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 10, 2023


The Honorable Leo Delperdang, Chairperson
House Committee on Energy, Utilities and Telecommunications
300 SW 10th Avenue, Room 582-N
Topeka, Kansas 66612
Dear Representative Delperdang:
SUBJECT: Fiscal Note for HB 2327 by Representative Xu, et al.
In accordance with KSA 75-3715a, the following fiscal note concerning HB 2327 is
respectfully submitted to your committee.
Under current law, new qualifying pipeline property is exempt from property taxes for the
ten taxable years immediately following the taxable year that construction or installation of the
property is completed. HB 2327 would discontinue the property tax exemption for new qualifying
pipeline property that experiences a spill or leak of crude oil, natural gas liquids, or other
substances. For any property that received this property tax exemption that experienced a spill or
leak of crude oil, natural gas liquids, or other substances on or before June 30, 2023, the exemption
would cease and expire on June 30, 2023. For any property that receives this property tax
exemption that experiences a spill or leak of crude oil, natural gas liquids, or other substances after
June 30, 2023, the exemption would cease and expire on the date of the spill or leak. The bill also
includes procedures that allow for the recoupment of certain property taxes if the property
experiences a spill or leak.
Passage of HB 2327 has the potential to increase property tax revenues by removing a
current property tax exemption for new qualifying pipeline property that experiences a spill or leak
of crude oil, natural gas liquids, or other substances. Under this scenario, the state would receive
additional property tax revenues to the two state building funds, the Educational Building Fund
and the State Institutions Building Fund. The bill has the potential to increase the amount of
property tax revenues that school districts would receive through the state’s uniform mill levy.
The bill also has the potential to increase revenues to any local government that levies a property
tax. However, the Department of Revenue does not have data on the property that now could be
assessed property taxes or the recoupment of prior years’ owed property taxes under the provisions
of HB 2327; therefore, a precise estimate of the amount of increased property tax revenues and its
The Honorable Leo Delperdang, Chairperson
Page 2—HB 2327

effect on local and state revenues cannot be estimated. The Department indicates that there are six
pipelines that are currently exempt from property taxes with a total assessed valuation of $509.9
million.
The League of Kansas Municipalities and the Kansas Association of Counties indicate that
the bill has the potential to increase local property tax revenues that are used in part to finance
local governments. Any fiscal effect associated with HB 2327 is not reflected in The FY 2024
Governor’s Budget Report.


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: 79-227