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


January 31, 2022


The Honorable Caryn Tyson, Chairperson
Senate Committee on Assessment and Taxation
Statehouse, Room 548-S
Topeka, Kansas 66612
Dear Senator Tyson:
SUBJECT: Fiscal Note for SB 359 by Senate Committee on Assessment and Taxation
In accordance with KSA 75-3715a, the following fiscal note concerning SB 359 is
respectfully submitted to your committee.
SB 359 would set the state sales tax rate on gas, water, electricity, heat, propane gas LP
gas, coal, wood, and other fuel sources for the production of heat and lighting for any use at 0.0
percent beginning on July 1, 2023. The bill would allow local governments to continue to charge
a retail sales tax on these fuel sources. Beginning on July 1, 2023, cities and counties would have
the option to exempt the listed fuel sources from the local sales tax charged in their jurisdiction.

Estimated State Fiscal Effect
FY 2022 FY 2022 FY 2023 FY 2023
SGF All Funds SGF All Funds
Revenue -- -- -- --
Expenditure -- -- $98,316 $98,316
FTE Pos. -- -- -- --
The Department of Revenue estimates that SB 359 would not have a fiscal effect on state
revenues until FY 2024. The fiscal effect to state revenues during subsequent years would be as
follows:
FY 2024 FY 2025 FY 2026 FY 2027
State General Fund ($46,800,000) ($52,100,000) ($53,100,000) ($54,100,000)
State Highway Fund (9,000,000) (10,000,000) (10,200,000) (10,400,000)
($55,800,000) ($62,100,000) ($63,300,000) ($64,500,000)
The Honorable Caryn Tyson, Chairperson
Page 2—SB 359

To formulate these estimates, the Department of Revenue reviewed sales tax collections
data from FY 2021 on these fuel sources. The Department indicates that it processes over 2,000
utility exemption requests each year and with only local taxes collected under the provisions of
the bill, the Department notes that it may be burdensome to the state and utility providers to process
claims that would only apply to local sales taxes.
The Department of Revenue indicates that it would require a total $98,316 from the State
General Fund in FY 2023 to implement the bill and to modify the automated tax system. The
Department indicates it would be required to revise existing sales tax forms and publications and
would create two new publications as a result of this bill. 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 the
bill would have no fiscal effect on counties and cities, unless they chose the option to exempt
certain fuel sources from the local sales tax charged in their jurisdiction. Any fiscal effect
associated with SB 359 is not reflected in The FY 2023 Governor’s Budget Report.


Sincerely,

Adam Proffitt
Director of the Budget

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

Statutes affected:
As introduced: 12-189a, 79-3603