Division of the Budget
Landon State Office Building Phone: (785) 296-2436
900 SW Jackson Street, Room 504 larry.campbell@ks.gov
Topeka, KS 66612 Division of the Budget http://budget.kansas.gov
Larry L. Campbell, Director Laura Kelly, Governor


March 27, 2019
REVISED

The Honorable Caryn Tyson, Chairperson
Senate Committee on Assessment and Taxation
Statehouse, Room 123-E
Topeka, Kansas 66612
Dear Senator Tyson:
SUBJECT: Fiscal Note for SB 76 by Senate Committee on Ways and Means
In accordance with KSA 75-3715a, the following fiscal note concerning SB 76 is respectfully
submitted to your committee.
SB 76 would reduce the state retail sales tax and compensating use tax rate for food and food
ingredients. Food and food ingredients are defined as substances, whether in liquid, concentrated, solid,
frozen, dried, or dehydrated form, that are sold for ingestion or chewing by humans and are consumed
for their taste or nutritional value. Food and food ingredients would not include alcoholic beverages,
candy, dietary supplements, soft drinks, food sold through vending machines, tobacco, or certain
prepared foods. Food and food ingredients would specifically include bottled water. The bill provides
specific definitions for bottled water, candy, food sold through vending machines, prepared food, soft
drinks, and dietary supplements. The bill would adjust the state retail sales tax rates specifically on food
and food ingredients and change the distribution of overall state sales tax revenue collected as follows:
Date of Percent to Percent to
Rate Change Tax Rate State General Fund State Highway Fund
Current law 6.5 % 83.846 % 16.154 %
July 1, 2019 5.5 83.497 16.503
July 1, 2020 4.5 83.098 16.902
July 1, 2021 3.5 82.680 17.320
July 1, 2022 3.5 82.644 17.356
The bill would adjust the state compensating use tax rates specifically on food and food
ingredients as shown above, but does not adjust the distribution of state compensating use tax revenue,
which would remain the same as current law: 83.846 percent to the State General Fund and 16.154
percent to the State Highway Fund.
The Honorable Caryn Tyson, Chairperson
Page 2—SB 76

Estimated State Fiscal Effect
FY 2019 FY 2019 FY 2020 FY 2020
SGF All Funds SGF All Funds
Revenue -- -- ($59,800,000) ($59,800,000)
Expenditure -- -- $2,092,046 $2,092,046
FTE Pos. -- -- -- 6.00
The Department of Revenue estimates that SB 76 would decrease State General Fund revenues
by $59.8 million in FY 2020. This bill would have no effect on either the State Highway Fund or local
sales tax revenues. The fiscal effect to state revenues during subsequent years would be as follows:
FY 2021 FY 2022 FY 2023
State General Fund ($126,600,000) ($195,700,000) ($204,600,000)
The estimate assumes that 15.0 percent of all current sales tax collections are collected on food
and food ingredients. State General Fund revenues in the out years assume a 1.6 percent annual growth
rate based on the November 2018 Consensus Revenue Estimate.
The Department of Revenue indicates that it would require a total $2,092,046 from the State
General Fund in FY 2020 to implement the bill and to modify the sales tax system. The bill would
require the Department to hire 6.00 new FTE positions to review, process, and audit sales tax returns.
The Department estimates that ongoing expenses for salary and wages for the 6.00 FTE positions and
overhead expenses would total $356,909 from the State General Fund in FY 2021. The current
composite jurisdiction sales tax system does not accommodate a second state sales tax rate. The required
programming for this bill by itself would be performed by existing staff of the Department of Revenue
and outside contract programmer services. 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 services
beyond the Department’s current budget may be required. Since the original fiscal note was issued, the
Department of Revenue lowered its estimate on administrative costs needed to implement the bill.
The Kansas Department of Transportation indicates that the bill would have no fiscal effect on
the State Highway Fund or the planned expenditures for projects funded under the comprehensive
transportation plan, known as T-WORKS. The League of Kansas Municipalities and Kansas Association
of Counties indicate the bill would have no fiscal effect on local governments. Any fiscal effect
associated with SB 76 is not reflected in The FY 2020 Governor’s Budget Report.

Sincerely,

Larry L. Campbell
Director of the Budget
cc: Ben Cleeves, Transportation
Jay Hall, Association of Counties
Lynn Robinson, Department of Revenue
Chardae Caine, League of Municipalities


Statutes affected:
As introduced: 79-3602, 79-3606, 79-3603, 75-5171, 79-3620, 79-3703, 79-3710