SESSION OF 2019
SUPPLEMENTAL NOTE ON HOUSE BILL NO. 2006
As Amended by Senate Committee on
Commerce

Brief*
HB 2006, as amended, would:
● Require certain analyses and reporting of
economic development incentive programs, which
would be done by:
○ The Legislative Division of Post Audit (LPA)
and
○ The Department of Commerce (Department);
and
● Extend the maximum maturity on bonds issued to
finance projects under the Kansas Rural Housing
Incentive District Act.
Legislative Division of Post Audit
The bill, in part, would amend the Legislative Post Audit
Act to authorize the Legislative Post Audit Committee
(Committee) to conduct a systematic and comprehensive
review, analysis, and evaluation of each “economic
development incentive program,” as that term would be
defined by the bill, every three years. Subject to appropriation
and as directed by the Committee, the Post Auditor would
include in each evaluation:

____________________
*Supplemental notes are prepared by the Legislative Research
Department and do not express legislative intent. The supplemental
note and fiscal note for this bill may be accessed on the Internet at
http://www.kslegislature.org
● A description of the economic development
incentive program, including its history and goals;
● A literature review of the effectiveness of the
incentive program, including an inventory of similar
programs in other states; and
● An estimate of the economic and fiscal impact of
the incentive program, which could include:
○ The extent to which the incentive program
changed business behavior;
○ The results of the incentive program on the
Kansas economy, including direct and indirect
impacts and negative effect on Kansas
businesses;
○ A comparison with other incentive programs
or economic development policies;
○ An assessment of whether the State can
afford the incentive program;
○ An assessment of the incentive program’s
design and administration;
○ An assessment of whether the incentive
program’s goals are achieved;
○ Recommendations for how the State may
more effectively achieve the incentive
program’s goals;
○ Recommendations that would allow for the
incentive program to be more easily or
conclusively evaluated in the future;
○ A “return on investment calculation,” as that
term would be defined by the bill;
○ Methodology and assumptions used in the
evaluation and a critique of multiplier
methodologies;
○ An analysis of significant opportunity costs;
and
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 ○ Any other information the Committee would
deem necessary to assess the effectiveness
of the incentive program.
Confidential information would be redacted from any
audit report.
The bill would not be construed to limit the Legislature’s
oversight of economic development incentive programs.

Department of Commerce
The Department would establish a database for the
purpose of disclosing information on economic development
incentive programs, which would be defined to include certain
income tax credits and locally-granted property tax
exemptions in addition to various programs administered
directly by the Department, including the Job Creation
Program Fund and the Economic Development Initiatives
Fund (EDIF).
Relative to economic development incentives, the
Department would be required to provide data on most
programs providing more than $50,000 in annual incentives
and make such information available to the public in a digital
format. The bill would require such information to be available
for multiple years and be searchable and available on the
Internet via the Department’s website. The database would
contain names and addresses of “recipients,” as that term
would be defined by the bill, receiving Sales Tax and
Revenue (STAR) Bond benefits, as well as names of
principals and officers for each STAR Bond project developer;
annual amount of incentives claimed and distributed to each
recipient; and qualification criteria for each economic
development program, including the number of jobs created
or amount of capital investments made. The bill would require
additional descriptive information to include the history of
each program; its purpose and goals; current applications;
the program cost and return on investment (ROI), including

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assumptions used to calculate ROI; annual reports; and the
amount of incentives by county. However, information on the
economic development incentive programs would not be
disclosed if such disclosure would violate any federal law or
confidentiality provisions of agreements executed prior to July
1, 2019.
Taxpayer confidentiality provisions would be modified to
allow the Secretary of Revenue to disclose certain income
and privilege tax credit information to the Department, except
that certain social and domestic tax credits would be
excluded from the bill’s provisions, including adoption credits,
earned income tax credits, food sales tax credits, child and
dependent care tax credits, and homestead property tax
refund credits.
Starting in the 2020 Session, the Secretary of
Commerce would be required to make annual oral
presentations to the Legislative Post Audit Committee, the
House Committee on Commerce, Labor and Economic
Development, and the Senate Committee on Commerce
regarding incentive programs and their economic impact.

Kansas Rural Housing Incentive District Act
The bill would extend the maximum maturity on bonds
issued to finance projects under the Kansas Rural Housing
Incentive District Act (Act) from 15 years to 25 years. The
governing body of cities or counties would be allowed to
extend the maximum period for individual projects authorized
under the Act from 15 years to 25 years.

Background
Prior to recommending the bill be passed as amended,
the Senate Committee on Commerce (Senate Committee)
added the language found in HB 2147, which would pertain to
the Kansas Rural Housing Incentive District Act, as amended

4- 2006
by the House Committee of the Whole. The following is the
background of both bills.

HB 2006, Evaluations and Transparency
The bill was introduced by Representative Williams, who
was a proponent during the hearing of the House Committee
on Commerce, Labor and Economic Development, stating the
bill would provide for a more open and taxpayer-focused
government. Other proponents included representatives from
the Kansas Policy Institute, a Johnson County commissioner
representing himself, and a member of the public.
Representatives from the Kansas Chamber and the
Kansas Economic Development Alliance spoke in opposition
to the bill, expressing concern the information published
online would not be useful and could reveal confidential
information. Opponent written-only testimony was provided by
various chambers of commerce.
The House Committee amended the bill to:
● Authorize LPA to conduct evaluations;
● Define economic development funds, in particular
the Job Creation Fund, to mean economic
development incentive programs; and
● Clarify when certain information may not be
disclosed.
The House Committee of the Whole amended the bill to
revise the schedule that economic development program
analyses would be performed by the LPA from every two
years to three years.
During the Senate Committee hearing, Representative
Williams, a member of the public, and representatives of
Americans for Prosperity-Kansas and the Kansas Chamber

5- 2006
spoke in favor of the bill. Representatives of the Kansas
Policy Institute, the Kansas Economic Development Alliance,
and the chambers of commerce of Olathe and Overland Park
provided written-only proponent testimony.
The Post Auditor, a professor of economics from the
University of Kansas, and a representative of the Pew
Charitable Trusts provided neutral testimony.
No opponent testimony was provided.
The Senate Committee amended the bill to:
● Revise the content of the evaluations conducted by
LPA;
● Specify the EDIF as a fund subject to evaluation;
● Define “recipient” to include “enterprise,” as that
term would be defined by the bill, to include certain
persons who have declared bankruptcy or been a
party to a failed economic development project;
● Specify the Department must post the information
via the agency’s website;
● Delete language that would have granted the
Secretary of Commerce discretion to not disclose
certain information online;
● Require the Secretary of Commerce to make oral
presentations to certain legislative standing
committees; and
● Specify the Legislature retains oversight of
economic development initiatives programs.
According to the fiscal note prepared by the Division of
the Budget on the bill, as introduced, the Department
estimates it would need an additional 1.0 full-time equivalent

6- 2006
(FTE) position and $59,813 from the State General Fund
(SGF) for salaries and wages in FY 2019 to collect and report
the information required in the bill. For FY 2020 and
subsequent years, the Department would require an
additional 0.6 FTE position and $44,550 from the SGF for
salaries and wages. No estimate was available at the time of
the House Committee’s actions for the costs that would be
incurred by the Legislative Division of Post Audit.

HB 2147, Kansas Rural Housing Incentive District Act
The bill was introduced by the House Committee on
Commerce, Labor and Economic Development (House
Committee) at the request of Representative Tarwater on
behalf of the Kansas Association of Realtors.
In the House Committee hearing, a representative of the
Kansas Association of Realtors and a real estate broker
spoke in favor of the bill, explaining the Act, which was
enacted in 1998, provides a means for cities and counties to
financially assist developers in building housing in rural
communities. By extending the maturity of the bonds,
proponents contended, more housing projects will become
financially viable and encourage affordable new housing.
No opponent or neutral testimony was provided.
The House Committee of the Whole amended the bill to
extend the length of time for cities or counties’ project plans
from 15 years to 25 years.
In the Senate Committee hearing, a representative of
the Kansas Association of Realtors and a real estate broker
spoke in favor of the bill, explaining the Act, which was
enacted in 1998, provides a means for cities and counties to
financially assist developers in building housing in rural
communities. By extending the maturity of the bonds,
proponents contended, more housing projects will become
financially viable and encourage affordable new housing.
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 No opponent or neutral testimony was provided.
According to the fiscal note prepared by the Division of
the Budget on the bill, as introduced, in consultation with the
Kansas Association of Counties and the League of Kansas
Municipalities, there would be a negligible fiscal effect on
local governments.


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Statutes affected:
As introduced: 75-5133, 79-3234
As Amended by House Committee: 75-5133, 79-3234
{As Amended by House Committee of the Whole}: 75-5133, 79-3234
As Amended by Senate Committee: 75-5133, 79-3234, 12-5245, 12-5248, 12-5250