COMMITTEE ON LEGISLATIVE RESEARCH
OVERSIGHT DIVISION
FISCAL NOTE
L.R. No.:5414S.02T Bill No.:Truly Agreed To and Finally Passed SB 1388 Subject:Taxation and Revenue - Sales and Use Type:Original Date:May 30, 2024Bill Summary:This proposal authorizes a sales tax exemption for certain nuclear facilities.
FISCAL SUMMARY
ESTIMATED NET EFFECT ON GENERAL REVENUE FUNDFUND AFFECTEDFY 2025FY 2026FY 2027Fully
Implemented
(FY 2035)
General Revenue*(Unknown)(Unknown)(Unknown)(Unknown)Total Estimated Net
Effect on General
Revenue(Unknown)(Unknown)(Unknown)(Unknown)
*Oversight is unable to verify the project costs/loss in sales tax revenue from a nuclear security
enterprise that is built/expanded in Kansas City. Based on the estimates provided by DOR and
B&P, Oversight assumes the fiscal impact could be significant.
ESTIMATED NET EFFECT ON OTHER STATE FUNDSFUND AFFECTEDFY 2025FY 2026FY 2027Fully
Implemented
(FY 2035)
School District Trust
Fund (0688)*(Unknown)(Unknown)(Unknown)(Unknown)
Conservation
Commission Fund
(0609)*(Unknown)(Unknown)(Unknown)(Unknown)
Parks and Soils State
Sales Tax Fund(s)
(0613 & 0614)*(Unknown)(Unknown)(Unknown)(Unknown)
Total Estimated Net
Effect on Other
State Funds(Unknown)(Unknown)(Unknown)(Unknown) L.R. No. 5414S.02T
Bill No. Truly Agreed To and Finally Passed SB 1388
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May 30, 2024
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*Oversight is unable to verify the project costs and resulting loss in sales tax revenue from a
nuclear security enterprise that is built/expanded in Kansas City. Based on the estimates provided
by DOR and B&P, Oversight assumes the fiscal impact could be significant.
Numbers within parentheses: () indicate costs or losses.
ESTIMATED NET EFFECT ON FEDERAL FUNDSFUND
AFFECTED
FY 2025FY 2026FY 2027Fully
Implemented
(FY 2035)
Total Estimated
Net Effect on
All Federal
Funds $0$0$0$0
ESTIMATED NET EFFECT ON FULL TIME EQUIVALENT (FTE)FUND
AFFECTED
FY 2025FY 2026FY 2027Fully
Implemented
(FY 2035)
Total Estimated
Net Effect on
FTE 0000
☒ Estimated Net Effect (expenditures or reduced revenues) expected to exceed $250,000 in any
of the three fiscal years after implementation of the act or at full implementation of the act.
☐ Estimated Net Effect (savings or increased revenues) expected to exceed $250,000 in any of
the three fiscal years after implementation of the act or at full implementation of the act.
ESTIMATED NET EFFECT ON LOCAL FUNDSFUND
AFFECTED
FY 2025FY 2026FY 2027Fully
Implemented
(FY 2035)
Local
Governments(Unknown)(Unknown)(Unknown)(Unknown) L.R. No. 5414S.02T
Bill No. Truly Agreed To and Finally Passed SB 1388
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May 30, 2024
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FISCAL ANALYSIS
ASSUMPTION
Section 144.054 - Nuclear Sales Tax Exemption
Officials from the Department of Revenue (DOR) note in Section 144.020, items that are sold
are subject to state and local sales and use tax unless specifically excluded by statute. The state
sales tax is 4.225%. That sales tax is broken down as:
General Revenue 3%
School District 1%
Conservation Commission .125
Parks, Soil & Water Funds .1%
This proposal creates an exemption for sales and purchases of tangible personal property,
building materials, equipment, fixtures, manufactured goods, machinery, and parts for the
purpose of constructing a nuclear security enterprise. This exemption is only for a nuclear
security enterprise built in Kansas City based on the population definition in this proposal. This
legislation specifically excludes the collection of both the state and local sales tax.
This proposal defines a nuclear security enterprise as the physical facilities, technology, and
human capital of the national security laboratories and the nuclear weapons production facilities.
The National Nuclear Security Administration (NNSA) purchased in February 2023 a 450,000
square foot building in Kansas City for $38.8 million to be used for manufacturing space to
expand their mission of nuclear weapons building and testing. According to a press release
additional expansion at this site is expected over the next several years.
Per the NNSA report on the Kansas City facility, the KC Step purchase in Feb. is expected to
cost $647 million over 2023-2028 as it is brought fully online. Retrofitting the building is
expected to cost $608.2 million ($647 million - $38.8 purchase price). Which would result in a
price of $1,352 per square foot. Their next project is KC Next estimated at a cost of $2.42
billion over 2026-2043. Using the same square foot cost would mean the purchase of $1,795,000
square feet over the next several years.
This newly created sales tax exemption would begin on August 28, 2024, and end on August 28,
2034, per the proposal. DOR notes sales tax is remitted one month behind collection and
therefore in TY 2024 there will only be 3 months of impact. While the purchase of the building
in Feb would not be eligible for the new exemption, purchases made to retrofit the building after
August 28, 2024, would be. For fiscal note purposes, DOR will assume the costs will be equally
distributed through the fiscal years of the project. For KC Step it will be $121,640,000 each year
(2023-2028) while the KC Next will be $142,708,366 per year (2026-2043). DOR notes that the
final estimated years of the KC Next project will have costs that may not be eligible for the
exemption given the exemption’s stop date of August 28, 2034. L.R. No. 5414S.02T
Bill No. Truly Agreed To and Finally Passed SB 1388
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May 30, 2024
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It should be noted that this would eliminate all the local sales taxes in the City of Kansas City for
this project. For fiscal note purposes, DOR assumes all purchases would be made in Kansas
City. For the fiscal note, DOR used the address of the current NNSA campus to determine the
local taxes impacted. Should any of the expansion space be located in another area of the city or
purchases made in a different part of the city, the local sales tax rate used may differ than the
estimated provided.
Table 1: Estimated Impact by Fund - Tax Year
State Funds
Tax
RateTY 2024TY 2025TY 2026TY 2027TY 2028TY 2029
General Revenue 3.000%($912,300)($3,649,200)($7,930,451)($7,930,451)($7,930,451)($4,281,251)Education (SDTF)1.000%($304,100)($1,216,400)($2,643,484)($2,643,484)($2,643,484)($1,427,084)Conservation0.125%($38,013)($152,050)($330,435)($330,435)($330,435)($178,385)DNR0.100%($30,410)($121,640)($264,348)($264,348)($264,348)($142,708)Total State
Revenue($1,284,823)($5,139,290)($11,168,718)($11,168,718)($11,168,718)($6,029,428)
Local Funds Jackson County1.375%($418,138)($1,672,550)($3,634,790)($3,634,790)($3,634,790)($1,962,240)Kansas City3.250%($988,325)($3,953,300)($8,591,322)($8,591,322)($8,591,322)($4,638,022)Kansas City Zoo0.125%($38,013)($152,050)($330,435)($330,435)($330,435)($178,385)Total Local
Revenue ($1,444,475)($5,777,900)($12,556,547)($12,556,547)($12,556,547)($6,778,647)
Table 1: Estimated Impact by Fund - Tax Year (cont.)
State Funds
Tax
RateTY 2030TY 2031TY 2032TY 2033TY 2034
General Revenue 3.000%($4,281,251)($4,281,251)($4,281,251)($4,281,251)($2,854,167)Education (SDTF)1.000%($1,427,084)($1,427,084)($1,427,084)($1,427,084)($951,389)Conservation0.125%($178,385)($178,385)($178,385)($178,385)($118,924)DNR0.100%($142,708)($142,708)($142,708)($142,708)($95,139)Total State
Revenue($6,029,428)($6,029,428)($6,029,428)($6,029,428)($4,019,619)
Local Funds Jackson County1.375%($1,962,240)($1,962,240)($1,962,240)($1,962,240)(1,308,160)Kansas City3.250%($4,638,022)($4,638,022)($4,638,022)($4,638,022)(3,092,015)Kansas City Zoo0.125%($178,385)($178,385)($178,385)($178,385)(118,924)Total Local
Revenue ($6,778,647)($6,778,647)($6,778,647)($6,778,647)($4,519,098)
Based on revenue patterns, DOR notes that sales tax is typically split 50/50 between fiscal years.
L.R. No. 5414S.02T
Bill No. Truly Agreed To and Finally Passed SB 1388
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Table 2: Estimated Impact by Fund - Fiscal YearState FundsFY25FY26 FY27FY28FY29General Revenue ($2,736,900)($5,789,825)($7,930,451)($7,930,451)($6,105,851)Education (SDTF)($912,300)($1,929,942)($2,643,484)($2,643,484)($2,035,284)Conservation($114,038)($241,243)($330,435)($330,435)($254,410)DNR($91,230)($192,994)($264,348)($264,348)($203,528)Total State Revenue($3,854,468)($8,154,004)($11,168,718)($11,168,718)($8,599,073) Local Funds Jackson County($1,254,413)($2,653,670)($3,634,790)($3,634,790)($2,798,515)Kansas City($2,964,975)($6,272,311)($8,591,322)($8,591,322)($6,614,672)Kansas City Zoo($114,038)($241,243)($330,435)($330,435)($254,410)Total Local Revenue($4,333,426)($9,167,224)($12,556,547)($12,556,547)($9,667,597)Table 2: Estimated Impact by Fund - Fiscal Year (cont.)State FundsFY30FY31FY32FY33FY34General Revenue ($4,281,251)($4,281,251)($4,281,251)($4,281,251)($3,567,709)Education (SDTF)($1,427,084)($1,427,084)($1,427,084)($1,427,084)($1,189,236)Conservation($178,385)($178,385)($178,385)($178,385)($148,655)DNR($142,708)($142,708)($142,708)($142,708)($118,924)Total State Revenue($6,029,428)($6,029,428)($6,029,428)($6,029,428)($5,024,524) Local Funds Jackson County($1,962,240)($1,962,240)($1,962,240)($1,962,240)($1,635,200)Kansas City($4,638,022)($4,638,022)($4,638,022)($4,638,022)($3,865,018)Kansas City Zoo($178,385)($178,385)($178,385)($178,385)($148,655)Total Local Revenue($6,778,647)($6,778,647)($6,778,647)($6,778,647)($5,648,873)
DOR notes this will require changes to the department’s sales tax forms, website and computer
programming. These changes are estimated to cost $8,923.
Oversight assumes the Department of Revenue is provided with core funding to handle a certain
amount of activity each year. Oversight assumes the DOR could absorb the administrative costs
related to this proposal. If multiple bills pass which require additional staffing and duties at
substantial costs, DOR could request funding through the appropriation process.
Officials from the Office of Administration - Budget and Planning (B&P) note this proposal
would exempt all building materials used to construct a nuclear security enterprise facility from
state and local sales taxes. B&P assumes that this would also apply to all building materials used
to retrofit an existing building. This exemption would be effective from August 28, 2024
through August 28, 2034. This exemption would only apply to nuclear security enterprise
facilities located within Kansas City. L.R. No. 5414S.02T
Bill No. Truly Agreed To and Finally Passed SB 1388
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May 30, 2024
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B&P notes that the Kansas City National Security Campus is in the process of expanding. The
Kansas City Campus is operated by a contractor for the National Nuclear Security
Administration (NNSA) within the Department of Energy (DOE). Based on information
published by the Government Accountability Office (GAO) there are currently two expansion
projects occurring:
Based on information published by DOE, the first building was acquired in February 2023, for
the price of $38.8 million. Therefore, B&P assumes that the retrofitting cost could be
approximately $608.2 million ($647 million project cost - $38.8 million building purchase). In
addition, B&P notes that the building added 450,000 square feet to the Kansas City Campus.
Therefore, B&P estimates that the retrofitting project could cost around $1,352 per square feet
($608.2 million retrofit cost / 450,000 square feet).
B&P notes that the cost for the second expansion is not yet known. However, the Kansas City
Campus is looking to add 1,795,000 in square feet to their space. Using the current estimated per
square footage cost, B&P estimates that the total cost of the next expansion could be around
$2,426,042,222 (1,795,000 square feet x $1,352 retrofit cost per square feet).
The first expansion project is expected to take from 2023 through 2028, while the second
expansion is expected to take from 2026 through 2043. For the purpose of this fiscal note, B&P
will assume that costs are divided equally each year. Therefore, B&P estimates that KC Step
expansion could result in $121,640,000 per year in taxable material sales from 2023 – 2028 and
the KC NExT expansion could result in $142,708,366 per year in taxable material sales from
2026 – 2043.
B&P notes that both projects have some costs that will fall outside of sales tax exemption dates
(8/28/2024 – 8/28/2034). B&P will only include estimated costs for the KC Step expansion
incurred from 8/28/2024 – 12/31/2028 and the estimated costs for the KC NExT expansion
incurred from 1/1/2026 – 8/28/2034.
Based on the above information, B&P estimates that this proposal could reduce TSR by
$1,284,823 and local revenues* by $1,444,475 in tax year 2024. This proposal could reduce
TSR by $5,139,290 and local revenues by $5,777,900 in tax yar 2025. As both expansion
projects become active, this proposal could reduce TSR by $11,168,718 and local revenues by
$12,556,547 in tax years 2026 through 2028. This proposal could reduce TSR by $6,029,428
and local revenues by $6,778,647 in tax years 2029 through 2032. As the exemption ends, this
proposal may reduce TSR by $4,019,619 and local revenues by $4,519,098 in tax year 2034.
*B&P used the address of the current Kansas City Campus to estimate the potential local impact.
However, if actual sales occur in different locations, the revenue impacts may be spread out
among additional taxing jurisdictions. L.R. No. 5414S.02T
Bill No. Truly Agreed To and Finally Passed SB 1388
Page 7 of
May 30, 2024
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Table 1: Estimated Impact by Fund - Tax YearState FundsTax RateTY 2024TY 2025TY 2026TY 2027TY 2028TY 2029General Revenue 3.000%($912,300)($3,649,200)($7,930,451)($7,930,451)($7,930,451)($4,281,251)Education (SDTF)1.000%($304,100)($1,216,400)($2,643,484)($2,643,484)($2,643,484)($1,427,084)Conservation0.125%($38,013)($152,050)($330,435)($330,435)($330,435)($178,385)DNR0.100%($30,410)($121,640)($264,348)($264,348)($264,348)($142,708)Total State Revenue($1,284,823)($5,139,290)($11,168,718)($11,168,718)($11,168,718)($6,029,428) Local Funds Jackson County1.375%($418,138)($1,672,550)($3,634,790)($3,634,790)($3,634,790)($1,962,240)Kansas City3.250%($988,325)($3,953,300)($8,591,322)($8,591,322)($8,591,322)($4,638,022)Kansas City Zoo0.125%($38,013)($152,050)($330,435)($330,435)($330,435)($178,385)Total Local Revenue ($1,444,475)($5,777,900)($12,556,547)($12,556,547)($12,556,547)($6,778,647)
Table 1: Estimated Impact by Fund - Tax Year (cont.)
State FundsTax RateTY 2030TY 2031TY 2032TY 2033TY 2034General Revenue 3.000%($4,281,251)($4,281,251)($4,281,251)($4,281,251)($2,854,167)Education (SDTF)1.000%($1,427,084)($1,427,084)($1,427,084)($1,427,084)($951,389)Conservation0.125%($178,385)($178,385)($178,385)($178,385)($118,924)DNR0.100%($142,708)($142,708)($142,708)($142,708)($95,139)Total State Revenue($6,029,428)($6,029,428)($6,029,428)($6,029,428)($4,019,619) Local Funds Jackson County1.375%($1,962,240)($1,962,240)($1,962,240)($1,962,240)($1,308,160)Kansas City3.250%($4,638,022)($4,638,022)($4,638,022)($4,638,022)($3,092,015)Kansas City Zoo0.125%($178,385)($178,385)($178,385)($178,385)($118,924)Total Local Revenue ($6,778,647)($6,778,647)($6,778,647)($6,778,647)($4,519,098)
Based on historical revenue collection patterns, B&P notes that sales tax is typically split 50/50
between fiscal years. B&P estimates that this proposal could reduce TSR by $3,854,468 and
local revenues by $4,333,429 in FY25. This proposal will not impact state and local revenues
beyond FY34. L.R. No. 5414S.02T
Bill No. Truly Agreed To and Finally Passed SB 1388
Page 8 of
May 30, 2024
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Table 2: Estimated Impact by Fund - Fiscal YearState FundsFY25FY26 FY27FY28FY29General
Revenue ($2,736,900)($5,789,825)($7,930,451)($7,930,451)($6,105,851)
Education
(SDTF)($912,300)($1,929,942)($2,643,484)($2,643,484)($2,035,284)
Conservation($114,038)($241,243)($330,435)($330,435)($254,410)DNR($91,230)($192,994)($264,348)($264,348)($203,528)Total State
Revenue($3,854,468)($8,154,004)($11,168,718)($11,168,718)($8,599,073)
Local Funds Jackson County($1,254,413)($2,653,670)($3,634,790)($3,634,790)($2,798,515)Kansas City($2,964,975)($6,272,311)($8,591,322)($8,591,322)($6,614,672)Kansas City Zoo($114,038)($241,243)($330,435)($330,435)($254,410)Total Local
Revenue($4,333,426)($9,167,224)($12,556,547)($12,556,547)($9,667,597)
Table 2: Estimated Impact by Fund - Fiscal Year (cont.)State FundsFY30FY31FY32FY33FY34General
Revenue ($4,281,251)($4,281,251)($4,281,251)($4,281,251)($3,567,709)
Education
(SDTF)($1,427,084)($1,427,084)($1,427,084)($1,427,084)($1,189,236)
Conservation($178,385)($178,385)($178,385)($178,385)($148,655)DNR($142,708)($142,708)($142,708)($142,708)($118,924)Total State
Revenue($6,029,428)($6,029,428)($6,029,428)($6,029,428)($5,024,524)
Local Funds Jackson County($1,962,240)($1,962,240)($1,962,240)($1,962,240)($1,635,200)Kansas City($4,638,022)($4,638,022)($4,638,022)($4,638,022)($3,865,018)Kansas City Zoo($178,385)($178,385)($178,385)($178,385)($148,655)Total Local
Revenue($6,778,647)($6,778,647)($6,778,647)($6,778,647)($5,648,873)
Officials from the Department of Natural Resources defer to the Department of Revenue for
the potential fiscal impact of this proposal.
Oversight notes the Park, Soil, and Water Sales Tax funds are derived from the one-tenth of one
percent sales and use tax pursuant to Article IV Section 47 (a) thus DNR’s sales taxes are
constitutional mandates. Oversight assumes the proposed sales tax exemption may decrease the L.R. No. 5414S.02T
Bill No. Truly Agreed To and Finally Passed SB 1388
Page 9 of
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amount of sales tax revenue distributed to this fund. Therefore, Oversight will reflect the B&P’s
and DOR’s fiscal impact estimates for DNR’s funds.
Oversight notes that the Conservation Sales Tax funds are derived from one-eighth of one
percent sales and use tax of the Missouri Constitution, thus MDC’s sales taxes are constitutional
mandates. Oversight assumes the proposed sales tax exemption may decrease the amount of sales
tax revenue distributed to this fund.
Officials from the City of Kansas City assume the legislation will have a negative fiscal impact
of an indeterminate amount.
Oversight notes officials from B&P and DOR both assume the proposal will have a direct fiscal
impact on state and local revenues. Oversight does not have any information to the contrary.
Oversight is unable to verify the project costs and timing and therefore the resulting loss in sales
tax revenue from a nuclear security enterprise that is built/expanded in Kansas City. Therefore,
Oversight will reflect a negative unknown impact in the fiscal note. Based on the estimates
provided by DOR and B&P, Oversight assumes the fiscal impact could be significant.
FISCAL IMPACT –
State Government
FY 2025
(10 Mo.)
FY 2026FY 2027Fully
Implemented
(FY 2035)
GENERAL REVENUE
FUND
Revenue Reduction -
§144.054 - Nuclear
security enterprise sales
tax exemption (Unknown)(Unknown)(Unknown)(Unknown)
ESTIMATED NET
EFFECT ON
GENERAL REVENUE
FUND(Unknown)(Unknown)(Unknown)(Unknown)
SCHOOL DISTRICT
TRUST FUND
Revenue Reduction -
§144.054 - Nuclear (Unknown)(Unknown)(Unknown)(Unknown) L.R. No. 5414S.02T
Bill No. Truly Agreed To and Finally Passed SB 1388
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FISCAL IMPACT –
State Government
FY 2025
(10 Mo.)
FY 2026FY 2027Fully
Implemented
(FY 2035)
security enterprise sales
tax exemption
ESTIMATED NET
EFFECT ON SCHOOL
DISTRICT TRUST
FUND (Unknown)(Unknown)(Unknown)(Unknown)
CONSERVATION
COMMISSION FUND
Revenue Reduction -
§144.054 - Nuclear
security enterprise sales
tax exemption(Unknown)(Unknown)(Unknown)(Unknown)
ESTIMATED NET
EFFECT ON
CONSERVATION
COMMISSION FUND (Unknown)(Unknown)(Unknown)(Unknown)
PARKS AND SOILS
STATE SALES TAX
FUNDS
Revenue Reduction -
§144.054 - Nuclear
security enterprise sales
tax exemption(Unknown)(Unknown)(Unknown)(Unknown)
ESTIMATED NET
EFFECT ON PARKS
AND SOILS STATE
SALES TAX FUNDS(Unknown)(Unknown)(Unknown)(Unknown) L.R. No. 5414S.02T
Bill No. Truly Agreed To and Finally Passed SB 1388
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FISCAL IMPACT –
Local Government
FY 2025
(10 Mo.)
FY 2026FY 2027Fully
Implemented
(FY 2035)
LOCAL POLITICAL
SUBDIVISIONS
Revenue Reduction -
§144.054 - Kansas City -
Nuclear security
enterprise sales tax
exemption(Unknown)(Unknown)(Unknown)(Unknown)
ESTIMATED NET
EFFECT ON LOCAL
POLITICAL
SUBDIVISIONS(Unknown)(Unknown)(Unknown)(Unknown)
FISCAL IMPACT – Small Business
Small businesses that would be part of this project would be positively impacted by this
proposal.
FISCAL DESCRIPTION
This act authorizes a state and local sales tax exemption for all sales and purchases of tangible
personal property, building materials, equipment, fixtures, manufactured goods, machinery, and
parts for the purposes of constructing all or any portion of a nuclear security enterprise, as such
term is defined in the act, located in Kansas City.
This legislation is not federally mandated, would not duplicate any other program and would not
require additional capital improvements or rental space. L.R. No. 5414S.02T
Bill No. Truly Agreed To and Finally Passed SB 1388
Page 12 of 12
May 30, 2024
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SOURCES OF INFORMATION
Office of Administration - Budget and Planning
Department of Revenue
Department of Natural Resources
City of Kansas City
Julie MorffRoss StropeDirectorAssistant DirectorMay 30, 2024May 30, 2024