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 27, 2023


The Honorable Adam Smith, Chairperson
House Committee on Taxation
300 SW 10th Avenue, Room 346-S
Topeka, Kansas 66612
Dear Representative Smith:
SUBJECT: Fiscal Note for HB 2199 by House Committee on Taxation
In accordance with KSA 75-3715a, the following fiscal note concerning HB 2199 is
respectfully submitted to your committee.
HB 2199 would authorize disabled veterans with a disability rating of 100.0 percent to
receive a sales tax exemption on the purchase of up to two motor vehicles during their lifetime. A
surviving spouse of a qualified disabled veteran would be able to continue to be eligible for this
sales tax exemption unless the surviving spouse remarries. The sales tax exemption would begin
retroactively on and after January 1, 2023.
The Department of Revenue estimates that HB 2199 would decrease state and local sales
tax revenues by unknown amounts beginning in FY 2024. The bill allows the sales tax exemption
to apply to vehicles purchased after January 1, 2023; however, any vehicle purchased after January
1, 2023, and before the effective date of the bill on July 1, 2023, would be eligible for a refund of
the sales taxes that were paid during this period beginning on July 1, 2023. The state funds directly
affected by this bill are the State General Fund and the State Highway Fund. However, the
Department does not have sufficient information on when a qualified disabled veteran would be
purchasing a first or second vehicle with this exemption or the sales tax liability on those purchases
to make a precise estimate of the amount of reduced state and local sales tax revenues under the
provisions of the bill. According to the Kansas Commission on Veterans Affairs, in 2022, 8,538
Kansas veterans had a 100.0 percent disability compensation rating. Each of these disabled
veterans using this exemption twice during his or her lifetime would result in over 17,000 vehicle
purchases exempt from sales tax.
The Department of Revenue indicates that it would require a total $73,553 from the State
General Fund in FY 2024 to implement the bill, including IT system changes and to update forms
and publications. The bill would require the Department to hire 1.00 new FTE position to answer
questions from taxpayers and to audit compliance. The Department estimates that ongoing
The Honorable Adam Smith, Chairperson
Page 2—HB 2199

expenses for salaries and wages for the 1.00 FTE position and overhead expenses would total
$66,947 from the State General Fund in FY 2025.
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. Any
fiscal effect associated with HB 2199 is not reflected in The FY 2024 Governor’s Budget Report.
The League of Kansas Municipalities and the Kansas Association of Counties indicate that
the bill has the potential to decrease local sales tax revenues 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: Jay Hall, Kansas Association of Counties
Wendi Stark, League of Kansas Municipalities
Lynn Robinson, Department of Revenue