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


February 15, 2023


The Honorable Caryn Tyson, Chairperson
Senate Committee on Assessment and Taxation
300 SW 10th Avenue, Room 548-S
Topeka, Kansas 66612
Dear Senator Tyson:
SUBJECT: Fiscal Note for SB 58 by Senator Peck, et al.
In accordance with KSA 75-3715a, the following fiscal note concerning SB 58 is
respectfully submitted to your committee.
SB 58 would provide a sales tax exemption on all sales of tangible personal property or
services, except sales of motor vehicles, to Kansas residents who are certified by the U.S.
Department of Veterans Affairs to receive 100.0 percent disability compensation and considered
to be permanently disabled. Sales qualifying for this exemption would be capped at $50,000 per
year for each qualifying person. The Department of Revenue would be required to issue a veteran
exemption identification number to each eligible person. This sales tax exemption would begin
on January 1, 2024.

Estimated State Fiscal Effect
FY 2023 FY 2023 FY 2024 FY 2024
SGF All Funds SGF All Funds
Revenue -- -- ($7,900,000) ($9,500,000)
Expenditure -- -- $44,120 $44,120
FTE Pos. -- -- 1.00 1.00
The Department of Revenue estimates that SB 58 would decrease state revenues by $9.5
million in FY 2024. Of that total, the State General Fund is estimated to decrease by $7.9 million
while the State Highway Fund is estimated to decrease by $1.6 million. 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:
The Honorable Caryn Tyson, Chairperson
Page 2—SB 58

FY 2025 FY 2026 FY 2027 FY 2028
State General Fund ($18,200,000) ($17,200,000) ($17,300,000) ($17,500,000)
State Highway Fund (3,800,000) (3,700,000) (3,800,000) (3,800,000)
($22,000,000) ($20,900,000) ($21,100,000) ($21,300,000)
To formulate these estimates, the Department of Revenue reviewed veteran disability data
from the Kansas Commission on Veterans Affairs. In 2022, there were 8,538 Kansas veterans that
had a 100.0 percent disability compensation rating, and these estimates assume that each eligible
veteran would use the maximum $50,000 exemption each year.
The Department of Revenue indicates that it would require a total of $44,120 from the State
General Fund in FY 2024 to hire 1.00 new FTE position to manage this new sales tax exemption
program and to change forms and publications. The Department estimates that ongoing expenses
for salaries and wages for the 1.00 FTE position would total $61,947 from the State General Fund
in FY 2025 and subsequent fiscal years.
The Kansas Department of Transportation (KDOT) indicates that the bill would reduce
revenues to the State Highway Fund as noted above. KDOT indicates that when the state receives
fewer State Highway Fund dollars, it may be required to make corresponding reductions to planned
expenditures for projects funded under the comprehensive transportation plan. Any fiscal effect
associated with SB 58 is not reflected in The FY 2024 Governor’s Budget Report.
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. The bill also has the potential to reduce revenues that are pledged to repay
STAR bond projects; however, it is unknown what impact this bill would have on the viability of
those projects.


Sincerely,

Adam Proffitt
Director of the Budget

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