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 14, 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 168 by Senate Committee on Assessment and Taxation
In accordance with KSA 75-3715a, the following fiscal note concerning SB 168 is
respectfully submitted to your committee.
SB 168 would allow local governments, including Washburn University, to continue to
charge a sales tax on food and food ingredients; however, the bill gives the option for local
governments to exempt food and food ingredients from local sales taxes beginning on July 1, 2025.
The Department of Revenue estimates that SB 168 would have no fiscal effect on State
General Fund and State Highway Fund revenues and only has the potential to reduce local sales
tax collections by unknown amounts beginning in FY 2026. However, having a different tax base
for local jurisdictions has the potential to place Kansas out of compliance with the Streamlined
Sales and Use Tax Agreement. The Department of Revenue estimates that more than $80.0 million
in revenues annually could be at risk and may no longer be received if Kansas loses its member
status, as other members would no longer be contractually required to remit retail sales and
compensating use taxes to Kansas.
The Department indicates that the bill would require $38,213 from the State General Fund
in FY 2024 to implement the bill and to modify the automated tax system. There would be
significant programming required to exclude some cities and/or some counties from the local
distribution accounting process for those local jurisdictions that have chosen to exempt food sales.
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
The Honorable Caryn Tyson, Chairperson
Page 2—SB 168

services beyond the Department’s current budget may be required. Any fiscal effect associated
with SB 168 is not reflected in The FY 2024 Governor’s Budget Report.
The League of Kansas Municipalities and the Kansas Association of Counties indicate the
bill would give local governments the option to exempt food and food ingredients from local sales
taxes. If a local government chose to exempt these sales from its local sales tax base, then the bill
would provide a net reduction to local sales tax collections that are used in part to finance local
governments.


Sincerely,

Adam Proffitt
Director of the Budget

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

Statutes affected:
As introduced: 12-189a