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


February 20, 2019


The Honorable Steven Johnson, Chairperson
House Committee on Taxation
Statehouse, Room 185-N
Topeka, Kansas 66612
Dear Representative Johnson:
SUBJECT: Fiscal Note for HB 2267 by House Committee on Taxation
In accordance with KSA 75-3715a, the following fiscal note concerning HB 2267 is
respectfully submitted to your committee.
HB 2267 would provide a sales tax exemption for purchases of tangible personal property
and services made to construct, reconstruct, repair, or replace any fence used to enclose land
devoted to agricultural use.

Estimated State Fiscal Effect
FY 2019 FY 2019 FY 2020 FY 2020
SGF All Funds SGF All Funds
Revenue -- -- ($2,100,000) ($2,500,000)
Expenditure -- -- $1,800 $1,800
FTE Pos. -- -- -- --
The Department of Revenue estimates that HB 2267 would decrease state revenues by $2.5
million in FY 2020. Of that total, the State General Fund is estimated to decrease by $2.1 million
in FY 2020, while the State Highway Fund is estimated to decrease by $400,000 in FY 2020. This
bill also is 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 Department of
Revenue indicates that this bill would have a similar fiscal effect in future fiscal years.
To formulate these estimates, the Department of Revenue reviewed data from the U.S.
Department of Agriculture (USDA). According to the USDA Agricultural Statistics Service,
Kansas has 15.5 million acres of pastureland. This estimate assumes that each square mile of this
The Honorable Steven Johnson, Chairperson
Page 2—HB 2267

land is fenced and that 5.0 percent is replaced annually. According to Iowa State University
Extension and Outreach, it costs $1.48/foot to construct a barbed wire fence. Based on these
estimates, an exemption on fencing materials in Kansas would result in an annual state sales tax
reduction of $2.5 million. The actual impact of exempting fencing materials would likely vary
from year to year with variations in the materials used to construct fencing and the unpredictability
of Kansas weather, wildlife, and other factors which may cause damage or destruction to fences.
According to the Department of Revenue, reissuing sales tax publications would cost $1,800 from
the State General Fund in FY 2020.
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, known
as T-WORKS.
The Department of Agriculture indicates that the bill would have no fiscal effect on its
operations. The Department indicates that bill would reduce costs incurred by farmers and
ranchers for constructing, repairing, or replacing fencing used for agricultural purposes, including
fencing damaged or destroyed by wildfires.
The Kansas Association of Counties and the League of Kansas Municipalities indicate that
the bill would provide a net reduction to local sales tax collections that are used in part to finance
local governments. Any fiscal effect associated with HB 2267 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
Ben Cleeves, Transportation
Chardae Caine, League of Municipalities
Jay Hall, Association of Counties
Kellen Liebsch, Agriculture


Statutes affected:
As introduced: 79-3606