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


January 25, 2022


The Honorable Adam Smith, Chairperson
House Committee on Taxation
Statehouse, Room 346-S
Topeka, Kansas 66612
Dear Representative Smith:
SUBJECT: Fiscal Note for HB 2482 by House Committee on Taxation
In accordance with KSA 75-3715a, the following fiscal note concerning HB 2482 is
respectfully submitted to your committee.
Under current law, motor vehicles rented or leased for less than 28 days are subject to a 3.5
percent excise tax and the retail sales tax. HB 2482 would provide a retail sales tax exemption for
motor vehicles rented or leased for less than 28 days beginning on July 1, 2022.

Estimated State Fiscal Effect
FY 2022 FY 2022 FY 2023 FY 2023
SGF All Funds SGF All Funds
Revenue -- -- ($6,000,000) ($7,200,000)
Expenditure -- -- $1,200 $1,200
FTE Pos. -- -- -- --
The Department of Revenue estimates that HB 2482 would decrease state revenues by $7.2
million in FY 2023. Of that total, the State General Fund is estimated to decrease by $6.0 million
in FY 2023, while the State Highway Fund is estimated to decrease by $1.2 million in FY 2023.
This bill also is estimated to decrease local sales tax revenues; however, the specific estimate of
lower local sales tax revenues was not calculated by the Department of Revenue. The fiscal effect
to state revenues during subsequent years would be as follows:
FY 2024 FY 2025
State General Fund ($6,100,000) ($6,300,000)
State Highway Fund (1,200,000) (1,200,000)
($7,300,000) ($7,500,000)
The Honorable Adam Smith, Chairperson
Page 2—HB 2482

To formulate these estimates, the Department of Revenue reviewed rental cars tax
collections data. In FY 2021, collections from the excise tax totaled approximately $3.7 million
and collections from the retail sales tax totaled approximately $6.9 million. Based on FY 2021
collections, the Department estimates that this new sales tax exemption would reduce state
revenues by $7.2 million in FY 2023. The Department indicates that the bill would require $1,200
from the State General Fund in FY 2023 to update sales tax forms and publications.
The Kansas Department of Transportation (KDOT) indicates that the bill would reduce
state revenues to the State Highway Fund as noted above. KDOT indicates that when the state
receives lower State Highway Fund dollars it may be required to make corresponding reductions
to planned expenditures for projects funded under the comprehensive transportation plan.
The Kansas Association of Counties and the League of Kansas Municipalities indicate that
the bill would provide a net reduction to local sales tax collections that are used in part to finance
local governments. Any fiscal effect associated with HB 2482 is not reflected in The FY 2023
Governor’s Budget Report.


Sincerely,

Adam Proffitt
Director of the Budget


cc: Lynn Robinson, Department of Revenue
Brendan Yorkey, Department of Transportation
Wendi Stark, League of Municipalities
Jay Hall, Association of Counties


Statutes affected:
As introduced: 79-3606