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 22, 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 2311 by Representative Hodge
In accordance with KSA 75-3715a, the following fiscal note concerning HB 2311 is
respectfully submitted to your committee.
HB 2311 would provide a state and local retail sales tax and compensating use tax
exemption for food and food ingredients beginning on July 1, 2019. Food and food ingredients
would be 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, food sold through vending machines, soft drinks, tobacco, or certain prepared food.
Food and food ingredients would specifically include bottled water. The bill would provide
specific definitions for bottled water, candy, food sold through vending machines, prepared food,
soft drinks, and dietary supplements. The bill would not adjust the distribution of state retail sales
and 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.

Estimated State Fiscal Effect
FY 2019 FY 2019 FY 2020 FY 2020
SGF All Funds SGF All Funds
Revenue -- -- ($325,900,000) ($388,700,000)
Expenditure -- -- $1,600 $1,600
FTE Pos. -- -- -- --
The Department of Revenue estimates that HB 2311 would decrease state revenues by
$388.7 million in FY 2020. Of that total, the State General Fund is estimated to decrease by $325.9
million in FY 2020, while the State Highway Fund is estimated to decrease by $62.8 million in FY
The Honorable Steven Johnson, Chairperson
Page 2—HB 2311

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 fiscal
effect to state revenues during subsequent years would be as follows:
FY 2021 FY 2022 FY 2023
State General Fund ($360,000,000) ($365,700,000) ($371,600,000)
State Highway Fund (69,400,000) (70,500,000) (71,600,000)
($429,400,000) ($436,200,000) ($443,200,000)
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. According to the
Department of Revenue, updating sales tax publications and forms would cost $1,600 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 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 2311 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


Statutes affected:
As introduced: 79-3602, 79-3606