SESSION OF 2023
SUPPLEMENTAL NOTE ON HOUSE BILL NO. 2387
As Amended by House Committee on
Commerce, Labor and Economic Development
Brief*
HB 2387, as amended, would amend law related to
Sales Tax and Revenue (STAR) bonds. The bill would provide
for state revenue to replace lost sales tax proceeds
attributable to reductions in the state sales tax rate on food,
expand eligible uses of STAR bonds to historic theaters and
major amusement parks, extend the deadline for the
submission of the annual STAR bonds report, and increase
the amount of project costs that may be financed in certain
rural redevelopment projects without the issuance of special
obligation bonds.
Food Sales Tax Replacement Revenue
The bill would create the STAR Bonds Food Sales Tax
Revenue Replacement Fund (Fund) and provide for transfers
to the Fund from the State General Fund (SGF).
Transfers would commence on April 1, 2024, and the
amounts of such transfers would be determined by the
Secretary of Revenue certifying, for each STAR Bond Project
District established prior to December 31, 2022, the amount
of sales tax that would have been generated on the sales of
food and food ingredients if the tax rate on such sales had
been 6.5 percent.
The State Treasurer would be directed to pay the
amount attributable to each STAR bond project district to 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 appropriate finance, debt service, or reserve fund associated
with the district.
Transfers and payments to each district would cease
upon the satisfaction of all principal and interest attributable
to bonds issued prior to December 31, 2022.
For STAR bond project districts established after
December 31, 2022, the base year revenue for the district
would be defined to not include revenue resulting from state
sales and use tax on the sale of food and food ingredients.
Historic Theaters and Major Amusement Parks
The bill would expand the permissible uses for STAR
bonds to include historic theaters and major amusement
parks. Permissible project costs for historic theaters would
include costs connected to construction or renovation of
historic theaters, and permissible project costs for major
amusement parks would include costs connected to the
construction or purchase of amusement rides, including rides
within a building or buildings.
Major amusement parks would be defined as facilities
containing amusement rides, including rides within a building
or buildings, and with capital improvements of at least $100.0
million in the state.
STAR Bond Report Deadline
The bill would change the date for which the annual
STAR Bond report to the Senate Committee on Commerce
and House Committee on Commerce, Labor and Economic
Development from January 31 to March 31.
2- 2387 Rural Redevelopment Project Cost Financing Increase
The bill would increase the maximum amount of
financing for rural redevelopment projects under the STAR
Bond Program without the issuance of special revenue bonds
from $10.0 million per project to $25.0 million per project.
Background
The bill was introduced by the House Committee on
Commerce, Labor and Economic Development at the request
of a representative of the Department of Commerce.
House Committee on Commerce, Labor and Economic
Development
In the House Committee hearing, proponent testimony
was provided by representatives of the Department of
Commerce, City of Derby, Hutfles & Associates Public
Relations, and League of Kansas Municipalities. The
proponents generally stated the bill would ensure STAR
bondholders are held harmless from food sales tax rate
reductions, expand the allowable uses of STAR bonds to
make the program applicable to more projects, and make the
annual report of the program more useful by allowing it to
contain full calendar year information for the preceding year.
Written-only proponent testimony was provided by a
representative of the City of Wichita.
Written-only opponent testimony was provided by a
representative of Americans for Prosperity-Kansas.
No other testimony was provided.
The House Committee amended the bill to make
technical changes to the replacement of revenue associated
with food sales tax rate reductions, modify the use of STAR
3- 2387 bond proceeds on amusement parks, a nd increase the
amount of financing that may be utilized without the issuance
of special obligation bonds.
Fiscal Information
According to the fiscal note prepared by the Division of
the Budget on the bill, as introduced, the Department of
Revenue indicates enactment of the bill would increase the
transfer amount from the State General Fund to the STAR
Bonds Food Sales Tax Revenue Replacement Fund by $1.4
million in FY 2024 and would provide for transfers of $11.6
million in FY 2025 and $15.4 million in FY 2026. The fiscal
effect associated with the bill is partially reflected in The FY
2024 Governor’s Budget Report, which includes transfers to
the fund in a greater amount attributable to the proposed
acceleration of food sales tax rate reductions.
STAR Bonds; food sales tax revenue replacement; amusement parks; historic
theaters; report deadline
4- 2387