Bill Summary – FastDemocracy

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 2302 by Representatives Whipple, Hodge, and
                                  Ohaebosim
                 In accordance with KSA 75-3715a, the following revised fiscal note concerning HB 2302
         is respectfully submitted to your committee.
                 HB 2302 would create the Food Sales Tax Refund Act and repeal the food sales tax credit
         beginning in tax year 2019. The bill provides a set refund amount for sales tax paid on food for
         taxpayers who are Kansas residents the entire year and whose household income is $36,700 or
         less. In order to qualify for the food sales tax refund, taxpayers would be required to be 55 years
         of age or older; totally and permanently disabled or blind; or have at least one dependent under the
         age of 18 living with them the entire year. To calculate the amount of the food sales tax refund,
         taxpayers with qualifying income of $18,350 or less would multiply the number of exemptions by
         $94, and taxpayers with qualifying income of $18,351 to $36,700 would multiply the number of
         exemptions by $47.

                                            Estimated State Fiscal Effect
                                       FY 2019         FY 2019            FY 2020             FY 2020
                                        SGF            All Funds           SGF               All Funds
            Revenue                             --                 --   ($54,000,000)       ($54,000,000)
            Expenditure                         --                 --       $459,080             $459,080
            FTE Pos.                            --                 --              --                   --
The Honorable Steven Johnson, Chairperson
Page 2—HB 2302

        The Department of Revenue estimates that HB 2302 would decrease State General Fund
revenues by $54.0 million in FY 2020 and in future fiscal years. To formulate these estimates, the
Department of Revenue reviewed data on the Food Sales Tax Refund Program that was repealed
after tax year 2012. The Department indicates that approximately $60.8 million in food sales tax
refunds were claimed in tax year 2012 and similar results would be expected in tax year 2019 and
in future tax years under the provisions of the bill. Taxpayers claimed approximately $6.8 million
in food sales income tax credits in tax year 2017 and estimates that similar results will occur in
future tax years. Therefore, the bill is estimated to reduce State General Fund revenues by $54.0
million in tax year 2019 or FY 2020 ($60.8 million in food sales tax refunds minus $6.8 million
from the repeal of the food sales income tax credit).
       The Department of Revenue indicates that it would require a total $459,080 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. Any fiscal effect associated with HB 2302 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
    Colleen Becker, Department of Administration
Statutes affected: 
As introduced: 79-3226, 79-32