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 226 by Senate Committee on Ways and Means
In accordance with KSA 75-3715a, the following fiscal note concerning SB 226 is
respectfully submitted to your committee.
SB 226 would provide a sales tax exemption for organizations operating as an Area Agency
on Aging for the purpose of coordinating and providing seniors and those living with disabilities
with services that promote person-centered care, including home-delivered meals, congregate meal
settings, long-term case management, transportation, information, assistance, and other
preventative and intervention services to help service recipients remain in their homes and
communities. The sales tax exemption would also be extended for any contractor hired for the
construction, equipment, maintenance, repairing, enlarging, furnishing, or remodeling of facilities
used for the operation of services for an Area Agency on Aging. The bill includes reporting
requirements for contractors and penalties for the use of the sales tax exemption that is determined
to not be part of this project which would be punishable as a misdemeanor. The bill would allow
these organizations to file a refund claim on sales taxes paid in FY 2020 and FY 2021.

Estimated State Fiscal Effect
FY 2021 FY 2021 FY 2022 FY 2022
SGF All Funds SGF All Funds
Revenue -- -- ($315,000) ($375,000)
Expenditure -- -- $1,200 $1,200
FTE Pos. -- -- -- --
The Honorable Caryn Tyson, Chairperson
Page 2—SB 226

The Department of Revenue estimates that SB 226 would decrease state revenues by
$375,000 in FY 2022. Of that total, the State General Fund is estimated to decrease by $315,000
in FY 2022, while the State Highway Fund is estimated to decrease by $60,000 in FY 2022. This
bill also is estimated to decrease local sales tax revenues; however, the specific estimate of lower
local sales tax revenues was not calculated by the Department of Revenue.
To formulate these estimates, the Department of Revenue reviewed data on Area Agencies
on Aging. That data shows that there are currently 11 agencies in the state, including eight that
are not already associated with a sales tax-exempt organization. Based on this information, it is
estimated that the sales tax exemption would result in an annual reduction of approximately
$125,000 in state sales tax collections. Because the bill allows organizations operating as an Area
Agency on Aging to file a refund claim for sales taxes paid in FY 2020 and FY 2021, the fiscal
effect for FY 2022 also includes refunds for sales taxes paid in FY 2020 and FY 2021. According
to the Department of Revenue, reissuing sales tax publications and issuing tax entity exemption
certificates would cost $1,200 from the State General Fund in FY 2022.
The Kansas Department of Transportation indicates that the bill would reduce state
revenues to the State Highway Fund, as noted above. The Kansas Association of Counties and the
League of Kansas Municipalities indicate that the bill would provide a net reduction to local sales
tax collections that are used in part to finance local governments. Any fiscal effect associated with
SB 226 is not reflected in The FY 2022 Governor’s Budget Report.


Sincerely,

Adam Proffitt
Director of the Budget

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

Statutes affected:
As introduced: 79-3606