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 13, 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 2285 by Representative Capps
In accordance with KSA 75-3715a, the following fiscal note concerning HB 2285 is
respectfully submitted to your committee.
HB 2285 would establish the Kansas Legal Tender Act that would allow specie to be used
as legal tender in Kansas. Specie is defined as coins having gold and silver content or certain gold
and silver bullion that is coined, stamped, or imprinted with its weight and purity. Specie legal
tender in Kansas would consist of specie coins issued by the federal government or any other
specie designated as legal tender by a court order. The bill does not allow specie or legal tender
to be characterized as personal property for taxation or regulatory purposes. The exchange of one
type or form of legal tender for another type or form of legal tender would not be a taxable event.
The bill would not allow someone to compel another person to accept gold and silver coins in
payment. The Attorney General would be required to enforce the Act without prejudice to any
private right of action and the Kansas courts would require specific performance as a remedy for
breach of any contract designating a type or form of specie as tender.
Calculations for Kansas income taxes are based on the Kansas adjusted gross income,
which is calculated by adding or subtracting certain types of income from the amount of federal
adjusted gross income. The bill would allow a subtraction modification for any capital gain from
the sale of specie. The subtraction modification would be available to taxpayers beginning in tax
year 2019. The bill would also provide a retail sales tax exemption for all sales of specie.
The Department of Revenue indicates HB 2285 would decrease State General Fund and
State Highway Fund revenues beginning in FY 2020. The Department indicates that the sales tax
exemption for all sales of specie would reduce sales tax collection by a negligible amount, which
would reduce revenues to the State General Fund, State Highway Fund, and to local governments
that impose a local sales tax. The Department of Revenue does not have data to make a precise
estimate for the subtraction modification for any capital gain from the sale of specie that would
reduce State General Fund revenues by an unknown amount.
The Honorable Steven Johnson, Chairperson
Page 2—HB 2285

The Department of Revenue indicates that it would require a total $258,195 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.
The Attorney General’s Office indicates that the bill gives it the authority to enforce the
Act, but it is unclear what type of enforcement action would be needed. Therefore, the Office is
unable to provide an estimate of the potential fiscal effect of this provision. The Office of Judicial
Administration indicates the bill is not expected to have a significant fiscal effect on expenditures
for the Judicial Branch. Any fiscal effect associated with HB 2285 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
Janie Harris, Judiciary
Willie Prescott, Office of the Attorney General
Colleen Becker, Department of Administration


Statutes affected:
As introduced: 79-32, 79-3606