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 C. Proffitt, Director Laura Kelly, Governor
Division of the Budget
January 23, 2025
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 2012 by House Committee on Taxation
In accordance with KSA 75-3715a, the following fiscal note concerning HB 2012 is
respectfully submitted to your committee.
HB 2012 would create a new non-refundable income tax credit for a retail dealer that sells
higher ethanol blend at their service station or a distributor that sells higher ethanol blend directly
to the final user located in this state. Higher ethanol blend is a fuel that is comprised of at least
15.0 percent but not more than 85.0 percent ethanol and is capable of being dispensed directly into
motor vehicle fuel tanks for consumption. The amount of the income tax credit would be equal to
$0.05 per gallon of higher ethanol blend sold by the retail dealer and or distributor. The bill would
allow any unused tax credits to be carried forward for up to five years. The total amount of tax
credits that could be claimed would be capped at $5.0 million per tax year and the tax credit could
be claimed in tax years 2026 through 2031.
The Department of Revenue indicates that it does not have data on retail sales of qualifying
higher ethanol blend fuel to accurately estimate the fiscal effect of HB 2012. If the new credit is
fully utilized, the bill would reduce State General Fund revenues by $5.0 million per tax year
beginning in tax year 2026 or FY 2027.
The Department indicates that the bill would require $219,111 from the State General Fund
in FY 2026 to implement the bill and to modify the automated tax system. The bill would require
the Department to hire 1.00 new Customer Service Representative FTE position to answer
questions from taxpayers. The Department estimates that ongoing expenses for salaries and wages
for the 1.00 new FTE position would total $72,182 from the State General Fund in FY 2027. The
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 The Honorable Adam Smith, Chairperson
Page 2—HB 2012
changes is too short, additional expenditures for outside contract programmer services beyond the
Department’s current budget may be required. Any fiscal effect associated with HB 2012 is not
reflected in The FY 2026 Governor’s Budget Report.
Sincerely,
Adam C. Proffitt
Director of the Budget
cc: Lynn Robinson, Department of Revenue
Lynn Retz, Kansas Corporation Commission