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


April 14, 2021


The Honorable Adam Smith, Chairperson
House Committee on Taxation
Statehouse, Room 185A-N
Topeka, Kansas 66612
Dear Representative Smith:
SUBJECT: Fiscal Note for HB 2357 by House Committee on Taxation
In accordance with KSA 75-3715a, the following fiscal note concerning HB 2357 is
respectfully submitted to your committee.
HB 2357 would establish the Property Tax Relief Act starting in tax year 2021 and in future
tax years. The bill eliminates the Selective Assistance for Effective Senior Relief (SAFESR) and
the Homestead Property Tax Refund after tax year 2021. The Property Tax Relief Act would be
available to residential homestead property owners earning less than $50,000 a year in income.
Married taxpayers would divide their combined income in half to determine if they qualify for the
under $50,000 income threshold. The bill would allow the income threshold to be adjusted
annually beginning in tax year 2023, according to the cost-of-living adjustments from the federal
Internal Revenue Service (IRS). The bill includes two formulas to calculate the amount of the
property tax relief that could be claimed on all Kansas individual income tax forms: one for a
person less than 65 years of age and one for a person 65 years of age or older. The bill would only
allow one claimant per household per year. The claimant could either have the refund applied to
their property taxes or receive the refund directly. The bill includes definitions for “base year,”
“claimant,” “homestead,” “household,” “household income,” “income,” and “property taxes
accrued.” The bill includes language that allows the claimant’s legal guardian, conservator,
attorney-in-fact, or estate to claim the tax credit.
The Department of Revenue would be required to send a record to the county clerks each
year with the name of each eligible claimant who received a refund. The county clerk would make
any needed corrections to the record sent by the Department of Revenue and certify the information
to the county treasurer. The county treasurer would be required to certify the record with any
changes to the Department of Revenue by December 31st each year. Any refund involving
delinquent property taxes on the homestead would apply to the oldest delinquent property taxes
first.
The Honorable Adam Smith, Chairperson
Page 2—HB 2357

The Department of Revenue would be required make available the forms and instructions
for claimants. The forms and instructions would be available at the county clerk’s office who
would also have the duty to assist claimants on filing a claim. The bill would require each county
treasurer to include information from the Department of Revenue about claiming benefits from the
Property Tax Relief Act in the annual property tax statement. The Department of Revenue would
have the authority to write rules and regulations to implement the bill.
The bill would make it a class B misdemeanor to fraudulently make a claim and would
allow for recovery of the amount paid with interest. A claim that is excessive or negligently
prepared would have 10.0 percent of the corrected claim disallowed and allow for recovery with
interest of any overpayment. The bill would not allow an individual to claim benefits under the
Property Tax Relief Act, if they receive public funds to pay taxes or if they receive the title to the
homestead primarily to receive the benefits of this bill. The bill would allow the Department of
Revenue to extend the time to file a claim for good cause to within four years of the deadline.
The Department of Revenue estimates that HB 2357 would have no fiscal effect in FY
2022. The fiscal effect to state revenues during subsequent years would be as follows:
FY 2023 FY 2024 FY 2025
State General Fund ($84,600,000) ($100,100,000) ($115,900,000)
To formulate the estimates on the Property Tax Relief Act, the Department of Revenue
reviewed housing and population data from the U.S. Census Bureau and housing and property tax
data from the Property Valuation Division of the Department of Revenue. The Department
estimates that 148,379 claimants that are 65 years of age or older with household income less than
$50,000 (or married with household income less than $100,000) would be eligible for this program.
The Department estimates that 263,465 claimants under 65 years of age with household income
less than $50,000 (or married with household income less than $100,000) would be eligible for
this program. The average refund for tax year 2022 for a claimant that is 65 years of age or older
is estimated to be $253.65 and the average refund for those claimants under 65 years of age is
estimated to be $263.32. The second year of the program would include the additional refund for
eligible claimants that are 65 years of age or and older, providing for a refund of the increase in
their property tax from the base year, or the first year they are eligible for the program and are 65
years of age or older. The SAFESR and the Homestead Property Tax Refund expire after tax year
2021 and those savings are reflected in this fiscal note.
The Department indicates that the bill would require $159,209 from the State General Fund
in FY 2022 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 Administration indicates that adjusting state income tax collections has
the potential to have a fiscal effect on the amount of revenue collected from its debt setoff program.
This program intercepts individual income tax refunds and homestead tax refunds and applies
The Honorable Adam Smith, Chairperson
Page 3—HB 2357

those amounts to debts owed to state agencies, municipalities, district courts, and state agencies in
other states. Debts include, but are not limited to child support, taxes, educational expenses, fines,
services provided to the debtor, and court ordered restitution. As the dollar amounts of refunds
are increased, the amount available for possible debt setoffs is also increased. However, the
Department is unable to make an estimate of the amount of additional debts setoffs that will be
intercepted as a result of the bill.
The Department of Revenue, Department of Education, League of Kansas Municipalities,
and the Kansas Association of Counties indicate the bill would have no fiscal effect on state and
local property tax collections. The Kansas Association of Counties indicates that the bill would
require county treasurers to include additional information with the annual property tax statement.
The Association indicates that the bill would likely require counties to incur programming and
coding costs to include this information with the annual property tax statement. The bill would
also require county clerks to review information from the Department of Revenue and to assist
claimants on filing a claim under the Property Tax Relief Act, which may require counties to hire
temporary staff to help fulfill this requirement. However, the Association did not provide an
estimate of the amount of additional programming and coding costs, or the costs to hire temporary
staff that would be required for counties as a result of this bill.
A provision in the federal American Rescue Plan Act of 2021 (ARP) prohibits states or
territories from using the federal funds appropriated from ARP “to either directly or indirectly
offset a reduction in the net tax revenue of such State or territory resulting from a change in law,
regulation, or administrative interpretation during the covered period that reduces any tax (by
providing for a reduction in a rate, a rebate, a deduction, a credit, or otherwise) or delays the
imposition of any tax or tax increase.” If the state fails to comply with this provision by
implementing a reduction of net tax revenue through tax year 2024, the U.S. Treasury would be
required to recoup ARP funds in the amount of the net tax revenue reduction. If ARP funds are
not available, it is presumed that the State General Fund would be used to reimburse the U.S.
Treasury. Any fiscal effect associated with HB 2357 is not reflected in The FY 2022 Governor’s
Budget Report.


Sincerely,

Adam Proffitt
Director of the Budget

cc: Lynn Robinson, Department of Revenue
Jay Hall, Association of Counties
Jeff Scannell, Department of Administration
Wendi Stark, League of Municipalities
Craig Neuenswander, Education


Statutes affected:
As introduced: 79-32, 79-4508