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


March 1, 2021


The Honorable Caryn Tyson, Chairperson
Senate Committee on Assessment and Taxation
Statehouse, Room 123-E
Topeka, Kansas 66612
Dear Senator Tyson:
SUBJECT: Fiscal Note for SB 228 by Senate Committee on Assessment and Taxation
In accordance with KSA 75-3715a, the following fiscal note concerning SB 228 is
respectfully submitted to your committee.
SB 228 would allow movie theaters to retain the state sales tax collected on the admission
charged for viewing movies or films and on concessions sold at the business. The business would
be required to remit the local portion of the sales tax collected to the Department of Revenue. The
eligible business would be able to retain the state sales tax collected beginning on July 1, 2021
through June 30, 2023.

Estimated State Fiscal Effect
FY 2021 FY 2021 FY 2022 FY 2022
SGF All Funds SGF All Funds
Revenue -- -- ($5,800,000) ($6,900,000)
Expenditure -- -- $262,471 $262,471
FTE Pos. -- -- -- 3.00
The Department of Revenue estimates that SB 228 would decrease state revenues by $6.9
million in FY 2022. Of that total, the State General Fund is estimated to decrease by $5.8 million
in FY 2022, while the State Highway Fund is estimated to decrease by $1.1 million in FY 2022.
The Department indicates that similar results would also occur in FY 2023. Local sales tax
revenues collected from movies or films and concessions sold at the business are not estimated to
be affected under the provisions of this bill.
The Honorable Caryn Tyson, Chairperson
Page 2—SB 228

To formulate these estimates, the Department of Revenue reviewed sales tax data on movie
theater businesses. State sales and use tax collections reported by movie theaters were $8.3 million
in calendar year 2019 and fell to $5.5 million in FY 2020, with the decrease largely due to Covid-
19 mitigation efforts. Assuming that FY 2022 and FY 2023 movie theater collections will be an
average of calendar year 2019 and FY 2020 collections, the bill would reduce state sales and use
tax collections by approximately $6.9 million in each fiscal year.
The Department of Revenue indicates that it would require a total $262,471 from the State
General Fund in FY 2022 to hire 3.00 new FTE positions to implement the bill and to modify the
sales tax system. Implementation costs include the costs for IT enhancements, systems testing,
revisions to publications and instructions, and correspondence to taxpayers. The Department
estimates that ongoing expenses for salaries and wages for the 3.00 FTE positions and overhead
expenses would total $188,687 from the State General Fund in FY 2023. 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 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.
The Kansas Association of Counties and the League of Kansas Municipalities indicate that
the bill would have no fiscal effect on local sales tax collections. Any fiscal effect associated with
SB 228 is not reflected in The FY 2022 Governor’s Budget Report.


Sincerely,

Adam Proffitt
Director of the Budget

cc: Lynn Robinson, Department of Revenue
Ben Cleeves, Transportation
Wendi Stark, League of Municipalities
Jay Hall, Association of Counties