this bill by itself would be performed by existing staff of the
Department of Revenue. In addition, if the combined effect of implementing this bill and other
enacted legislation exceeds the Department’s programming resources, or if the time for
implementing the changes is too short, additional expenditures for outside contract programmer
services beyond the Department’s current budget may be required.
The Honorable Adam Smith, Chairperson
Page 3—HB 2091

The Department of Administration indicates that adjusting state income tax collections has
the potential to have a fiscal effect on the amount of revenue collected from its debt setoff program.
This program intercepts individual income tax refunds and homestead tax refunds and applies
those amounts to debts owed to state agencies, municipalities, district courts, and state agencies in
other states. Debts include, but are not limited to child support, taxes, educational expenses, fines,
services provided to the debtor, and court ordered restitution. As the dollar amounts of refunds
are increased, the amount available for possible debt setoffs is also increased. However, the
Department is unable to make an estimate of the additional debts setoffs that will be intercepted as
a result of the bill. Any fiscal effect associated with HB 2091 is not reflected in The FY 2022
Governor’s Budget Report.
The Kansas Association of Counties indicates that the bill would require county treasurers
to include additional information with the annual property tax statement. The Association
indicates that the bill would likely require counties to incur programming and coding costs to
include this information with the annual property tax statement. However, the Association did not
provide a precise estimate of the amount of additional programming and coding costs for counties.


Sincerely,

Adam Proffitt
Director of the Budget

cc: Lynn Robinson, Department of Revenue
Jeff Scannell, Department of Administration
Jay Hall, Association of Counties


Statutes affected:
As introduced: 79-32