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 5, 2019


The Honorable Julia Lynn, Chairperson
Senate Committee on Commerce
Statehouse, Room 445-S
Topeka, Kansas 66612
Dear Senator Lynn:
SUBJECT: Fiscal Note for SB 204 by Select Committee on Federal Tax Code
Implementation
In accordance with KSA 75-3715a, the following fiscal note concerning SB 204 is
respectfully submitted to your committee.
SB 204 would establish the Economic Development Incentive Review Subcommittee of
the Legislative Post Audit Committee. The Subcommittee would be composed of six members of
the Legislative Post Audit Committee as follows:
1. The chairperson of the Legislative Post Audit Committee or designee;
2. The vice-chairperson of the Legislative Post Audit Committee or designee;
3. One member selected by the President of the Senate;
4. One member selected by the Speaker of the House of Representatives;
5. One member selected by the Minority Leader of the Senate; and
6. One member selected by the Minority Leader of the House of Representatives.
The Subcommittee would direct evaluations of economic development incentive programs
and perform other duties as specified under the Legislative Post Audit Act and with the approval
of the Legislative Post Audit Committee as specified in the bill.
On or before July 1, 2020, the Subcommittee would develop policy guidelines, eligibility
requirements, and criteria for enacting sales tax exemptions requested by businesses, nonprofit,
religious, or charitable organizations. The Subcommittee would submit its recommendations to
various House and Senate committees as specified in the bill.
The Honorable Julia Lynn, Chairperson
Page 2—SB 204

On or before January 1, 2021, the Subcommittee would develop an inventory of all Kansas
economic development incentives. In determining whether a program is an economic development
incentive, the Subcommittee may consider legislative intent, whether the program is promoted as
an incentive by any state agency, and other factors deemed relevant by the Subcommittee. The
Subcommittee would update this inventory annually. Upon completion of the inventory, the
Subcommittee would develop a schedule ensuring that economic development incentives are
evaluated at least once every five calendar years.
The Post Auditor would complete an initial one-time study to be completed by July 1, 2021,
to determine the purpose of each incentive, the data available, and what additional information
may be needed to facilitate future high-quality evaluations. The study results would be provided
to the Subcommittee.
For each evaluation, the Subcommittee would determine whether to use the services of the
Post Auditor, the services of a firm or firms, or the services of the Post Auditor and a firm or firms.
The Subcommittee would accept the economic development incentive evaluation report of the Post
Auditor or firm. The evaluation report would be provided to the agency or agencies responsible
for administration of the economic development incentive under evaluation and the agency or
agencies would be given an opportunity to respond. The Subcommittee would hold a public
hearing on each evaluation report completed.
The Subcommittee would approve and submit the economic development incentive
evaluation report to the Legislature for each evaluation following the completion of the public
hearing. The Subcommittee could include recommendations or comments on the evaluation or the
incentives under review in the report. The Subcommittee could require the Post Auditor or firm
to conduct further investigations or inquiries based upon the initial evaluation report and to issue
a supplemental evaluation report to the Subcommittee and if so, the Subcommittee could defer
submitting the initial report to the Legislature. The Subcommittee would accept any supplemental
evaluation report, conduct a public hearing on the supplemental report, and approve and submit
the initial report and the supplemental report, including any recommendations or comments to the
Legislature. SB 204 specifies what could be included in an evaluation.
The Legislative Division of Post Audit indicates the agency would not need any additional
funding in either FY 2019 or FY 2020 if SB 204 were enacted; however, the agency estimates
additional expenditures of between $100,000 to $240,000 from the State General Fund in FY 2021
and future fiscal years. Of those amounts, $100,000 would be for contracting with experts using
existing staff positions to conduct the evaluations. The agency estimates it would cost $240,000
to contract with experts and hire an additional 2.00 FTE positions to conduct the evaluations. The
agency states that it is up to the Legislative Post Audit Committee to select either option.
Legislative Administrative Services states there would be no fiscal effect to the Legislature
resulting from the enactment of SB 204 because members of the Subcommittee would be paid
compensation, travel expenses, and subsistence from the budget of the Legislative Division of Post
Audit.
The Honorable Julia Lynn, Chairperson
Page 3—SB 204

The Department of Commerce and the Department of Revenue both indicate enactment of
SB 204 would have no fiscal effect on the operations of either agency. Any fiscal effect associated
with SB 204 is not reflected in The FY 2020 Governor’s Budget Report.


Sincerely,

Larry L. Campbell
Director of the Budget


cc: Chris Clarke, Post Audit
Sherry Rentfro, Commerce
Lynn Robinson, Department of Revenue
Karen Clowers, Legislative Services