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
March 15, 2023
The Honorable Rick Billinger, Chairperson
Senate Committee on Ways and Means
300 SW 10th Avenue, Room 548-S
Topeka, Kansas 66612
Dear Senator Billinger:
SUBJECT: Fiscal Note for SB 309 by Senate Committee on Ways and Means
In accordance with KSA 75-3715a, the following fiscal note concerning SB 309 is
respectfully submitted to your committee.
SB 309 would create the Fixing Instant Revenue Shock for Taxpayers Fund that would be
administered by the State Treasurer. All expenditures from this fund would be for the purposes of
restoring to cities and counties the local retail sales and compensating use tax revenue lost due to
the enactment of legislation passed by the Legislature. The bill would transfer $220.0 million from
the State General Fund to the Fixing Instant Revenue Shock for Taxpayers Fund on July 1, 2023,
or as soon thereafter as moneys are available. The Director of Taxation at the Department of
Revenue would be required to certify the amount of lost revenue experienced by each city and
county to the State Treasurer due to the enactment of legislation passed by the Legislature. The
State Treasurer would pay each city and county the certified amount from Fixing Instant Revenue
Shock for Taxpayers Fund, upon the certification from the governing body of each city or county
that they have complied with the revenue neutral rate requirements. The State Treasurer would be
required to transmit a copy of the certification of each payment from the Fixing Instant Revenue
Shock for Taxpayers Fund to the Director of the Budget and the Director of Legislative Research.
The State Treasurer would establish procedures to recapture monies paid from the Fixing Instant
Revenue Shock for Taxpayers Fund if a city or county is not complying with the revenue neutral
rate requirements.
The bill would create the Local Extraordinary Needs Fund that would be administered by
the State Treasurer. All expenditures from this fund would be for the purposes of providing grants
to cities and counties for capital expenditure projects approved by the Joint Committee on Local
Extraordinary Needs Grants. The bill would transfer $50.0 million from the State General Fund
to the Local Extraordinary Needs Fund on July 1, 2023, or as soon thereafter as moneys are
available. The city or county would submit a local extraordinary needs grant application to the The Honorable Rick Billinger, Chairperson
Page 2—SB 309
State Treasurer. As part of the application, the governing body of each city or county would be
required to certify to the State Treasurer that they have complied with the revenue neutral rate
requirements before the State Treasurer would forward the application to Joint Committee on
Local Extraordinary Needs Grants. The State Treasurer would pay each city and county the
amount approved by the Joint Committee on Local Extraordinary Needs Grants. The State
Treasurer would be required to transmit a copy of the certification of each payment from the Local
Extraordinary Needs Fund to the Director of the Budget and the Director of Legislative Research.
The bill would establish the Joint Committee on Local Extraordinary Needs Grants within
the legislative branch of state government. The committee would be composed of five members
of the Senate and five members of the House of Representatives. All Senate members would be
appointed by the President of the Senate and all Representative members would be appointed by
the Speaker of the House of Representatives. The committee would review all grant applications
from cities and counties. The committee could adopt procedural guidelines to aid in reviewing the
grant applications and would be permitted to introduce legislation that would be necessary in
performing its functions. The committee would be prohibited from approving a grant for a single
capital expenditure project that exceeds $2.0 million.
The bill would abolish the Local Ad Valorem Tax Reduction Fund (LAVTRF) and
transfers any monies and liabilities from the LAVTRF to the State General Fund on July 1, 2023.
The bill also removes all statutory references to the LAVTRF and outdated references.
SB 309 would reduce State General Fund revenues by a total of $270.0 million in FY 2024
by authorizing transfers from the State General Fund of $220.0 million to the Fixing Instant
Revenue Shock for Taxpayers Fund and $50.0 million to the Local Extraordinary Needs Fund.
The State Treasurer indicates 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 1.00 new Program Administrator FTE position to manage these two
new programs. The State Treasurer indicates the bill would require it to implement minor
computer programming changes in order to pay amounts to cities and counties for these two new
programs. These programming costs are estimated to be negligible and could be absorbed within
existing resources.
The amount of expenditures from the Fixing Instant Revenue Shock for Taxpayers Fund
are capped at $220.0 million in FY 2024; 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 expenditures from the Local Extraordinary Needs Fund
are capped at $50.0 million; however, the number of grant applications and the total dollar amounts
included in those applications that the State Treasurer would receive or the precise timing of these
payments once approved by the Joint Committee on Local Extraordinary Needs Grants is
unknown.
Under current law, the State General Fund transfer to the LAVTRF is set to resume in FY
2025 with a total transfer amount of $54.0 million. The last State General Fund transfer to the
LAVTRF occurred in FY 2003 and transfers have routinely been suspended in appropriations bills. The Honorable Rick Billinger, Chairperson
Page 3—SB 309
The Department of Revenue would be required to calculate and certify to the State
Treasurer the amount of lost revenue experienced by each city and county due to the enactment of
legislation passed by the Legislature. The Department indicates that these costs are estimated to
be negligible and could be absorbed within existing resources.
Legislative Administrative Services states that creating a new joint committee in FY 2024
would require additional expenditures of $26,878 from the state General Fund for salaries and
wages for legislators and committee assistants. Any fiscal effect associated with SB 309 is not
reflected in The FY 2024 Governor’s Budget Report.
The League of Kansas Municipalities and the Kansas Association of Counties indicate that
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 15.0 percent. Some cities and counties with a lack of retail
diversification may see local sales tax reductions of over 35.0 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 Fixing Instant
Revenue Shock for Taxpayers 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 Local Extraordinary Needs Fund.
Sincerely,
Adam Proffitt
Director of the Budget
cc: Lynn Robinson, Department of Revenue
John Hedges, Office of the State Treasurer
Amy Penrod, Department of Health & Environment
Wendi Stark, League of Kansas Municipalities
Jay Hall, Kansas Association of Counties
Karen Clowers, Legislative Services