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 10, 2023


The Honorable Caryn Tyson, Chairperson
Senate Committee on Assessment and Taxation
300 SW 10th Avenue, Room 548-S
Topeka, Kansas 66612
Dear Senator Tyson:
SUBJECT: Fiscal Note for SB 89 by Senator Holscher
In accordance with KSA 75-3715a, the following fiscal note concerning SB 89 is
respectfully submitted to your committee.
SB 89 would provide a sales tax exemption for diapers and feminine hygiene products
beginning on July 1, 2023. The bill includes definitions for diapers and feminine hygiene products.

Estimated State Fiscal Effect
FY 2023 FY 2023 FY 2024 FY 2024
SGF All Funds SGF All Funds
Revenue -- -- ($6,800,000) ($8,300,000)
Expenditure -- -- $1,200 $1,200
FTE Pos. -- -- -- --
The Department of Revenue estimates that SB 89 would decrease state revenues by $8.3
million in FY 2024. Of that total, the State General Fund is estimated to decrease by $6.8 million
in FY 2024, while the State Highway Fund is estimated to decrease by $1.5 million in FY 2024.
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. The fiscal effect
to state revenues during subsequent years would be as follows:
FY 2025 FY 2026 FY 2027 FY 2028
State General Fund ($8,100,000) ($8,300,000) ($8,400,000) ($8,500,000)
State Highway Fund (1,730,000) (1,830,000) (1,850,000) (1,850,000)
($9,830,000) ($10,130,000) ($10,250,000) ($10,350,000)
The Honorable Caryn Tyson, Chairperson
Page 2—SB 89

To formulate these estimates, the Department of Revenue reviewed data from the U.S.
Bureau of Labor Statistics Consumer Expenditure Survey and the Kansas Department of Health
and Environment. According to the Department of Revenue, reissuing sales tax publications and
revising forms would cost $1,200 from the State General Fund in FY 2024.
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 provide a net reduction to local sales tax collections that are used in part to finance
local governments. The bill also has the potential to reduce revenues that are pledged to repay
STAR bond projects; however, it is unknown what impact this bill would have on the viability of
those projects.
The fiscal effect associated with SB 89 is reflected in The FY 2024 Governor’s Budget
Report. However, the total reduction in sales tax revenue is slightly less in FY 2024 for SB 89 as
compared to the tax policy recommended by the Governor. There is a one-month lag in sales tax
collections after a sales tax change goes into effect and the Governor’s tax policy recommendation
would take effect three months earlier on April 1, 2023.


Sincerely,

Adam Proffitt
Director of the Budget

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

Statutes affected:
As introduced: 79-3606