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


March 3, 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 136 by Senate Committee on Assessment and Taxation
In accordance with KSA 75-3715a, the following fiscal note concerning SB 136 is
respectfully submitted to your committee.
SB 136 would create a new income tax credit for the installation of certain water
conservation systems in newly constructed houses. The income tax credit would be equal to 25.0
percent of the expenditures paid by a qualified taxpayer for the installation of a qualified water
conservation system, up to $1,000. The tax credit would be nonrefundable and could be carried
forward for up to five years. The Department of Revenue would be required to annually certify
the tax credit amount allowed for each eligible taxpayer. The new tax credit would apply to water
conservation systems installed between January 1, 2023, and December 31, 2029. The bill would
allow the Department of Revenue to establish rules and regulations to administer the tax credit
program. The Kansas Department of Health and Environment (KDHE) would be allowed to
establish rules and regulations for verification of the eligibility of an eligible taxpayer’s
expenditures used to claim the tax credit.

Estimated State Fiscal Effect
FY 2023 FY 2023 FY 2024 FY 2024
SGF All Funds SGF All Funds
Revenue -- -- ($950,000) ($950,000)
Expenditure -- -- $139,588 $139,588
FTE Pos. -- -- -- --
The Honorable Caryn Tyson, Chairperson
Page 2—SB 136

The Department of Revenue estimates that SB 136 would decrease State General Fund
revenues by $950,000 in FY 2024 and future fiscal years. To formulate these estimates, the
Department of Revenue reviewed data on residential construction from the U.S. Census Bureau
which indicate that 9,500 new dwelling units were constructed in Kansas in 2022. The Department
assumes that 10.0 percent of new units would install a qualified water conservation system.
The Department indicates that the bill would require $139,588 from the State General Fund
in FY 2024 to implement the bill and to modify the automated tax system. 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.
KDHE indicates the costs to establish rules and regulations for verification of the eligibility
of an eligible taxpayer’s expenditures used to claim the tax credit would be negligible and could
be absorbed within existing resources. Verification of the eligibility of water conservation systems
would likely be delegated to local authorities, such as county sanitarians or stormwater utilities.
Any fiscal effect associated with SB 136 is not reflected in The FY 2024 Governor’s Budget
Report.


Sincerely,

Adam Proffitt
Director of the Budget

cc: Lynn Robinson, Department of Revenue
Amy Penrod, Department of Health & Environment
Debra Jones, Kansas Water Office