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 2416 by House Committee on Taxation
In accordance with KSA 75-3715a, the following fiscal note concerning HB 2416 is
respectfully submitted to your committee.
HB 2416 would provide a sales tax exemption for organizations operating as an Area
Agency on Aging for the purpose of coordinating and providing seniors and those living with
disabilities with services that promote person-centered care, including home-delivered meals,
congregate meal settings, long-term case management, transportation, information, assistance, and
other preventative and intervention services to help service recipients to remain in their homes and
communities. The sales tax exemption would also be extended to any contractor hired for the
construction, equipment, maintenance, repairing, enlarging, furnishing, or remodeling of facilities
used for the operation of services for an Area Agency on Aging. The bill includes reporting
requirements for contractors and penalties for the use of the sales tax exemption that is determined
to not be part of this project which would be punishable as a misdemeanor. The bill would be
effective July 1, 2023.
Estimated State Fiscal Effect
FY 2023
SGF
FY 2023
All Funds
FY 2024
SGF
FY 2024
All Funds
Revenue -- -- ($280,000) ($337,000)
Expenditure -- -- $1,200 $1,200
FTE Pos. -- -- -- --
The Honorable Adam Smith, Chairperson
Page 2—HB 2416
The Department of Revenue estimates that HB 2416 would decrease state revenues by
$337,000 in FY 2024. Of that total, the State General Fund is estimated to decrease by $280,000,
while the State Highway Fund is estimated to decrease by $57,000. In FY 2025 and subsequent
fiscal years, the bill is estimated to reduce state revenues by $132,000, including a $109,000
reduction from the State General Fund and a $23,000 reduction from the State Highway Fund.
This bill is also 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.
To formulate these estimates, the Department of Revenue reviewed data on Area Agencies
on Aging. That data shows that there are currently 11 agencies in the state, including eight that
are not already associated with a sales tax-exempt organization. Based on this information, it is
estimated that the sales tax exemption would result in an annual reduction of approximately
$125,000 in state sales tax collections. According to the Department of Revenue, reissuing sales
tax publications and issuing tax entity exemption certificates would cost $1,200 from the State
General Fund in FY 2024. The Kansas Department of Transportation indicates that the bill would
reduce state revenues to the State Highway Fund, as noted above. Any fiscal effect associated
with HB 2416 is not reflected in The FY 2024 Governor’s Budget Report.
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.
Sincerely,
Adam Proffitt
Director of the Budget
cc: Wendi Stark, League of Kansas Municipalities
Jay Hall, Kansas Association of Counties
Lynn Robinson, Department of Revenue
Brendan Yorkey, Department of Transportation