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 http://budget.kansas.gov
Adam Proffitt, Director Laura Kelly, Governor
Division of the Budget
February 20, 2023
The Honorable Sean Tarwater, Chairperson
House Committee on Commerce, Labor and Economic Development
300 SW 10th Avenue, Room 346-S
Topeka, Kansas 66612
Dear Representative Tarwater:
SUBJECT: Fiscal Note for HB 2064 by House Committee on Commerce, Labor and
Economic Development
In accordance with KSA 75-3715a, the following fiscal note concerning HB 2064 is
respectfully submitted to your committee.
HB 2064 would create the Kansas Employee Emergency Savings Account (KEESA)
Program which would be administered by the Department of Commerce. The bill would provide
assistance to eligible employers with recruiting and retaining employees in a challenging labor
market through incentives to contribute to employee emergency savings accounts, to encourage
employees of eligible employers to save money for emergencies, avoid high-cost borrowing, and
to encourage financial literacy. Eligible employers would be required to hire no more than 250
employees and be required to apply to the Secretary of Commerce to participate in the KEESA
Program. Eligible employers would be required to make an initial deposit of at least $50 on behalf
of a participating employee to establish the savings account. The employer would be eligible for
a 50.0 percent income tax credit for the initial deposits in a participating employees’ savings
account with max credit of $50 per employee. The eligible employer could make additional
deposits to employees’ savings accounts based on matching funds or other amounts as determined
by the employer. The employer would be eligible for a 25.0 percent income tax credit for matching
funds or other amounts deposited in a participating employees’ savings account with max credit
of $325 per employee. The tax credits would be available to be claimed in tax years 2024, 2025,
and 2026. The tax credits would not be transferable, are non-refundable, and could be carried
forward for up to two tax years.
The employee would be allowed make deposits in the savings account including a direct
payroll deduction and would not incur any fees or charges for making that deduction. The
employee savings accounts would be federally insured and be required to offer online and mobile
banking access to the account. The mobile application would notify employees of payroll deposits The Honorable Sean Tarwater, Chairperson
Page 2—HB 2064
and provide financial literacy tools and educational materials to learn about saving for
emergencies, establishing savings goals, and budgeting. The employee would be the owner of the
savings account and the employer could not restrict any uses of the money in the account.
On or before January 31 each year, the eligible employer would be required to provide to
each participating employee notice of the employee’s total deposits from payroll deductions made
to the employee’s savings account during the prior taxable year. Eligible employers would
annually report to the Secretary of Commerce the number of employee savings accounts newly
established during the preceding year; the amounts of initial deposits made by the employer during
the preceding year; the number of participating employees during the preceding year; the amounts
of deposits by employees from payroll deductions during the preceding year; the amounts of
additional deposits made by the employer during the preceding year; and any additional
information requested by the Secretary. The Department of Commerce would have the authority
to write rules and regulations to implement the bill.
Calculations for Kansas income taxes are based on the Kansas adjusted gross income,
which is calculated by adding or subtracting certain types of income from the federal adjusted
gross income. The bill would allow an eligible employee to subtract from income for Kansas
income tax purposes the amount of payroll that was deducted from wages and deposited in the
taxpayer’s employee savings account. The subtraction modification would be capped at $1,500
per taxpayer or $3,000 for married filing jointly and would be available for tax years 2024, 2025,
and 2026.
The Department of Revenue estimates that HB 2064 would likely reduce State General
Fund revenues by $6.5 million in FY 2024, FY 2025, and FY 2026. The fiscal note assumes 5,000
employers would participate and claim the maximum tax credit amount of $375 for a total of $1.8
million in tax credits claimed. For the subtraction modification, the Department assumes 50,000
employees would take the full $3,000 modification and using an effective tax rate of 3.1 percent
would reduce receipts by approximately $4.7 million. To formulate these estimates, the
Department of Revenue reviewed data from the U.S. Census Bureau’s Statistics of U.S.
Businesses.
The State of Kansas has approximately 55,000 firms (businesses) with 250 or fewer
employees, most of which have fewer than five employees. These 55,000 firms employ
approximately 520,000 employees in total. If each qualified employer provides the maximum
deposits to each employee’s saving account earning the $375 maximum tax credit per employee
($50 for the initial deposit and $325 for matching), then a maximum of $195.0 million in tax credits
have the potential to be issued in tax year 2024. For the subtraction modification, the Department
assumes 40.0 percent of taxpayers are married filing jointly, assumes an effective tax rate of 3.1
percent, and assumes the maximum amount would be allowed. The Department estimates the
subtraction modification has the potential to reduce State General Fund receipts by a maximum of
$33.8 million in tax year 2024.
The Department of Revenue indicates that it would require $139,263 from the State
General Fund in FY 2024 to implement the bill and to modify the automated tax system. The The Honorable Sean Tarwater, Chairperson
Page 3—HB 2064
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 Department of Commerce indicates that bill would require $47,317 from the State
General Fund in FY 2024 to implement the bill. The bill would require the Department hire a new
0.50 FTE position to manage this new program.
The Department of Administration indicates that adjusting state income tax collections has
the potential to have a fiscal effect on the amount of revenue collected from its debt setoff program.
This program intercepts individual income tax refunds and homestead tax refunds and applies
those amounts to debts owed to state agencies, municipalities, district courts, and state agencies in
other states. Debts include, but are not limited to child support, taxes, educational expenses, fines,
services provided to the debtor, and court ordered restitution. As the dollar amounts of refunds
are increased, the amount available for possible debt setoffs is also increased. However, the
Department is unable to make an estimate of the amount of additional debts setoffs that will be
intercepted as a result of the bill. Any fiscal effect associated with HB 2064 is not reflected in The
FY 2024 Governor’s Budget Report.
Sincerely,
Adam Proffitt
Director of the Budget
cc: Lynn Robinson, Department of Revenue
Tamara Emery, Department of Administration
Sherry Rentfro, Department of Commerce