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 6, 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 2318 by House Committee on Taxation
In accordance with KSA 75-3715a, the following fiscal note concerning HB 2318 is
respectfully submitted to your committee.
HB 2318 would reduce the state retail sales and compensating use tax rates from 6.5 percent
to 6.15 percent beginning on July 1, 2023.

Estimated State Fiscal Effect
FY 2023 FY 2023 FY 2024 FY 2024
SGF All Funds SGF All Funds
Revenue -- -- ($333,100,000) ($399,000,000)
Expenditure -- -- $7,615 $7,615
FTE Pos. -- -- -- --
The Department of Revenue estimates that HB 2318 would decrease state revenues by
$399.0 million in FY 2024. Of that total, the State General Fund is estimated to decrease by $333.1
million in FY 2024, while the State Highway Fund is estimated to decrease by $65.9 million in FY
2024. The bill would have no fiscal effect on local sales tax revenues. The fiscal effect to state
revenues during subsequent years would be as follows:
FY 2025 FY 2026 FY 2027 FY 2028
State General Fund ($362,600,000) ($364,100,000) ($369,700,000) ($375,400,000)
State Highway Fund (76,900,000) (79,900,000) (81,100,000) (82,400,000)
($439,500,000) ($444,000,000) ($450,800,000) ($457,800,000)
The Honorable Adam Smith, Chairperson
Page 2—HB 2318

The Department indicates that the bill would require $7,615 from the State General Fund
in FY 2024 for IT system updates, quality assurance, and to update forms and publications.
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.
The League of Kansas Municipalities indicates that the bill has the potential to reduce state
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. Any fiscal effect associated with HB 2318 is not
reflected in The FY 2024 Governor’s Budget Report.


Sincerely,

Adam Proffitt
Director of the Budget

cc: Lynn Robinson, Department of Revenue
Brendan Yorkey, Department of Transportation
Wendi Stark, League of Kansas Municipalities


Statutes affected:
As introduced: 79-3603, 79-3703, 79-3603d