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 26, 2019
REVISED

The Honorable Steven Johnson, Chairperson
House Committee on Taxation
Statehouse, Room 185-N
Topeka, Kansas 66612
Dear Representative Johnson:
SUBJECT: Revised Fiscal Note for HB 2194 by Representatives Pittman and Kessinger
In accordance with KSA 75-3715a, the following revised fiscal note concerning HB 2194
is respectfully submitted to your committee.
Under current law, taxpayers are required to pay state income taxes on certain gambling
winnings, but are not allowed to deduct any losses from gambling. HB 2194 would allow 100.0
percent of gambling losses claimed on federal income tax returns to be claimed as an itemized
deduction on state income tax returns beginning in tax year 2019 and in each future tax year.

Estimated State Fiscal Effect
FY 2019 FY 2019 FY 2020 FY 2020
SGF All Funds SGF All Funds
Revenue -- -- ($8,200,000) ($8,200,000)
Expenditure -- -- $189,096 $189,096
FTE Pos. -- -- -- --
The Department of Revenue estimates that HB 2194 would decrease State General Fund
revenues by $8.2 million in FY 2020 and in each future fiscal year. To formulate this estimate,
the Department reviewed Internal Revenue Service data on gambling losses claimed on federal tax
returns. The Department of Revenue estimates that Kansas taxpayers would claim approximately
$145.0 million in gambling losses in tax year 2019 under the provisions of the bill, which would
reduce state income tax collections by approximately $8.2 million in tax year 2019 or FY 2020.
The Honorable Steven Johnson, Chairperson
Page 2—HB 2194

The Department of Revenue indicates that it would require a total of $189,096 from the
State General Fund in FY 2020 to implement the bill and to modify the automated tax system. 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 Department of Administration indicates that adjusting state income tax collections has the
potential to have a fiscal effect on the amount of revenue collected from its debt setoff program.
This program intercepts individual income tax refunds and homestead tax refunds and applies
those amounts to debts owed to state agencies, municipalities, district courts, and state agencies in
other states. Debts include, but are not limited to child support, taxes, educational expenses, fines,
services provided to the debtor, and court ordered restitution. As the dollar amounts of refunds
are increased, the amount available for possible debt setoffs is also increased. However, the
Department is unable to make an estimate of the amount of additional debts setoffs that will be
intercepted as a result of the bill.
The Kansas Lottery and the Kansas Racing and Gaming Commission indicate that the bill
would have no fiscal effect on each of their operations. The Kansas Lottery indicates that the bill
has the potential to increase the amount wagered at state-owned gaming facilities instead of at
gaming facilities from neighboring states that allow deductions for gambling losses. However, the
Kansas Lottery does not have data to make a precise estimate of the additional amount that would
be wagered at state-owned gaming facilities or the impact on the state’s share of proceeds from
these gaming facilities that would be transferred to the Expanded Lottery Act Revenues Fund and
the Problem Gambling and Addictions Grant Fund as a result of the bill. Any fiscal effect
associated with HB 2194 is not reflected in The FY 2020 Governor’s Budget Report.


Sincerely,

Larry L. Campbell
Director of the Budget


cc: Lynn Robinson, Department of Revenue
Stephen Durrell, Lottery
Brandi White, Racing & Gaming Commission
Colleen Becker, Department of Administration


Statutes affected:
As introduced: 79-32