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 3, 2020


The Honorable Steven Johnson, Chairperson
House Committee on Taxation
Statehouse, Room 185A-N
Topeka, Kansas 66612
Dear Representative Johnson:
SUBJECT: Fiscal Note for HB 2460 by House Committee on Taxation
In accordance with KSA 75-3715a, the following fiscal note concerning HB 2460 is
respectfully submitted to your committee.
HB 2460 would create a new income tax credit for qualified railroad track maintenance
expenditures of short line railroads for tax years 2020 through 2024. The bill would allow an
income tax credit of 50.0 percent of an eligible taxpayer’s expenditures for qualified railroad track
maintenance during the tax year. The amount of the tax credit allowed for an eligible taxpayer
cannot exceed the product of $5,000 and the number of miles of railroad track owned or leased
within Kansas by the eligible taxpayer. The total amount of tax credits would be capped at
$8,720,000 for each tax year. The tax credit is transferable and non-refundable and can be carried
forward for up to five tax years. The Department of Revenue would have the authority to write
rules and regulation to implement the bill. The Department of Transportation would have the
option to write rules and regulations to permit the verification of the eligibility of the railroad track
maintenance expenditures for the taxpayer to receive the new tax credit.

Estimated State Fiscal Effect
FY 2020 FY 2020 FY 2021 FY 2021
SGF All Funds SGF All Funds
Revenue -- -- ($8,720,000) ($8,720,000)
Expenditure -- -- $125,997 $125,997
FTE Pos. -- -- -- --
The Honorable Steven Johnson, Chairperson
Page 2—HB 2460

The Department of Revenue estimates that HB 2460 would decrease State General Fund
revenues by $8,720,000 in FY 2021. The fiscal effect to state revenues during subsequent years
would be as follows:
FY 2022 FY 2023 FY 2024 FY 2025
State General Fund ($8,720,000) ($8,720,000) ($8,720,000) ($8,720,000)
To formulate these estimates, the Department of Revenue reviewed data on short line
(Class III) railroads in Kansas from the Department of Commerce. Data indicates that there are
currently 1,806 short line railroad miles that are owned or leased in Kansas. If the income tax
credit were claimed for all of these miles in a tax year, then eligible taxpayers would be able to
claim tax credits that total $9,030,000 (1,806 miles x $5,000). However, since the new income tax
credit is capped, only $8,720,000 in tax credits would be able to be claimed in a tax year.
The Department indicates it would require $125,997 from the State General Fund in FY
2021 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. 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 Department of Transportation indicates that the administrative costs associated with
implementing the bill would be negligible and could be absorbed within existing resources. Any
fiscal effect associated with HB 2460 is not reflected in The FY 2021 Governor’s Budget Report.


Sincerely,

Larry L. Campbell
Director of the Budget


cc: Lynn Robinson, Department of Revenue
Ben Cleeves, Transportation