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 16, 2023
The Honorable Adam Smith, Chairperson
House Committee on Taxation
300 SW 10th Avenue, Room 346-S
Topeka, Kansas 66612
Dear Representative Smith:
SUBJECT: Fiscal Note for HB 2162 by Representative V. Miller, et al.
In accordance with KSA 75-3715a, the following fiscal note concerning HB 2162 is
respectfully submitted to your committee.
HB 2162 would provide a sales tax exemption for certain hygiene products beginning on
July 1, 2023. The hygiene products would include antiperspirants, cotton swabs, dental floss,
deodorants, diapers, interdental cleaners, menstrual cups, mouthwash, panty liners, sanitary
napkins, shampoo, soaps and cleaning solutions, suntan lotions, suntan screens, tampons, toilet
tissues, toothbrushes, and toothpaste.
Estimated State Fiscal Effect
FY 2023
SGF
FY 2023
All Funds
FY 2024
SGF
FY 2024
All Funds
Revenue -- -- ($16,700,00) ($20,100,000)
Expenditure -- -- $1,200 $1,200
FTE Pos. -- -- -- --
The Department of Revenue estimates that HB 2162 would decrease state revenues by
$20.1 million in FY 2024. Of that total, the State General Fund is estimated to decrease by $16.7
million in FY 2024, while the State Highway Fund is estimated to decrease by $3.4 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:
The Honorable Adam Smith, Chairperson
Page 2—HB 2162
FY 2025 FY 2026 FY 2027 FY 2028
State General Fund ($18,200,000) ($18,300,000) ($18,500,000) ($18,700,000)
State Highway Fund (3,900,000) (4,000,000) (4,100,000) (4,100,000)
($22,100,000) ($22,300,000) ($22,600,000) ($22,800,000)
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. The Department indicates that the bill includes definitions of hygiene products
that are inconsistent with the approved definitions in the Streamlined Sales and Use Tax
Agreement. Those inconsistencies have the potential to cause compliance issues. 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 fiscal effect associated with HB 2162 is partially reflected in The FY 2024 Governor’s
Budget Report. The sales tax exemption for diapers and feminine hygiene products included in
The FY 2024 Governor’s Budget Report includes fewer items which reduces the fiscal effect. In
addition, the Governor’s tax policy recommendation would take effect three months earlier on
April 1, 2023.
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.
Sincerely,
Adam Proffitt
Director of the Budget
cc: Lynn Robinson, Department of Revenue
Brendan Yorkey, Department of Transportation
Wendi Stark, League of Kansas Municipalities
Jay Hall, Kansas Association of Counties