SENATE BILL No. 416
An Act concerning economic development; expanding the availability of certain investment
incentives; amending K.S.A. 79-32,153, 79-32,154, 79-32,160a, 79-32,195 and 79-32,196
and K.S.A. 1997 Supp. 40-2813, 74-50,114 and 74-50,132 and repealing the existing
sections.

Be it enacted by the Legislature of the State of Kansas:

    Section 1. K.S.A. 1997 Supp. 40-2813 is hereby amended to read as
follows: 40-2813. For all taxable years commencing after December 31,
1993 1997, any taxpayer who makes expenditures for the purpose of mak-
ing all or any portion of an existing building or facility accessible to per-
sons with a disability, which building or facility is on real property located
in this state and used in a trade or business or held for the production of
income, shall be entitled to claim a tax credit in an amount equal to 50%
of such expenditures or, the amount of $10,000, whichever is less, against
the tax liability imposed against such taxpayer pursuant to article 28 of
chapter 40 of the Kansas Statutes Annotated premium tax or privilege
fees imposed pursuant to K.S.A. 40-252, and amendments thereto. Such
tax credit shall be deducted from the taxpayer's tax liability for the taxable
year following the year in which the expenditures are made by the tax-
payer. If the amount of such tax credit exceeds the taxpayer's tax liability
for such taxable year, the amount thereof which exceeds such tax liability
may be carried over for deduction from the taxpayer's tax liability in the
next succeeding taxable year or years until the total amount of the tax
credit has been deducted from tax liability, except that no such tax credit
shall be carried over for deduction after the fourth taxable year succeed-
ing the taxable year in which the expenditures are made. Terms used in
this section shall have the same meanings as ascribed thereto in K.S.A.
79-32,175, and amendments thereto.

    Sec. 2. K.S.A. 1997 Supp. 74-50,114 is hereby amended to read as
follows: 74-50,114. As used in K.S.A. 74-50,113 through 74-50,117 and
amendments thereto:

    (a) ``Ancillary support'' means a facility which is operated by a busi-
ness and whose function is to provide services in support of the business,
but is not directly engaged in the business' primary function.

    (b) ``Business'' means any manufacturing business or nonmanufac-
turing business.

    (c) ``Business headquarters'' means a facility where principal officers
of the business are housed and from which direction, management or
administrative support for transactions is provided for a business or di-
vision of a business or regional division of a business.

    (d) ``Full-time employee'' means a person who is required to file a
Kansas income tax return and who is employed by a business or retail
business to perform duties in connection with the operation of the busi-
ness or retail business on:

    (1) A regular, full-time basis;

    (2) a part-time basis, provided such person is customarily performing
such duties at least 20 hours per week throughout the taxable year; or

    (3) a seasonal basis, provided such person performs such duties for
substantially all of the season customary for the position in which such
person is employed. The number of full-time employees during any tax-
able year shall be determined by dividing by 12 the sum of the number
of full-time employees on the last business day of each month of such
taxable year. If the business or retail business is in operation for less than
the entire taxable year, the number of full-time employees shall be de-
termined by dividing the sum of the number of full-time employees on
the last business day of each full calendar month during the portion of
such taxable year during which the business was in operation by the num-
ber of full calendar months during such period.

    (e) ``Manufacturing business'' means all commercial enterprises iden-
tified under the manufacturing standard industrial classification codes,
major groups 20 through 39.

    (f) ``Metropolitan county'' means the county of Douglas, Johnson,
Leavenworth, Sedgwick, Shawnee or Wyandotte.

    (g) ``Nonmanufacturing business'' means any commercial enterprise
other than a manufacturing business or a retail business. Nonmanufac-
turing business shall also include the business headquarters of an enter-
prise, ancillary support of an enterprise, and an enterprise designated
under standard industrial classification codes 5961, 7948-0201 or 7372
regardless of the firm's classification as a retail business if that facility for
which the sales tax exemption certificate is issued facilitates the creation
of at least 20 new full-time positions. In addition, with respect to enter-
prises in standard industrial classification code 7948-0201, such enter-
prises must operate an auto racetrack in the state involving capital im-
provements costing not less than $100,000,000.

    For taxable years commencing after December 31, 1997, any ancillary
support business which would otherwise be eligible for a sales tax ex-
emption or an income, premium or privilege tax credit pursuant to this
subsection shall incorporate in its tax filing for the exemption or credit a
statement from the secretary of commerce and housing which includes a
finding by the secretary that the job expansion incident to the exemption
or credit claimed would not have occurred in the absence of the credit
or exemption.

    (h) ``Nonmetropolitan region'' means a region established under
K.S.A. 74-50,116 and amendments thereto and is comprised of any county
or counties which are not metropolitan counties.

    (i) ``Retail business'' means: (1) Any commercial enterprise primarily
engaged in the sale at retail of goods or services taxable under the Kansas
retailers' sales tax act; (2) any service provider set forth in K.S.A. 17-2707,
and amendments thereto; (3) any bank, savings and loan or other lending
institution; (4) any commercial enterprise whose primary business activity
includes the sale of insurance; and (5) any commercial enterprise deriving
its revenues directly from noncommercial customers in exchange for per-
sonal services such as, but not limited to, barber shops, beauty shops,
photographic studios and funeral services.

    (j) ``Secretary'' means the secretary of the Kansas department of com-
merce and housing.

    (k) ``Standard industrial classification code'' means a standard indus-
trial classification code published in the Standard Industrial Classification
manual, 1987, as prepared by the statistical policy division of the office
of management and budget of the office of the president of the United
States of America.

    Sec. 3. K.S.A. 1997 Supp. 74-50,132 is hereby amended to read as
follows: 74-50,132. For taxable years commencing after December 31,
1997, a qualified firm shall be entitled to a credit toward its corporate
income tax liability against the tax imposed by the Kansas income tax act,
the premium tax or privilege fee imposed pursuant to K.S.A. 40-252, and
amendments thereto or the privilege tax as measured by net income of
financial institutions imposed pursuant to chapter 79, article 11 of the
Kansas Statutes Annotated in an amount equal to the portion of the qual-
ified business facility cash investment in the training and education of the
firm's employees that exceeds 2% of the firm's total payroll costs. The
maximum amount of the credit that may be claimed by a single corporate
taxpayer in any single tax year under this section shall not exceed $50,000.
Tax credits earned by a qualified business under this section must be
claimed in their entirety in the tax year eligible.

    Sec. 4. K.S.A. 79-32,153 is hereby amended to read as follows: 79-
32,153. (a) For taxable years commencing after December 31, 1997, any
taxpayer who shall invest in a qualified business facility, as defined in
subsection (b) of K.S.A. 79-32,154, and amendments thereto, shall be
allowed a credit for such investment, in an amount determined under
subsection (b) against the tax imposed by the Kansas income tax act, the
privilege tax on net income of insurance companies imposed under chap-
ter 40, article 28 of the Kansas Statutes Annotated, the premium tax or
privilege fees imposed pursuant to K.S.A. 40-252, and amendments
thereto or the privilege tax as measured by net income of financial insti-
tutions imposed pursuant to chapter 79, article 11 of the Kansas Statutes
Annotated for the taxable year during which commencement of com-
mercial operations, as defined in subsection (f) of K.S.A. 79-32,154, and
amendments thereto, occurs at such qualified business facility, and for
each of the nine succeeding taxable years. No credit shall be allowed
under this section unless the number of qualified business facility em-
ployees, as determined under subsection (d) of K.S.A. 79-32,154, and
amendments thereto, engaged or maintained in employment at the qual-
ified business facility as a direct result of the investment by the taxpayer
for the taxable year for which the credit is claimed equals or exceeds two.
Where an employee performs services for the taxpayer outside the qual-
ified business facility, the employee shall be considered engaged or main-
tained in employment at the qualified business facility if (1) the em-
ployee's service performed outside the qualified business facility is
incidental to the employee's service inside the qualified business facility,
or (2) the base of operations or, the place from which the service is di-
rected or controlled, is at the qualified business facility.

    (b) The credit allowed by subsection (a) for any taxpayer who invests
in a qualified business facility shall be a portion of the income tax, but
not in excess of 50% of such tax, otherwise imposed on or measured by
the taxpayer's qualified business facility income, as defined in subsection
(g) of K.S.A. 79-32,154, and amendments thereto, for the taxable year for
which such credit is allowed. Such portion shall be an amount equal to
the sum of the following:

    (1) One hundred dollars for each qualified business facility employee
determined under K.S.A. 79-32,154, and amendments thereto; plus

    (2) one hundred dollars for each $100,000, or major fraction thereof
(which shall be deemed to be 51% or more), in qualified business facility
investment as determined under K.S.A. 79-32,154, and amendments
thereto.

    (c) No credit shall be allowed under this section for investment in a
public utility, as such term is defined in K.S.A. 66-104, and amendments
thereto.

    Sec. 5. K.S.A. 79-32,154 is hereby amended to read as follows: 79-
32,154. As used in this act, the following words and phrases shall have
the meanings respectively ascribed to them herein:

    (a) ``Facility'' shall mean any factory, mill, plant, refinery, warehouse,
feedlot, building or complex of buildings located within the state, includ-
ing the land on which such facility is located and all machinery, equipment
and other real and tangible personal property located at or within such
facility used in connection with the operation of such facility. The word
``building'' shall include only structures within which individuals are cus-
tomarily employed or which are customarily used to house machinery,
equipment or other property.

    (b) ``Qualified business facility'' shall mean a facility which satisfies
the requirements of paragraphs (1) and (2) of this subsection.

    (1) Such facility is employed by the taxpayer in the operation of a
revenue producing enterprise, as defined in subsection (c). Such facility
shall not be considered a qualified business facility in the hands of the
taxpayer if the taxpayer's only activity with respect to such facility is to
lease it to another person or persons. If the taxpayer employs only a
portion of such facility in the operation of a revenue producing enterprise,
and leases another portion of such facility to another person or persons
or does not otherwise use such other portions in the operation of a rev-
enue producing enterprise, the portion employed by the taxpayer in the
operation of a revenue producing enterprise shall be considered a qual-
ified business facility, if the requirements of paragraph (2) of this sub-
section are satisfied.

    (2) If such facility was acquired by the taxpayer from another person
or persons, such facility was not employed, immediately prior to the trans-
fer of title to such facility to the taxpayer, or to the commencement of
the term of the lease of such facility to the taxpayer, by any other person
or persons in the operation of a revenue producing enterprise and the
taxpayer continues the operation of the same or substantially identical
revenue producing enterprise, as defined in subsection (i), at such facility.

    (c) ``Revenue producing enterprise'' shall mean:

    (1) The assembly, fabrication, manufacture or processing of any ag-
ricultural, mineral or manufactured product;

    (2) the storage, warehousing, distribution or sale of any products of
agriculture, aquaculture, mining or manufacturing;

    (3) the feeding of livestock at a feedlot;

    (4) the operation of laboratories or other facilities for scientific, ag-
ricultural, aquacultural, animal husbandry or industrial research, devel-
opment or testing;

    (5) the performance of services of any type;

    (6) the feeding of aquatic plants and animals at an aquaculture op-
eration;

    (7) the administrative management of any of the foregoing activities;
or

    (8) any combination of any of the foregoing activities.

    ``Revenue producing enterprise'' shall not mean a swine production
facility as defined in K.S.A. 17-5903, and amendments thereto.

    (d) ``Qualified business facility employee'' shall mean a person em-
ployed by the taxpayer in the operation of a qualified business facility
during the taxable year for which the credit allowed by K.S.A. 79-32,153,
and amendments thereto, is claimed:

    (1) A person shall be deemed to be so engaged if such person per-
forms duties in connection with the operation of the qualified business
facility on: (A) A regular, full-time basis; (B) a part-time basis, provided
such person is customarily performing such duties at least 20 hours per
week throughout the taxable year; or (C) a seasonal basis, provided such
person performs such duties for substantially all of the season customary
for the position in which such person is employed. The number of qual-
ified business facility employees during any taxable year shall be deter-
mined by dividing by 12 the sum of the number of qualified business
facility employees on the last business day of each month of such taxable
year. If the qualified business facility is in operation for less than the entire
taxable year, the number of qualified business facility employees shall be
determined by dividing the sum of the number of qualified business fa-
cility employees on the last business day of each full calendar month
during the portion of such taxable year during which the qualified busi-
ness facility was in operation by the number of full calendar months dur-
ing such period. Notwithstanding the provisions of this subsection, for
the purpose of computing the credit allowed by K.S.A. 79-32,153, and
amendments thereto, in the case of an investment in a qualified business
facility, which facility existed and was operated by the taxpayer or related
taxpayer prior to such investment, the number of qualified business fa-
cility employees employed in the operation of such facility shall be re-
duced by the average number, computed as provided in this subsection,
of individuals employed in the operation of the facility during the taxable
year preceding the taxable year in which the qualified business facility
investment was made at the facility.

    (2) For taxable years commencing after December 31, 1997, in the
case of a taxpayer claiming a credit against the privilege tax on net income
of insurance companies imposed under chapter 40, article 28 of Kansas
Statutes Annotated, premium tax and privilege fees imposed pursuant to
K.S.A. 40-252, and amendments thereto or the privilege tax as measured
by net income of financial institutions imposed pursuant to chapter 79
article 11 of the Kansas Statutes Annotated, ``qualified business em-
ployee'' shall not mean any person who is employed in the operation of
a qualified business facility in the state due to the merger, acquisition or
other reconfiguration of the taxpayer unless such employee's position rep-
resents a net gain of total positions created by the taxpayer and the em-
ployee's position was not in existence at the time of the merger acquisition
or other reconfiguration of the taxpayer.

    (e) ``Qualified business facility investment'' shall mean the value of
the real and tangible personal property, except inventory or property held
for sale to customers in the ordinary course of the taxpayer's business,
which constitutes the qualified business facility, or which is used by the
taxpayer in the operation of the qualified business facility, during the
taxable year for which the credit allowed by K.S.A. 79-32,153, and amend-
ments thereto, is claimed. The value of such property during such taxable
year shall be: (1) Its original cost if owned by the taxpayer; or (2) eight
times the net annual rental rate, if leased by the taxpayer. The net annual
rental rate shall be the annual rental rate paid by the taxpayer less any
annual rental rate received by the taxpayer from subrentals. The qualified
business facility investment shall be determined by dividing by 12 the
sum of the total value of such property on the last business day of each
calendar month of the taxable year. If the qualified business facility is in
operation for less than an entire taxable year, the qualified business facility
investment shall be determined by dividing the sum of the total value of
such property on the last business day of each full calendar month during
the portion of such taxable year during which the qualified business fa-
cility was in operation by the number of full calendar months during such
period. Notwithstanding the provisions of this subsection, for the purpose
of computing the credit allowed by K.S.A. 79-32,153, and amendments
thereto, in the case of an investment in a qualified business facility, which
facility existed and was operated by the taxpayer or related taxpayer prior
to such investment the amount of the taxpayer's qualified business facility
investment in such facility shall be reduced by the average amount, com-
puted as provided in this subsection, of the investment of the taxpayer or
a related taxpayer in the facility for the taxable year preceding the taxable
year in which the qualified business facility investment was made at the
facility.

    (f) ``Commencement of commercial operations'' shall be deemed to
occur during the first taxable year for which the qualified business facility
is first available for use by the taxpayer, or first capable of being used by
the taxpayer, in the revenue producing enterprise in which the taxpayer
intends to use the qualified business facility.

    (g) ``Qualified business facility income'' shall mean the Kansas taxable
income derived by the taxpayer from the operation of the qualified busi-
ness facility. If a taxpayer has income derived from the operation of a
qualified business facility as well as from other activities conducted within
this state, the Kansas taxable income derived by the taxpayer from the
operation of the qualified business facility shall be determined by multi-
plying the taxpayer's Kansas taxable income by a fraction, the numerator
of which is the property factor, as defined in paragraph (1), plus the
payroll factor, as defined in paragraph (2), and the denominator of which
is two. In the case of financial institutions, the property and payroll factors
shall be computed utilizing the specific provisions of the apportionment
method applicable to financial institutions, if enacted, and the qualified
business facility income shall be based upon net income.

    (1) The property factor is a fraction, the numerator of which is the
average value of the taxpayer's real and tangible personal property owned
or rented and used in connection with the operation of the qualified
business facility during the tax period, and the denominator of which is
the average value of all the taxpayer's real and tangible personal property
owned or rented and used in this state during the tax period. The average
value of all such property shall be determined as provided in K.S.A. 79-
3281 and 79-3282, and amendments thereto.

    (2) The payroll factor is a fraction, the numerator of which is the total
amount paid during the tax period by the taxpayer for compensation to
persons qualifying as qualified business facility employees, as determined
under subsection (d), at the qualified business facility, and the denomi-
nator of which is the total amount paid in this state during the tax period
by the taxpayer for compensation. The compensation paid in this state
shall be determined as provided in K.S.A. 79-3283, and amendments
thereto.

    The formula set forth in this subsection (g) shall not be used for any
purpose other than determining the qualified business facility income
attributable to a qualified business facility.

    (h) ``Related taxpayer'' shall mean (1) a corporation, partnership, trust
or association controlled by the taxpayer; (2) an individual, corporation,
partnership, trust or association in control of the taxpayer; or (3) a cor-
poration, partnership, trust or association controlled by an individual, cor-
poration, partnership, trust or association in control of the taxpayer. For
the purposes of this act, ``control of a corporation'' shall mean ownership,
directly or indirectly, of stock possessing at least 80% of the total com-
bined voting power of all classes of stock entitled to vote and at least 80%
of all other classes of stock of the corporation; ``control of a partnership
or association'' shall mean ownership of at least 80% of the capital or
profits interest in such partnership or association; and ``control of a trust''
shall mean ownership, directly or indirectly, of at least 80% of the ben-
eficial interest in the principal or income of such trust.

    (i) ``Same or substantially identical revenue producing enterprise''
shall mean a revenue producing enterprise in which the products pro-
duced or sold, services performed or activities conducted are the same in
character and use, are produced, sold, performed or conducted in the
same manner and to or for the same type of customers as the products,
services or activities produced, sold, performed or conducted in another
revenue producing enterprise.

    Sec. 6. K.S.A. 79-32,160a is hereby amended to read as follows: 79-
32,160a. (a) For taxable years commencing after December 31, 1997, any
taxpayer who shall invest in a qualified business facility, as defined in
subsection (b) of K.S.A. 79-32,154, and amendments thereto, and also
meets the definition of a business in subsection (b) of K.S.A. 74-50,114
and amendments thereto, shall be allowed a credit for such investment,
in an amount determined under subsection (b) or (c), as the case requires,
against the tax imposed by the Kansas income tax act or where the qual-
ified business facility is the principal place from which the trade or busi-
ness of the taxpayer is directed or managed and the facility has facilitated
the creation of at least 20 new full-time positions, against the privilege
tax on net income of insurance companies imposed under chapter 40,
article 28 of the Kansas Statutes Annotated premium tax or privilege fees
imposed pursuant to K.S.A. 40-252, and amendments thereto or as meas-
ured by the net income of financial institutions imposed pursuant to chap-
ter 40 79, article 11 of the Kansas Statutes Annotated, for the taxable year
during which commencement of commercial operations, as defined in
subsection (f) of K.S.A. 79-32,154, and amendments thereto, occurs at
such qualified business facility. In the case of a taxpayer who meets the
definition of a manufacturing business in subsection (d) of K.S.A. 74-
50,114 and amendments thereto, no credit shall be allowed under this
section unless the number of qualified business facility employees, as
determined under subsection (d) of K.S.A. 79-32,154, and amendments
thereto, engaged or maintained in employment at the qualified business
facility as a direct result of the investment by the taxpayer for the taxable
year for which the credit is claimed equals or exceeds two. In the case of
a taxpayer who meets the definition of a nonmanufacturing business in
subsection (f) of K.S.A. 74-50,114 and amendments thereto, no credit
shall be allowed under this section unless the number of qualified busi-
ness facility employees, as determined under subsection (d) of K.S.A. 79-
32,154, and amendments thereto, engaged or maintained in employment
at the qualified business facility as a direct result of the investment by the
taxpayer for the taxable year for which the credit is claimed equals or
exceeds five. Where an employee performs services for the taxpayer out-
side the qualified business facility, the employee shall be considered en-
gaged or maintained in employment at the qualified business facility if
(1) the employee's service performed outside the qualified business fa-
cility is incidental to the employee's service inside the qualified business
facility, or (2) the base of operations or, the place from which the service
is directed or controlled, is at the qualified business facility.

    (b) The credit allowed by subsection (a) for any taxpayer who invests
in a qualified business facility which is located in a designated nonmetro-
politan region established under K.S.A. 74-50,116 and amendments
thereto, on or after the effective date of this act, shall be a portion of the
income tax imposed by the Kansas income tax act on the taxpayer's Kansas
taxable income, the privilege tax on net income of insurance companies
imposed under chapter 40, article 28 of the Kansas Statutes Annotated
premium tax or privilege fees imposed pursuant to K.S.A. 40-252, and
amendments thereto or the privilege tax as measured by the net income
of financial institutions imposed pursuant to chapter 40 79, article 11 of
the Kansas Statutes Annotated, for the taxable year for which such credit
is allowed, but in the case where the qualified business facility investment
was made prior to January 1, 1996, not in excess of 50% of such tax. Such
portion shall be an amount equal to the sum of the following:

    (1) Two thousand five hundred dollars for each qualified business
facility employee determined under K.S.A. 79-32,154, and amendments
thereto; plus

    (2) one thousand dollars for each $100,000, or major fraction thereof,
which shall be deemed to be 51% or more, in qualified business facility
investment, as determined under K.S.A. 79-32,154, and amendments
thereto.

    (c) The credit allowed by subsection (a) for any taxpayer who invests
in a qualified business facility, which is not located in a nonmetropolitan
region established under K.S.A. 74-50,116 and amendments thereto and
which also meets the definition of business in subsection (b) of K.S.A.
74-50,114 and amendments thereto, on or after the effective date of this
act, shall be a portion of the income tax imposed by the Kansas income
tax act on the taxpayer's Kansas taxable income, the privilege tax on net
income of insurance companies imposed under chapter 40, article 28 of
the Kansas Statutes Annotated premium tax or privilege fees imposed
pursuant to K.S.A. 40-252, and amendments thereto or the privilege tax
as measured by the net income of financial institutions imposed pursuant
to chapter 40 79, article 11 of the Kansas Statutes Annotated, for the
taxable year for which such credit is allowed, but in the case where the
qualified business facility investment was made prior to January 1, 1996,
not in excess of 50% of such tax. Such portion shall be an amount equal
to the sum of the following:

    (1) One thousand five hundred dollars for each qualified business
facility employee as determined under K.S.A. 79-32,154, and amend-
ments thereto; and

    (2) one thousand dollars for each $100,000, or major fraction thereof,
which shall be deemed to be 51% or more, in qualified business facility
investment as determined under K.S.A. 79-32,154, and amendments
thereto.

    (d) The credit allowed by subsection (a) for each qualified business
facility employee and for qualified business facility investment shall be a
one-time credit. If the amount of the credit allowed under subsection (a)
exceeds the tax imposed by the Kansas income tax act on the taxpayer's
Kansas taxable income, the privilege tax on net income of insurance com-
panies imposed under chapter 40, article 28 of the Kansas Statutes An-
notated premium tax and privilege fees imposed pursuant to K.S.A. 40-
252, and amendments thereto or the privilege tax as measured by the net
income of financial institutions imposed pursuant to chapter 40 79, article
11 of the Kansas Statutes Annotated for the taxable year, or in the case
where the qualified business facility investment was made prior to January
1, 1996, 50% of such tax imposed upon the amount which exceeds such
tax liability or such portion thereof may be carried over for credit in the
same manner in the succeeding taxable years until the total amount of
such credit is used. Except that, before the credit is allowed, a taxpayer,
who meets the definition of a manufacturing business in subsection (d)
of K.S.A. 74-50,114 and amendments thereto, shall recertify annually that
the net increase of a minimum of two qualified business facility employees
has continued to be maintained and a taxpayer, who meets the definition
of a nonmanufacturing business in subsection (f) of K.S.A. 74-50,114 and
amendments thereto, shall recertify annually that the net increase of a
minimum of five qualified business employees has continued to be main-
tained.

    (e) Notwithstanding the foregoing provisions of this section, any tax-
payer qualified and certified under the provisions of K.S.A. 1997 Supp.
74-50,131, and amendments thereto, and that has received written ap-
proval from the secretary of commerce and housing for participation and
has participated, during the tax year for which the exemption is claimed,
in the Kansas industrial training, Kansas industrial retraining or the state
of Kansas investments in lifelong learning program or is eligible for the
tax credit established in K.S.A. 1997 Supp. 74-50,132, and amendments
thereto, shall be entitled to a credit in an amount equal to 10% of that
portion of the qualified business facility investment which exceeds
$50,000 in lieu of the credit provided in subsection (b)(2) or (c)(2) without
regard to the number of qualified business facility employees engaged or
maintained in employment at the qualified business facility. The credit
allowed by this subsection shall be a one-time credit. If the amount
thereof exceeds the tax imposed by the Kansas income tax act on the
taxpayer's Kansas taxable income or the premium tax or privilege fees
imposed pursuant to K.S.A. 40-252, and amendments thereto or the priv-
ilege tax as measured by net income of financial institutions imposed pur-
suant to chapter 79, article 11 of the Kansas Statutes Annotated for the
taxable year, the amount thereof which exceeds such tax liability may be
carried forward for credit in the succeeding taxable year or years until
the total amount of the tax credit is used, except that no such tax credit
shall be carried forward for deduction after the 10th taxable year suc-
ceeding the taxable year in which such credit initially was claimed and no
carry forward shall be allowed for deduction in any succeeding taxable
year unless the taxpayer continued to be qualified and was recertified for
such succeeding taxable year pursuant to K.S.A. 1997 Supp. 74-50,131,
and amendments thereto.

    (f) This section and K.S.A. 79-32,160b and amendments thereto shall
be part of and supplemental to the job expansion and investment credit
act of 1976 and acts amendatory thereof and supplemental thereto.

    Sec. 7. K.S.A. 79-32,195 is hereby amended to read as follows: 79-
32,195. As used in this act, the following words and phrases shall have
the meanings ascribed to them herein: (a) ``Business firm'' means any
business entity authorized to do business in the state of Kansas which is
subject to the state income tax imposed by the provisions of the Kansas
income tax act, any national banking association, state bank, trust com-
pany or savings and loan association paying an annual tax on its net income
pursuant to article 11 of chapter 79 of the Kansas Statutes Annotated, or
any insurance company paying an annual tax on its net income pursuant
to article 28 of chapter 40 of the Kansas Statutes Annotated the premium
tax and privilege fees imposed pursuant to K.S.A. 40-252, and amend-
ments thereto;

    (b) ``community services'' means:

    (1) The conduct of activities which meet a demonstrated community
need and which are designed to achieve the objectives set forth in the
blueprint for investment in Kansas children and their families of the 1991
special committee on childrens' initiatives and which have been approved
by local planning councils established in accordance with such blueprint
improved educational and social services for Kansas children and their
families, and which are coordinated with communities;

    (2) crime prevention; and

    (3) health care services.

    (c) ``crime prevention'' means any nongovernmental activity which
aids in the prevention of crime in an impoverished area.

    (d) ``community service organization'' means any organization per-
forming community services in Kansas and which:

    (1) Has obtained a ruling from the internal revenue service of the
United States department of the treasury that such organization is exempt
from income taxation under the provisions of section 501(c)(3) of the
federal internal revenue code; or

    (2) is incorporated in the state of Kansas or another state as a non-
stock, nonprofit corporation; or

    (3) has been designated as a community development corporation by
the United States government under the provisions of title VII of the
economic opportunity act of 1964; or

    (4) is chartered by the United States congress.

    (e) ``health care services'' shall include, but not be limited to, the
following: Services provided by local health departments, city, county or
district hospitals, city or county nursing homes, or other residential insti-
tutions, preventive health care services offered by a community service
organization including immunizations, prenatal care, the postponement
of entry into nursing homes by home health care services, and community
based services for persons with a disability, mental health services, indi-
gent health care, physician or health care worker recruitment, health ed-
ucation, emergency medical services, services provided by rural health
clinics, integration of health care services, home health services and serv-
ices provided by rural health networks.

    (f) ``rural community'' means any city having a population of fewer
than 15,000 located in a county that is not part of a standard metropolitan
statistical area as defined by the United States department of commerce
or its successor agency. However, any such city located in a county de-
fined as a standard metropolitan statistical area shall be deemed a rural
community if a substantial number of persons in such county derive their
income from agriculture and, in any county where there is only one city
within the county which has a population of more than 15,000 and which
classifies as a standard metropolitan statistical area, all other cities in that
county having a population of less than 15,000 shall be deemed a rural
community.

    Sec. 8. K.S.A. 79-32,196 is hereby amended to read as follows: 79-
32,196. For taxable years commencing after December 31, 1997, any busi-
ness firm which contributes to a community service organization or gov-
ernmental entity which engages in the activities of providing community
services, shall be allowed a credit, as provided in K.S.A. 79-32,197, against
the tax imposed by the Kansas income tax act, the tax on net income of
national banking associations, state banks, trust companies or savings and
loan associations imposed under article 11 of chapter 79 of the Kansas
Statutes Annotated, or the tax on net income of insurance companies
imposed under article 28 of chapter 40 of the Kansas Statutes Annotated
premium tax or privilege fees imposed pursuant to K.S.A. 40-252, and
amendments thereto, if the proposal of the provider of community serv-
ices is approved pursuant to K.S.A. 79-32,198. Any business firm which
makes such a contribution after the effective date of this act and prior to
July 1, 1998, shall be allowed a credit in accordance with this act, as if
the contribution had been made in calendar year 1997, for the firm's tax
liability for taxable years commencing after December 31, 1996. Notwith-
standing any other provisions of this section, no business firm shall claim
more than one credit for the same contribution.

    New Sec. 9. For purposes of calculating any tax due under K.S.A.
40-253, and amendments thereto, from a taxpayer not organized under
the laws of this state, the credits allowed pursuant to K.S.A. 40-2813, 74-
50,132, 79-32,153, 79-32,160 and 79-32,196, and amendments thereto,
shall be treated as tax paid under K.S.A. 40-252, and amendments thereto.

    Sec. 10. K.S.A. 79-32,153, 79-32,154, 79-32,160a, 79-32,195 and
79-32,196 and K.S.A. 1997 Supp. 40-2813, 74-50,114 and 74-50,132 are
hereby repealed.

    Sec. 11. This act shall take effect and be in force from and after its
publication in the Kansas register.

I hereby certifiy that the above Bill originated in the
Senate, and passed that body

__________________________________

Senate adopted
Conference Committe Report __________________________________

__________________________________

President of the Senate.

__________________________________

Secretary of the Senate.

Passed the House
as amended __________________________

House adopted
Conference Committee Report __________________________

__________________________________

Speaker of the House.

__________________________________

Chief Clerk of the House.

Approved __________________________

__________________________________

Governor.