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 2231 by House Committee on Taxation
In accordance with KSA 75-3715a, the following fiscal note concerning HB 2231 is
respectfully submitted to your committee.
HB 2231 would provide a property tax exemption for residential property that is also used
as a day care facility licensed by the Kansas Department of Health and Environment (KDHE). The
property tax exemption would begin in tax year 2024.
Passage of HB 2231 would decrease property tax revenues by adding a new property tax
exemption. The state funds directly affected by this bill are the two building funds, the Educational
Building Fund (EBF) and the State Institutions Building Fund (SIBF). The Department of
Revenue estimates this bill would decrease revenues to these two funds by $59,170 in FY 2025,
with $39,447 from the EBF and $19,723 from the SIBF. Less property tax revenue would also
affect state expenditures for aid to school districts. To the extent that less property tax revenue
would be available from the state’s uniform mill levy to fund expenditures for school districts, the
state would be required to provide an additional $788,938 in state aid from the State General Fund
through the school finance formula in FY 2025. Local governments that levy a property tax would
also receive less revenue; however, the amount of reduced property tax revenues was not
estimated. The fiscal effect to state revenues would be as follows:
FY 2025 FY 2026 FY 2027
School District Finance $788,938 $836,275 $886,451
EBF 39,447 41,814 44,323
SIBF 19,723 20,907 22,161
$848,108 $898,996 $952,935
The Honorable Adam Smith, Chairperson
Page 2—HB 2231

To formulate these estimates, the Department of Revenue reviewed data on family day care
homes from Childcare Aware of Kansas. The Department estimates that there are 3,219 family
day care homes in 2022. Calculations are based on the assumptions that the median single family
home value of family day care home is $160,000, average annual property tax increase is 6.0
percent, and 66.6 percent of family day care homes are run by the homeowner. The Department
indicates the bill would have fiscal effect on its operations. Any fiscal effect associated with HB
2231 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 property tax collections that are used in part to
finance local governments.


Sincerely,

Adam Proffitt
Director of the Budget

cc: Lynn Robinson, Department of Revenue
Craig Neuenswander, Department of Education
Jay Hall, Kansas Association of Counties
Wendi Stark, League of Kansas Municipalities


Statutes affected:
As introduced: 79-201, 65-504