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 C. Proffitt, Director Laura Kelly, Governor


February 5, 2024


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 421 by Senator Blasi, et al.
In accordance with KSA 75-3715a, the following fiscal note concerning SB 421 is
respectfully submitted to your committee.
SB 421 would provide a sales tax exemption for Exploration Place, Inc. for the purpose of
constructing, remodeling, furnishing, or equipping a riverfront amphitheater, a destination
playscape, an education center, and indoor renovations at Exploration Place in Wichita. The sales
tax exemption would also be extended to any contractor hired for constructing, remodeling,
furnishing, or equipping the project for Exploration Place, Inc. The bill includes reporting
requirements for contractors and penalties for the use of the sales tax exemption that is determined
to not be part of this project, which would be punishable as a misdemeanor. The sales tax
exemption would expire December 31, 2030. The sales tax exemption would go into effect on
July 1, 2024, but for purchases made on or after January 1, 2024, and prior to the effective date of
the bill, the organization would be eligible to submit a sales tax refund request.
Estimated State Fiscal Effect
FY 2024 FY 2025 FY 2026
Expenditures
State General Fund -- -- --
Fee Fund(s) -- $1,800 --
Federal Fund -- -- --
Total Expenditures -- --
Revenues
State General Fund -- ($106,600) ($106,600)
Fee Fund(s) -- (23,400) (23,400)
Federal Fund -- -- --
Total Revenues -- ($130,000) ($130,000)
FTE Positions -- -- --
The Honorable Caryn Tyson, Chairperson
Page 2—SB 421

The Department of Revenue estimates that SB 421 would decrease state revenues by
$130,000 in FY 2025. Of that total, the State General Fund is estimated to decrease by $106,600
in FY 2025, while the State Highway Fund is estimated to decrease by $23,400 in FY 2025. This
bill is also estimated to decrease local sales tax revenues; however, the specific estimate of lower
local sales tax revenues was not calculated by the Department of Revenue. The fiscal effect to
state revenues during subsequent years would be as follows:
FY 2026 FY 2027 FY 2028 FY 2029
State General Fund ($106,600) ($106,600) ($106,600) ($106,600)
State Highway Fund (23,400) (23,400) (23,400) (23,400)
($130,000) ($130,000) ($130,000) ($130,000)
To formulate these estimates, the Department of Revenue reviewed data from Exploration
Place, Inc., which reports that it is implementing a multi-year renovation project with combined
taxable expenditures estimated at $13.0 million. The project is estimated to begin in the spring of
2024 with an estimated completion date of December 31, 2030. A sales tax exemption for the
project is estimated to result in a state sales tax reduction of $845,000, including $692,900 from
the State General Fund and $152,100 from the State Highway Fund from January 1, 2024, through
December 31, 2030. Assuming the impact is evenly spaced throughout the duration of the
exemption period, the bill would result in an annual reduction of state sales tax collections of
$130,000 per fiscal year from FY 2025 through FY 2030 and a reduction of state sales tax
collections of $65,000 in FY 2031. According to the Department of Revenue, reissuing sales tax
publications and revising forms would cost $1,800 from the State General Fund in FY 2025.
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. Any
fiscal effect associated with SB 421 is not reflected in The FY 2025 Governor’s Budget Report.
The Kansas Association of Counties and the League of Kansas Municipalities indicate the
bill would provide a net reduction to local sales tax collections that are used in part to finance local
governments. This bill has the potential to reduce revenues that are pledged to repay STAR bond
projects; however, it is unknown what impact the bill would have on the viability of those projects.

Sincerely,

Adam C. Proffitt
Director of the Budget
cc: Lynn Robinson, Department of Revenue
Wendi Stark, League of Kansas Municipalities
Jay Hall, Kansas Association of Counties
Brendan Yorkey, Department of Transportation


Statutes affected:
As introduced: 79-3606