SESSION OF 2023
SUPPLEMENTAL NOTE ON SENATE BILL NO. 309
As Amended by Senate Committee on Ways
and Means

Brief*
SB 309, as amended, would create the Fixing Instant
Revenue Shock for Taxpayers Fund (Fund) and the Local
Extraordinary Needs Fund (Needs Fund) and abolish the
Local Ad Valorem Tax Reduction Fund.
The Fund would be administered by the State Treasurer
and would be used solely to reimburse cities, counties, and
other local taxing districts for loss of compensating use and
sales tax due to the enactment of legislation. The bill would
require a transfer of $220.0 million from the State General
Fund (SGF) to the Fund on July 1, 2023.
The bill would require the State Director of Taxation,
Department of Revenue, to be responsible for certifying to the
State Treasurer the impact of any legislation on sales and
compensating use tax receipts. The State Treasurer would
reimburse the local taxing entities for the amount certified. A
copy of all such certifications would be provided to the
Directors of the Budget and Legislative Research. The State
Treasurer would recapture any such transfers from local
taxing entities not compliant with KSA 79-2988, the property
tax revenue neutral rate.
The bill would also create the Needs Fund and would
require a transfer of $50.0 million from the SGF to the Needs
Fund. The bill would require all expenditures from the Needs
Fund to be for the purpose of providing grants to cities and
counties for capital expenditure projects approved by the
____________________
*Supplemental notes are prepared by the Legislative Research
Department and do not express legislative intent. The supplemental
note and fiscal note for this bill may be accessed on the Internet at
http://www.kslegislature.org
Joint Committee on Local Extraordinary Needs Grants (Joint
Committee) that would be established by the bill.
The Joint Committee would be comprised of ten
members, five appointed by the President of the Senate and
five appointed by the Speaker of the House. The bill would
require the State Treasurer to forward grant applications
received from the local taxing districts to the Joint Committee,
provided the entity is compliant with KSA 79-2988, the
property tax revenue neutral rate. The Joint Committee would
consider such grant applications and could approve the
grants, provided no single approval exceeds $2.0 million.
The bill would also abolish the Local Ad Valorem Tax
Reduction Fund and any and all references to this fund in the
Kansas Statutes Annotated.

Background
The bill was introduced by the Senate Committee on
Ways and Means at the request of Senator Masterson.

Senate Committee on Ways and Means
In the Senate Committee hearing, proponent testimony
was provided by Senator Masterson, who stated the Fund is
intended to compensate local taxing districts for lost revenue
if SB 248 would be enacted. The bill would expand the
Governor Kelly’s recommendation to eliminate the state sales
tax on food and to also eliminate the local sales tax on food.
The Senator further stated the Needs Fund is intended to
assist local communities in capital purchases for projects that
have been indefinitely delayed.
Neutral testimony was provided by a representative of
the League of Kansas Municipalities, who acknowledged the
testimony of both the proponent and opponents.

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 Opponent testimony was provided by representatives of
the City of Olathe, Kansas Association of Counties, Kansas
County Commissioners Association, and Sedgwick County
Commission, who generally stated the State of Kansas would
not provide funding for the Fund if there was an economic
downturn. The opponents also stated the Fund was subject to
annual appropriation, and the Legislature cannot bind future
legislatures to a decision on funding.
Written-only opponent testimony was provided by
representatives of the Cities of Garden City and Overland
Park, Kansas Legislative Policy Group, Shawnee County, and
Washburn University.
The Senate Committee on Ways and Means amended
the bill to add non-city or county local taxing districts and
Washburn University to the list of entities with the authority to
request funding from both funds.

Fiscal Information
According to the fiscal note prepared by the Division of
the Budget on the bill, as introduced, would reduce SGF
revenues by a total of $270.0 million in FY 2024 by
authorizing transfers from the SGF of $220.0 million to the
Fund and $50.0 million to the Needs Fund.
According to the State Treasurer, enactment of the bill
would require expenditures of $93,000 from the State
Treasurer Operating Fund beginning in FY 2024, including
expenditures for salaries and wages and overheard expenses
for new Program Administrator 1.0 FTE position to manage
these two new programs.
According to Legislative Administrative Services,
enactment of the bill would require additional expenditures of
$26,878 from the SGF for salaries and wages for legislators
and committee assistants.

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 According to the League of Kansas Municipalities and
Kansas Association of Counties, enactment of the bill has the
potential to provide additional resources to local
governments, to restore local retail sales and compensating
use tax revenue lost due to the enactment of legislation
passed by the Legislature in FY 2024. However, this funding
would only be for one year and would create a 12-month
delay in cities and counties from receiving this funding.
If local governments are prohibited from collecting sales
tax on food and food ingredients, overall local sales tax
collections are estimated to be reduced by as much as 15
percent. Some cities and counties with a lack of retail
diversification may see local sales tax reductions of over 35
percent. The lack of dedicated sales tax funding has the
potential to jeopardize bond payments, including STAR
bonds, and the funding of projects and services funding
directly from local sales taxes.
If funding from the Fund is not provided beyond FY
2024, then local governments would likely increase property
tax mill levies or reduce services. However, the amount
needed to restore to cities and counties local retail sales and
compensating use tax revenue lost due to the enactment of
legislation passed by the Legislature is unknown. The bill also
has the potential to provide cities and counties up to $50.0
million in FY 2024 for capital expenditure projects from the
new Needs Fund.
Fixing Instant Revenue Shock for Taxpayers Fund; Local Extraordinary Needs Fund;
State Treasurer; Joint Committee on Local Extraordinary Needs Grants; Legislature;
sales tax; food; local grants; LAVTR


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Statutes affected:
As introduced: 65-163j, 65-3306, 79-5003, 65-3327, 74-8768, 75-2556, 79-1479, 79-2965, 19-2694, 79-2960, 79-2961, 79-2962, 79-2959
As Amended by Senate Committee: 65-163j, 65-3306, 79-5003, 65-3327, 74-8768, 75-2556, 79-1479, 79-2965, 19-2694, 79-2960, 79-2961, 79-2962, 79-2959