Division of the Budget
Landon State Office Building Phone: (785) 296-2436
900 SW Jackson Street, Room 504 adam.c.proffitt@ks.gov
Topeka, KS 66612 Division of the Budget http://budget.kansas.gov
Adam Proffitt, Director Laura Kelly, Governor


February 22, 2021
CORRECTED

The Honorable John Barker, Chairperson
House Committee on Federal and State Affairs
Statehouse, Room 285A-N
Topeka, Kansas 66612
Dear Representative Barker:
SUBJECT: Corrected Fiscal Note for HB 2061 by House Committee on Federal and
State Affairs
In accordance with KSA 75-3715a, the following corrected fiscal note concerning HB 2061
is respectfully submitted to your committee.
HB 2061 would increase the minimum age to purchase or possess cigarettes, electronic
cigarettes, consumable materials, alternative nicotine products, and tobacco products from 18
years of age to 21 years of age. The bill would not allow vending machines or self-service displays
to sell cigarettes beginning on July 1, 2022. The bill would add electronic cigarettes to the
requirements of the current Clean Indoor Air Act. The bill clarifies that this prohibition also
includes cigarettes, e-cigarettes, and consumable material. The bill would allow electronic
cigarette and consumable material to be regulated under the Cigarette and Tobacco Products Act
and definitions in this Act would be updated to include electronic cigarettes and consumable
material. The bill would prohibit any person from selling electronic cigarettes with flavored
consumable material other than menthol flavored.
The bill would increase the retail dealer’s license fee from $25 to $100 and would increase
the minimum age to obtain this license from 18 years of age to 21 years of age. The bill would
allow the Department of Revenue to refuse to renew or issue a retail dealer’s license to any person
who is not of good character or has been convicted of a felony or other certain crimes. The bill
would eliminate the specific license for retailer’s license on railroad or sleeping cars; the show,
carnival, or catering license; the resident retail dealer’s temporary license; vending machine
distributor license; and vending machine operator’s license. The bill would also eliminate the
vending machine permit.
Under current law, it is a class B person misdemeanor to sell or furnish cigarettes or tobacco
products to persons under the age of 18 years of age or allow persons under the age of 18 years of
The Honorable John Barker, Chairperson
Page 2—CORRECTED HB 2061

age to purchase these products that is punishable with a fine of $200. The bill would add electronic
cigarettes and consumable materials to this misdemeanor; increase the age to 21 years of age; and
increase the fine to a minimum of $500 for the first violation, a minimum fine of $750 for a second
violation within a three-year period, and a minimum fine of $1,000 for a third or subsequent
violation within a three-year period. The bill would require the Department of Health and Human
Services to create or approve training materials for those caught selling tobacco products to people
under the age of 21. The bill would also update the “controlled buys” procedures that allow the
Department of Revenue to perform compliance checks to make sure retailers comply the age
requirements for the sale of cigarettes, electronic cigarettes, and tobacco products. All provisions
of the bill would become effective on July 1, 2022.
The Department of Revenue estimates that HB 2061 would decrease state revenues by
$7,205,000 in FY 2023. Of that total, the State General Fund is estimated to decrease by
$7,140,000, the State Highway Fund is estimated to decrease by $260,000 in FY 2023, and the
Cigarette and Tobacco Enforcement Fund is estimated to increase by $195,000 in FY 2023. This
bill also is estimated to decrease local sales tax revenues from lower cigarette sales; however, the
specific estimate of lower local sales tax revenues was not calculated by the Department of
Revenue.
The bill would also increase the biennial retail dealer’s license fee from $25 to $100. With
that change, the Department would see an increase every other year of $195,000 to the Cigarette
and Tobacco Enforcement Fund. The Department indicates that 2,600 dealers would see a fee
increase of $75 every other year. This bill would also increase the fees for violations of the
Cigarette and Tobacco Products Act; however, it is unknown what the effect on revenue collected
from these increased fines would be.
While some cities and counties in Kansas have already increased the age to purchase
cigarettes, electronic cigarettes, and tobacco products from 18 to 21 years of age, the effect is
unknown to the Department. To formulate these estimates, the Department of Revenue reviewed
data from the Centers for Disease Control and Prevention that show an estimated 17,219 smokers
aged 18-20 in Kansas (14.1 percent of that particular population are smokers), which represents
approximately 4.52 percent of all adult smokers in Kansas. The Department reported annual
cigarette stamp revenue of $116.5 million in 2020 and reducing consumption by 4.52 percent
would result in a reduction of approximately $5.3 million in cigarette stamp revenue that goes to
the State General Fund. The Department estimates that the $5.3 million cigarette stamp revenue
represents approximately 4.2 million packs of cigarettes no longer being sold in Kansas. The bill
is also estimated to reduce tobacco products tax collections by $400,000 and electronic cigarettes
tax collections by $100,000. There would also be a loss of an additional $1.6 million in sales tax
revenue ($1,340,000 to the State General Fund and $260,000 to the State Highway Fund). In the
original fiscal note issued, the revenue reductions attributed to the tobacco products tax and
electronic cigarettes tax were not included.
This bill would also increase the fees for violations of the Cigarette and Tobacco Products
Act; however, it is unknown what the effect on revenue collected from these increased fines would
be. The Department indicates that the bill would require $7,243 from the State General Fund in
FY 2023 to update forms and publications.
The Honorable John Barker, Chairperson
Page 3—CORRECTED HB 2061

The bill would require the Department of Health and Human Services to create or approve
training materials for those caught selling tobacco products to people under the age of 21. The
Kansas Department of Health and Environment (KDHE) fiscal note assumes that this is a drafting
error and KDHE would have this responsibility. KDHE indicates that if the bill requires it to create
or approve training materials for those caught selling tobacco products to people under the age of
21, then it would require $26,155 from the State General Fund in FY 2023 to contract with a part-
time inspector to conduct training sessions. KDHE indicates that the Department of Revenue is
currently performing these duties. KDHE indicates that there were 188 compliance violations in
2019 and assumes that the number of compliance violations would not vary substantially as a result
of this bill.
The bill has the potential for increasing litigation in the courts because of the increased fine
structure for violations of the Cigarette and Tobacco Products Act created by the bill. If it does,
the Office of Judicial Administration indicates that there would be a fiscal effect on the operations
of the court system. However, it is not possible to estimate the number of additional court cases
that would arise or how complex and time-consuming the cases would be. The fiscal effect would
most likely be negligible and could be accommodated within the existing budget resources. The
Attorney General’s Office indicates that the bill would have no fiscal effect on its operations;
however, they indicate that there might be additional law enforcement actions on the local level to
investigate and prosecute additional violations. The Office also indicates that the bill would likely
reduce sales of cigarettes in the state, which has the potential to decrease payments to Kansas under
the Master Settlement Agreement. The Kansas Sentencing Commission indicates that the bill
would not have an effect on prison admissions and beds. Any fiscal effect associated with HB
2061 is not reflected in The FY 2022 Governor’s Budget Report.


Sincerely,

Adam Proffitt
Director of the Budget

cc: Lynn Robinson, Department of Revenue
Dan Thimmesch, Health & Environment
Debbie Thomas, Judiciary
Willie Prescott, Office of the Attorney General
Scott Schultz, Sentencing Commission


Statutes affected:
As introduced: 79-3310c, 21-5102, 79-3321, 21-6109, 21-6110, 50-6a14, 72-6285, 79-3301, 79-3302, 79-3303, 79-3304, 79-3309, 79-3316, 79-3322, 79-3323, 79-3326, 79-3334, 79-3335, 79-3388, 79-3606, 79-3391, 79-3394, 79-3396, 79-3399