[As Amended by House Committee of the Whole]
         
As Amended by House Committee
          
Session of 1999
         
HOUSE BILL No. 2048
         
By Representatives Palmer, Aday, Alldritt, Ballard, Barnes, Beggs, Ben-
                lon, Bethell, Boston, Burroughs, Campbell, Compton, Dahl, Dean,
                Faber, Farmer, Flaharty, Franklin, Freeborn, Gilbert, Gilmore, Glas-
                scock, Gregory, Haley, Helgerson, Henderson, Howell, Huff, Jenkins,
                Jennison, Johnston, Kirk, Phill Kline, Krehbiel, Landwehr, Lane, Lar-
                kin, Light, Lightner, Lloyd, P.Long, Mason, Mayans, Mays, McClure,
                McCreary, McKechnie, Mollenkamp, Myers, Neufeld, O'Connor,
                O'Neal, Osborne, E. Peterson, J. Peterson, Phelps, Pottorff, Powell,
                Powers, Ruff, Sharp, Showalter, Shriver, Sloan, Spangler, Stone, Swen-
                son, Tanner, Thimesch, Toelkes, Toplikar, Vickrey, Vining, Wagle and
                Welshimer
               
1-20
               

21             AN  ACT relating to sales taxation; exempting sales of tangible personal
22             property and services purchased for repair or replacement of property
23             damaged or destroyed by certain disasters; amending K.S.A. 1998
24             Supp. 79-3606 and repealing the existing section. [relating to taxa-
25             tion; amending K.S.A. 12-189a, 79-2959 and K.S.A. 1998 Supp.
26             79-2964, 79-34,147, 79-3603 and 79-3703 and repealing the ex-
27             isting sections.]
28      
29       Be it enacted by the Legislature of the State of Kansas:
30             Section  1. K.S.A. 1998 Supp. 79-3606 is hereby amended to read as
31       follows: 79-3606. The following shall be exempt from the tax imposed by
32       this act:
33             (a) All sales of motor-vehicle fuel or other articles upon which a sales
34       or excise tax has been paid, not subject to refund, under the laws of this
35       state except cigarettes as defined by K.S.A. 79-3301 and amendments
36       thereto, cereal malt beverages and malt products as defined by K.S.A. 79-
37       3817 and amendments thereto, including wort, liquid malt, malt syrup
38       and malt extract, which is not subject to taxation under the provisions of
39       K.S.A. 79-41a02 and amendments thereto, motor vehicles taxed pursuant
40       to K.S.A. 79-5117, and amendments thereto, tires taxed pursuant to
41       K.S.A. 1998 Supp. 65-3424d, and amendments thereto, and drycleaning
42       and laundry services taxed pursuant to K.S.A. 1998 Supp. 65-34,150, and

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  1       amendments thereto;
  2             (b) all sales of tangible personal property or service, including the
  3       renting and leasing of tangible personal property, purchased directly by
  4       the state of Kansas, a political subdivision thereof, other than a school or
  5       educational institution, or purchased by a public or private nonprofit hos-
  6       pital or public hospital authority or nonprofit blood, tissue or organ bank
  7       and used exclusively for state, political subdivision, hospital or public hos-
  8       pital authority or nonprofit blood, tissue or organ bank purposes, except
  9       when: (1) Such state, hospital or public hospital authority is engaged or
10       proposes to engage in any business specifically taxable under the provi-
11       sions of this act and such items of tangible personal property or service
12       are used or proposed to be used in such business, or (2) such political
13       subdivision is engaged or proposes to engage in the business of furnishing
14       gas, water, electricity or heat to others and such items of personal prop-
15       erty or service are used or proposed to be used in such business;
16             (c) all sales of tangible personal property or services, including the
17       renting and leasing of tangible personal property, purchased directly by
18       a public or private elementary or secondary school or public or private
19       nonprofit educational institution and used primarily by such school or
20       institution for nonsectarian programs and activities provided or sponsored
21       by such school or institution or in the erection, repair or enlargement of
22       buildings to be used for such purposes. The exemption herein provided
23       shall not apply to erection, construction, repair, enlargement or equip-
24       ment of buildings used primarily for human habitation;
25             (d) all sales of tangible personal property or services purchased by a
26       contractor for the purpose of constructing, equipping, reconstructing,
27       maintaining, repairing, enlarging, furnishing or remodeling facilities for
28       any public or private nonprofit hospital or public hospital authority, public
29       or private elementary or secondary school or a public or private nonprofit
30       educational institution, which would be exempt from taxation under the
31       provisions of this act if purchased directly by such hospital or public hos-
32       pital authority, school or educational institution; and all sales of tangible
33       personal property or services purchased by a contractor for the purpose
34       of constructing, equipping, reconstructing, maintaining, repairing, en-
35       larging, furnishing or remodeling facilities for any political subdivision of
36       the state, the total cost of which is paid from funds of such political
37       subdivision and which would be exempt from taxation under the provi-
38       sions of this act if purchased directly by such political subdivision. Nothing
39       in this subsection or in the provisions of K.S.A. 12-3418 and amendments
40       thereto, shall be deemed to exempt the purchase of any construction
41       machinery, equipment or tools used in the constructing, equipping, re-
42       constructing, maintaining, repairing, enlarging, furnishing or remodeling
43       facilities for any political subdivision of the state. As used in this subsec-

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  1       tion, K.S.A. 12-3418 and 79-3640, and amendments thereto, "funds of a
  2       political subdivision" shall mean general tax revenues, the proceeds of
  3       any bonds and gifts or grants-in-aid. Gifts shall not mean funds used for
  4       the purpose of constructing, equipping, reconstructing, repairing, enlarg-
  5       ing, furnishing or remodeling facilities which are to be leased to the do-
  6       nor. When any political subdivision of the state, public or private non-
  7       profit hospital or public hospital authority, public or private elementary
  8       or secondary school or public or private nonprofit educational institution
  9       shall contract for the purpose of constructing, equipping, reconstructing,
10       maintaining, repairing, enlarging, furnishing or remodeling facilities, it
11       shall obtain from the state and furnish to the contractor an exemption
12       certificate for the project involved, and the contractor may purchase ma-
13       terials for incorporation in such project. The contractor shall furnish the
14       number of such certificate to all suppliers from whom such purchases are
15       made, and such suppliers shall execute invoices covering the same bearing
16       the number of such certificate. Upon completion of the project the con-
17       tractor shall furnish to the political subdivision, hospital or public hospital
18       authority, school or educational institution concerned a sworn statement,
19       on a form to be provided by the director of taxation, that all purchases so
20       made were entitled to exemption under this subsection. As an alternative
21       to the foregoing procedure, any such contracting entity may apply to the
22       secretary of revenue for agent status for the sole purpose of issuing and
23       furnishing project exemption certificates to contractors pursuant to rules
24       and regulations adopted by the secretary establishing conditions and stan-
25       dards for the granting and maintaining of such status. All invoices shall
26       be held by the contractor for a period of five years and shall be subject
27       to audit by the director of taxation. If any materials purchased under such
28       a certificate are found not to have been incorporated in the building or
29       other project or not to have been returned for credit or the sales or
30       compensating tax otherwise imposed upon such materials which will not
31       be so incorporated in the building or other project reported and paid by
32       such contractor to the director of taxation not later than the 20th day of
33       the month following the close of the month in which it shall be deter-
34       mined that such materials will not be used for the purpose for which such
35       certificate was issued, the political subdivision, hospital or public hospital
36       authority, school or educational institution concerned shall be liable for
37       tax on all materials purchased for the project, and upon payment thereof
38       it may recover the same from the contractor together with reasonable
39       attorney fees. Any contractor or any agent, employee or subcontractor
40       thereof, who shall use or otherwise dispose of any materials purchased
41       under such a certificate for any purpose other than that for which such a
42       certificate is issued without the payment of the sales or compensating tax
43       otherwise imposed upon such materials, shall be guilty of a misdemeanor

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  1       and, upon conviction therefor, shall be subject to the penalties provided
  2       for in subsection (g) of K.S.A. 79-3615, and amendments thereto;
  3             (e) all sales of tangible personal property or services purchased by a
  4       contractor for the erection, repair or enlargement of buildings or other
  5       projects for the government of the United States, its agencies or instru-
  6       mentalities, which would be exempt from taxation if purchased directly
  7       by the government of the United States, its agencies or instrumentalities.
  8       When the government of the United States, its agencies or instrumen-
  9       talities shall contract for the erection, repair, or enlargement of any build-
10       ing or other project, it shall obtain from the state and furnish to the
11       contractor an exemption certificate for the project involved, and the con-
12       tractor may purchase materials for incorporation in such project. The
13       contractor shall furnish the number of such certificates to all suppliers
14       from whom such purchases are made, and such suppliers shall execute
15       invoices covering the same bearing the number of such certificate. Upon
16       completion of the project the contractor shall furnish to the government
17       of the United States, its agencies or instrumentalities concerned a sworn
18       statement, on a form to be provided by the director of taxation, that all
19       purchases so made were entitled to exemption under this subsection. As
20       an alternative to the foregoing procedure, any such contracting entity may
21       apply to the secretary of revenue for agent status for the sole purpose of
22       issuing and furnishing project exemption certificates to contractors pur-
23       suant to rules and regulations adopted by the secretary establishing con-
24       ditions and standards for the granting and maintaining of such status. All
25       invoices shall be held by the contractor for a period of five years and shall
26       be subject to audit by the director of taxation. Any contractor or any agent,
27       employee or subcontractor thereof, who shall use or otherwise dispose of
28       any materials purchased under such a certificate for any purpose other
29       than that for which such a certificate is issued without the payment of
30       the sales or compensating tax otherwise imposed upon such materials,
31       shall be guilty of a misdemeanor and, upon conviction therefor, shall be
32       subject to the penalties provided for in subsection (g) of K.S.A. 79-3615
33       and amendments thereto;
34             (f) tangible personal property purchased by a railroad or public utility
35       for consumption or movement directly and immediately in interstate
36       commerce;
37             (g) sales of aircraft including remanufactured and modified aircraft,
38       sales of aircraft repair, modification and replacement parts and sales of
39       services employed in the remanufacture, modification and repair of air-
40       craft sold to persons using directly or through an authorized agent such
41       aircraft and aircraft repair, modification and replacement parts as certified
42       or licensed carriers of persons or property in interstate or foreign com-
43       merce under authority of the laws of the United States or any foreign

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  1       government or sold to any foreign government or agency or instrumen-
  2       tality of such foreign government and all sales of aircraft, aircraft parts,
  3       replacement parts and services employed in the remanufacture, modifi-
  4       cation and repair of aircraft for use outside of the United States;
  5             (h) all rentals of nonsectarian textbooks by public or private elemen-
  6       tary or secondary schools;
  7             (i) the lease or rental of all films, records, tapes, or any type of sound
  8       or picture transcriptions used by motion picture exhibitors;
  9             (j) meals served without charge or food used in the preparation of
10       such meals to employees of any restaurant, eating house, dining car, hotel,
11       drugstore or other place where meals or drinks are regularly sold to the
12       public if such employees' duties are related to the furnishing or sale of
13       such meals or drinks;
14             (k) any motor vehicle, semitrailer or pole trailer, as such terms are
15       defined by K.S.A. 8-126 and amendments thereto, or aircraft sold and
16       delivered in this state to a bona fide resident of another state, which motor
17       vehicle, semitrailer, pole trailer or aircraft is not to be registered or based
18       in this state and which vehicle, semitrailer, pole trailer or aircraft will not
19       remain in this state more than 10 days;
20             (l) all isolated or occasional sales of tangible personal property, serv-
21       ices, substances or things, except isolated or occasional sale of motor
22       vehicles specifically taxed under the provisions of subsection (o) of K.S.A.
23       79-3603 and amendments thereto;
24             (m) all sales of tangible personal property which become an ingre-
25       dient or component part of tangible personal property or services pro-
26       duced, manufactured or compounded for ultimate sale at retail within or
27       without the state of Kansas; and any such producer, manufacturer or
28       compounder may obtain from the director of taxation and furnish to the
29       supplier an exemption certificate number for tangible personal property
30       for use as an ingredient or component part of the property or services
31       produced, manufactured or compounded;
32             (n) all sales of tangible personal property which is consumed in the
33       production, manufacture, processing, mining, drilling, refining or com-
34       pounding of tangible personal property, the treating of by-products or
35       wastes derived from any such production process, the providing of serv-
36       ices or the irrigation of crops for ultimate sale at retail within or without
37       the state of Kansas; and any purchaser of such property may obtain from
38       the director of taxation and furnish to the supplier an exemption certifi-
39       cate number for tangible personal property for consumption in such pro-
40       duction, manufacture, processing, mining, drilling, refining, compound-
41       ing, treating, irrigation and in providing such services;
42             (o) all sales of animals, fowl and aquatic plants and animals, the pri-
43       mary purpose of which is use in agriculture or aquaculture, as defined in

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  1       K.S.A. 47-1901, and amendments thereto, the production of food for
  2       human consumption, the production of animal, dairy, poultry or aquatic
  3       plant and animal products, fiber or fur, or the production of offspring for
  4       use for any such purpose or purposes;
  5             (p) all sales of drugs, as defined by K.S.A. 65-1626 and amendments
  6       thereto, dispensed pursuant to a prescription order, as defined by K.S.A.
  7       65-1626 and amendments thereto, by a licensed practitioner;
  8             (q) all sales of insulin dispensed by a person licensed by the state
  9       board of pharmacy to a person for treatment of diabetes at the direction
10       of a person licensed to practice medicine by the board of healing arts;
11             (r) all sales of prosthetic and orthopedic appliances prescribed in
12       writing by a person licensed to practice the healing arts, dentistry or
13       optometry. For the purposes of this subsection, the term prosthetic and
14       orthopedic appliances means any apparatus, instrument, device, or equip-
15       ment used to replace or substitute for any missing part of the body; used
16       to alleviate the malfunction of any part of the body; or used to assist any
17       disabled person in leading a normal life by facilitating such person's mo-
18       bility; such term shall include accessories attached or to be attached to
19       motor vehicles, but such term shall not include motor vehicles or personal
20       property which when installed becomes a fixture to real property;
21             (s) all sales of tangible personal property or services purchased di-
22       rectly by a groundwater management district organized or operating un-
23       der the authority of K.S.A. 82a-1020 et seq. and amendments thereto,
24       which property or services are used in the operation or maintenance of
25       the district;
26             (t) all sales of farm machinery and equipment or aquaculture ma-
27       chinery and equipment, repair and replacement parts therefor and serv-
28       ices performed in the repair and maintenance of such machinery and
29       equipment. For the purposes of this subsection the term "farm machinery
30       and equipment or aquaculture machinery and equipment" shall include
31       machinery and equipment used in the operation of Christmas tree farm-
32       ing but shall not include any passenger vehicle, truck, truck tractor, trailer,
33       semitrailer or pole trailer, other than a farm trailer, as such terms are
34       defined by K.S.A. 8-126 and amendments thereto. Each purchaser of
35       farm machinery and equipment or aquaculture machinery and equipment
36       exempted herein must certify in writing on the copy of the invoice or
37       sales ticket to be retained by the seller that the farm machinery and
38       equipment or aquaculture machinery and equipment purchased will be
39       used only in farming, ranching or aquaculture production. Farming or
40       ranching shall include the operation of a feedlot and farm and ranch work
41       for hire and the operation of a nursery;
42             (u) all leases or rentals of tangible personal property used as a dwell-
43       ing if such tangible personal property is leased or rented for a period of

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  1       more than 28 consecutive days;
  2             (v) all sales of food products to any contractor for use in preparing
  3       meals for delivery to homebound elderly persons over 60 years of age and
  4       to homebound disabled persons or to be served at a group-sitting at a
  5       location outside of the home to otherwise homebound elderly persons
  6       over 60 years of age and to otherwise homebound disabled persons, as
  7       all or part of any food service project funded in whole or in part by
  8       government or as part of a private nonprofit food service project available
  9       to all such elderly or disabled persons residing within an area of service
10       designated by the private nonprofit organization, and all sales of food
11       products for use in preparing meals for consumption by indigent or home-
12       less individuals whether or not such meals are consumed at a place des-
13       ignated for such purpose;
14             (w) all sales of natural gas, electricity, heat and water delivered
15       through mains, lines or pipes: (1) To residential premises for noncom-
16       mercial use by the occupant of such premises; (2) for agricultural use and
17       also, for such use, all sales of propane gas; (3) for use in the severing of
18       oil; and (4) to any property which is exempt from property taxation pur-
19       suant to K.S.A. 79-201b Second through Sixth. As used in this paragraph,
20       "severing" shall have the meaning ascribed thereto by subsection (k) of
21       K.S.A. 79-4216, and amendments thereto;
22             (x) all sales of propane gas, LP-gas, coal, wood and other fuel sources
23       for the production of heat or lighting for noncommercial use of an oc-
24       cupant of residential premises;
25             (y) all sales of materials and services used in the repairing, servicing,
26       altering, maintaining, manufacturing, remanufacturing, or modification of
27       railroad rolling stock for use in interstate or foreign commerce under
28       authority of the laws of the United States;
29             (z) all sales of tangible personal property and services purchased di-
30       rectly by a port authority or by a contractor therefor as provided by the
31       provisions of K.S.A. 12-3418 and amendments thereto;
32             (aa) all sales of materials and services applied to equipment which is
33       transported into the state from without the state for repair, service, al-
34       teration, maintenance, remanufacture or modification and which is sub-
35       sequently transported outside the state for use in the transmission of
36       liquids or natural gas by means of pipeline in interstate or foreign com-
37       merce under authority of the laws of the United States;
38             (bb) all sales of used mobile homes or manufactured homes. As used
39       in this subsection: (1) "Mobile homes" and "manufactured homes" shall
40       have the meanings ascribed thereto by K.S.A. 58-4202 and amendments
41       thereto; and (2) "sales of used mobile homes or manufactured homes"
42       means sales other than the original retail sale thereof;
43             (cc) all sales of tangible personal property or services purchased for

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  1       the purpose of and in conjunction with constructing, reconstructing, en-
  2       larging or remodeling a business or retail business which meets the
  3       requirements established in K.S.A. 74-50,115 and amendments thereto,
  4       and the sale and installation of machinery and equipment purchased for
  5       installation at any such business or retail business. When a person shall
  6       contract for the construction, reconstruction, enlargement or remodeling
  7       of any such business or retail business, such person shall obtain from the
  8       state and furnish to the contractor an exemption certificate for the project
  9       involved, and the contractor may purchase materials, machinery and
10       equipment for incorporation in such project. The contractor shall furnish
11       the number of such certificates to all suppliers from whom such purchases
12       are made, and such suppliers shall execute invoices covering the same
13       bearing the number of such certificate. Upon completion of the project
14       the contractor shall furnish to the owner of the business or retail business
15       a sworn statement, on a form to be provided by the director of taxation,
16       that all purchases so made were entitled to exemption under this subsec-
17       tion. All invoices shall be held by the contractor for a period of five years
18       and shall be subject to audit by the director of taxation. Any contractor
19       or any agent, employee or subcontractor thereof, who shall use or oth-
20       erwise dispose of any materials, machinery or equipment purchased un-
21       der such a certificate for any purpose other than that for which such a
22       certificate is issued without the payment of the sales or compensating tax
23       otherwise imposed thereon, shall be guilty of a misdemeanor and, upon
24       conviction therefor, shall be subject to the penalties provided for in sub-
25       section (g) of K.S.A. 79-3615 and amendments thereto. As used in this
26       subsection, "business" and "retail business" have the meanings respec-
27       tively ascribed thereto by K.S.A. 74-50,114 and amendments thereto;
28             (dd) all sales of tangible personal property purchased with food
29       stamps issued by the United States department of agriculture;
30             (ee) all sales of lottery tickets and shares made as part of a lottery
31       operated by the state of Kansas;
32             (ff) on and after July 1, 1988, all sales of new mobile homes or man-
33       ufactured homes to the extent of 40% of the gross receipts, determined
34       without regard to any trade-in allowance, received from such sale. As used
35       in this subsection, "mobile homes" and "manufactured homes" shall have
36       the meanings ascribed thereto by K.S.A. 58-4202 and amendments
37       thereto;
38             (gg) all sales of tangible personal property purchased in accordance
39       with vouchers issued pursuant to the federal special supplemental food
40       program for women, infants and children;
41             (hh) all sales of medical supplies and equipment purchased directly
42       by a nonprofit skilled nursing home or nonprofit intermediate nursing
43       care home, as defined by K.S.A. 39-923, and amendments thereto, for

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9

  1       the purpose of providing medical services to residents thereof. This ex-
  2       emption shall not apply to tangible personal property customarily used
  3       for human habitation purposes;
  4             (ii) all sales of tangible personal property purchased directly by a non-
  5       profit organization for nonsectarian comprehensive multidiscipline youth
  6       development programs and activities provided or sponsored by such or-
  7       ganization, and all sales of tangible personal property by or on behalf of
  8       any such organization. This exemption shall not apply to tangible personal
  9       property customarily used for human habitation purposes;
10             (jj) all sales of tangible personal property or services, including the
11       renting and leasing of tangible personal property, purchased directly on
12       behalf of a community-based mental retardation facility or mental health
13       center organized pursuant to K.S.A. 19-4001 et seq., and amendments
14       thereto, and licensed in accordance with the provisions of K.S.A. 75-
15       3307b and amendments thereto. This exemption shall not apply to tan-
16       gible personal property customarily used for human habitation purposes;
17             (kk) on and after January 1, 1989, all sales of machinery and equip-
18       ment used directly and primarily for the purposes of manufacturing, as-
19       sembling, processing, finishing, storing, warehousing or distributing ar-
20       ticles of tangible personal property in this state intended for resale by a
21       manufacturing or processing plant or facility or a storage, warehousing or
22       distribution facility, and all sales of repair and replacement parts and
23       accessories purchased for such machinery and equipment:
24             (1) For purposes of this subsection, machinery and equipment shall
25       be deemed to be used directly and primarily in the manufacture, assem-
26       blage, processing, finishing, storing, warehousing or distributing of tan-
27       gible personal property where such machinery and equipment is used
28       during a manufacturing, assembling, processing or finishing, storing,
29       warehousing or distributing operation:
30             (A) To effect a direct and immediate physical change upon the tan-
31       gible personal property;
32             (B) to guide or measure a direct and immediate physical change upon
33       such property where such function is an integral and essential part of
34       tuning, verifying or aligning the component parts of such property;
35             (C) to test or measure such property where such function is an in-
36       tegral part of the production flow or function;
37             (D) to transport, convey or handle such property during the manu-
38       facturing, processing, storing, warehousing or distribution operation at
39       the plant or facility; or
40             (E) to place such property in the container, package or wrapping in
41       which such property is normally sold or transported.
42             (2)  For purposes of this subsection "machinery and equipment used
43       directly and primarily" shall include, but not be limited to:

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  1             (A) Mechanical machines or components thereof contributing to a
  2       manufacturing, assembling or finishing process;
  3             (B) molds and dies that determine the physical characteristics of the
  4       finished product or its packaging material;
  5             (C) testing equipment to determine the quality of the finished
  6       product;
  7             (D) computers and related peripheral equipment that directly control
  8       or measure the manufacturing process or which are utilized for engi-
  9       neering of the finished product; and
10             (E) computers and related peripheral equipment utilized for research
11       and development and product design.
12             (3) "Machinery and equipment used directly and primarily" shall not
13       include:
14             (A) Hand tools;
15             (B) machinery, equipment and tools used in maintaining and repair-
16       ing any type of machinery and equipment;
17             (C) transportation equipment not used in the manufacturing, assem-
18       bling, processing, furnishing, storing, warehousing or distributing process
19       at the plant or facility;
20             (D) office machines and equipment including computers and related
21       peripheral equipment not directly and primarily used in controlling or
22       measuring the manufacturing process;
23             (E) furniture and buildings; and
24             (F) machinery and equipment used in administrative, accounting,
25       sales or other such activities of the business;
26             (4) for purposes of this subsection, "repair and replacement parts and
27       accessories" means all parts and accessories for exempt machinery and
28       equipment, including but not limited to dies, jigs, molds, and patterns
29       which are attached to exempt machinery or which are otherwise used in
30       production, short-lived replaceable parts that can be readily detached
31       from exempt machinery or equipment, such as belts, drill bits, grinding
32       wheels, cutting bars and saws, and other replacement parts for production
33       equipment, including refractory brick and other refractory items for kiln
34       equipment used in production operations;
35             (ll) all sales of educational materials purchased for distribution to the
36       public at no charge by a nonprofit corporation organized for the purpose
37       of encouraging, fostering and conducting programs for the improvement
38       of public health;
39             (mm) all sales of seeds and tree seedlings; fertilizers, insecticides,
40       herbicides, germicides, pesticides and fungicides; and services, purchased
41       and used for the purpose of producing plants in order to prevent soil
42       erosion on land devoted to agricultural use;
43             (nn) except as otherwise provided in this act, all sales of services ren-

HB 2048--Am. by HCW

11

  1       dered by an advertising agency or licensed broadcast station or any mem-
  2       ber, agent or employee thereof;
  3             (oo) all sales of tangible personal property purchased by a community
  4       action group or agency for the exclusive purpose of repairing or weath-
  5       erizing housing occupied by low income individuals;
  6             (pp) all sales of drill bits and explosives actually utilized in the explo-
  7       ration and production of oil or gas;
  8             (qq) all sales of tangible personal property and services purchased by
  9       a nonprofit museum or historical society or any combination thereof, in-
10       cluding a nonprofit organization which is organized for the purpose of
11       stimulating public interest in the exploration of space by providing edu-
12       cational information, exhibits and experiences, which is exempt from fed-
13       eral income taxation pursuant to section 501(c)(3) of the federal internal
14       revenue code of 1986;
15             (rr) all sales of tangible personal property which will admit the pur-
16       chaser thereof to any annual event sponsored by a nonprofit organization
17       which is exempt from federal income taxation pursuant to section
18       501(c)(3) of the federal internal revenue code of 1986;
19             (ss) all sales of tangible personal property and services purchased by
20       a public broadcasting station licensed by the federal communications
21       commission as a noncommercial educational television or radio station;
22             (tt) all sales of tangible personal property and services purchased by
23       or on behalf of a not-for-profit corporation which is exempt from federal
24       income taxation pursuant to section 501(c)(3) of the federal internal rev-
25       enue code of 1986, for the sole purpose of constructing a Kansas Korean
26       War memorial;
27             (uu) all sales of tangible personal property and services purchased by
28       or on behalf of any rural volunteer fire-fighting organization for use ex-
29       clusively in the performance of its duties and functions;
30             (vv) all sales of tangible personal property purchased by any of the
31       following organizations which are exempt from federal income taxation
32       pursuant to section 501 (c)(3) of the federal internal revenue code of
33       1986, for the following purposes, and all sales of any such property by or
34       on behalf of any such organization for any such purpose:
35             (1) The American Heart Association, Kansas Affiliate, Inc. for the
36       purposes of providing education, training, certification in emergency car-
37       diac care, research and other related services to reduce disability and
38       death from cardiovascular diseases and stroke;
39             (2) the Kansas Alliance for the Mentally Ill, Inc. for the purpose of
40       advocacy for persons with mental illness and to education, research and
41       support for their families;
42             (3) the Kansas Mental Illness Awareness Council for the purposes of
43       advocacy for persons who are mentally ill and to education, research and

HB 2048--Am. by HCW

12

  1       support for them and their families;
  2             (4) the American Diabetes Association Kansas Affiliate, Inc. for the
  3       purpose of eliminating diabetes through medical research, public edu-
  4       cation focusing on disease prevention and education, patient education
  5       including information on coping with diabetes, and professional education
  6       and training;
  7             (5) the American Lung Association of Kansas, Inc. for the purpose of
  8       eliminating all lung diseases through medical research, public education
  9       including information on coping with lung diseases, professional educa-
10       tion and training related to lung disease and other related services to
11       reduce the incidence of disability and death due to lung disease;
12             (6) the Kansas chapters of the Alzheimer's Disease and Related Dis-
13       orders Association, Inc. for the purpose of providing assistance and sup-
14       port to persons in Kansas with Alzheimer's disease, and their families and
15       caregivers; and
16             (ww) all sales of tangible personal property purchased by the Habitat
17       for Humanity for the exclusive use of being incorporated within a housing
18       project constructed by such organization.
19             (xx) all sales of tangible personal property and services purchased by
20       a nonprofit zoo which is exempt from federal income taxation pursuant
21       to section 501 (c)(3) of the federal internal revenue code of 1986, or on
22       behalf of such zoo by an entity itself exempt from federal income taxation
23       pursuant to section 50 501 (c)(3) of the federal internal revenue code of
24       1986 contracted with to operate such zoo and all sales of tangible personal
25       property or services purchased by a contractor for the purpose of con-
26       structing, equipping, reconstructing, maintaining, repairing, enlarging,
27       furnishing or remodeling facilities for any nonprofit zoo which would be
28       exempt from taxation under the provisions of this section if purchased
29       directly by such nonprofit zoo or the entity operating such zoo. Nothing
30       in this subsection shall be deemed to exempt the purchase of any con-
31       struction machinery, equipment or tools used in the constructing, equip-
32       ping, reconstructing, maintaining, repairing, enlarging, furnishing or re-
33       modeling facilities for any nonprofit zoo. When any nonprofit zoo shall
34       contract for the purpose of constructing, equipping, reconstructing, main-
35       taining, repairing, enlarging, furnishing or remodeling facilities, it shall
36       obtain from the state and furnish to the contractor an exemption certifi-
37       cate for the project involved, and the contractor may purchase materials
38       for incorporation in such project. The contractor shall furnish the number
39       of such certificate to all suppliers from whom such purchases are made,
40       and such suppliers shall execute invoices covering the same bearing the
41       number of such certificate. Upon completion of the project the contractor
42       shall furnish to the nonprofit zoo concerned a sworn statement, on a form
43       to be provided by the director of taxation, that all purchases so made were

HB 2048--Am. by HCW

13

  1       entitled to exemption under this subsection. All invoices shall be held by
  2       the contractor for a period of five years and shall be subject to audit by
  3       the director of taxation. If any materials purchased under such a certifi-
  4       cate are found not to have been incorporated in the building or other
  5       project or not to have been returned for credit or the sales or compen-
  6       sating tax otherwise imposed upon such materials which will not be so
  7       incorporated in the building or other project reported and paid by such
  8       contractor to the director of taxation not later than the 20th day of the
  9       month following the close of the month in which it shall be determined
10       that such materials will not be used for the purpose for which such cer-
11       tificate was issued, the nonprofit zoo concerned shall be liable for tax on
12       all materials purchased for the project, and upon payment thereof it may
13       recover the same from the contractor together with reasonable attorney
14       fees. Any contractor or any agent, employee or subcontractor thereof,
15       who shall use or otherwise dispose of any materials purchased under such
16       a certificate for any purpose other than that for which such a certificate
17       is issued without the payment of the sales or compensating tax otherwise
18       imposed upon such materials, shall be guilty of a misdemeanor and, upon
19       conviction therefor, shall be subject to the penalties provided for in sub-
20       section (g) of K.S.A. 79-3615, and amendments thereto;
21             (yy) all sales of tangible personal property and services purchased by
22       a parent-teacher association or organization, and all sales of tangible per-
23       sonal property by or on behalf of such association or organization;
24             (zz) all sales of machinery and equipment purchased by over-the-air,
25       free access radio or television station which is used directly and primarily
26       for the purpose of producing a broadcast signal or is such that the failure
27       of the machinery or equipment to operate would cause broadcasting to
28       cease. For purposes of this subsection, machinery and equipment shall
29       include, but not be limited to, that required by rules and regulations of
30       the federal communications commission, and all sales of electricity which
31       are essential or necessary for the purpose of producing a broadcast signal
32       or is such that the failure of the electricity would cause broadcasting to
33       cease;
34             (aaa) all sales of tangible personal property and services purchased
35       by a religious organization which is exempt from federal income taxation
36       pursuant to section 501 (c)(3) of the federal internal revenue code, and
37       used exclusively for religious purposes; and
38             (bbb) all sales of food for human consumption by an organization
39       which is exempt from federal income taxation pursuant to section 501
40       (c)(3) of the federal internal revenue code of 1986, pursuant to a food
41       distribution program which offers such food at a price below cost in
42       exchange for the performance of community service by the purchaser
43       thereof; and

HB 2048--Am. by HCW

14

  1             (ccc) all sales of tangible personal property and services purchased
  2       after October 1, 1998, necessary to repair or replace tangible personal
  3       property or real property which was damaged or destroyed in this state
  4       as a result of an a weather related event or occurrence which the pres-
  5       ident of the United States has declared, pursuant to federal law, to be a
  6       major disaster, and grants from the federal government to meet disaster
  7       related expenses resulting from such event or occurrence have been au-
  8       thorized. No such sale shall be exempt hereunder unless occurring
  9       within three years after the date of such declaration. Sales tax paid
10       on and after October 1, 1998, but prior to the effective date of this act
11       upon the gross receipts received from any such sale shall be refunded if
12       such claim is filed on or before July 1, 2000. Also, in the event that
13       any such sale occurs after any such event or occurrence but before
14       any such declaration, a sales tax refund shall be allowed if claimed
15       within nine months after the date of such declaration. Each claim
16       for a sales tax refund shall be verified and submitted to the director of
17       taxation upon forms furnished by the director and shall be accompanied
18       by any additional documentation required by the director. The director
19       shall review each claim and shall refund that amount of sales tax paid as
20       determined under the provisions of this section. All refunds shall be paid
21       from the sales tax refund fund upon warrants of the director of accounts
22       and reports pursuant to vouchers approved by the director or the direc-
23       tor's designee. 
24       Sec.  2. K.S.A. 1998 Supp. 79-3606 is hereby repealed.
25        [Sec.  2. K.S.A. 1998 Supp. 79-3603 is hereby amended to read
26       as follows: 79-3603. For the privilege of engaging in the business
27       of selling tangible personal property at retail in this state or ren-
28       dering or furnishing any of the services taxable under this act,
29       there is hereby levied and there shall be collected and paid a tax
30       at the rate of 4.9%, except as otherwise more specifically provided,
31       upon:
32             [(a) The gross receipts received from the sale of tangible per-
33       sonal property at retail within this state;
34             [(b)  (1) the gross receipts from intrastate telephone or tele-
35       graph services and (2) the gross receipts received from the sale of
36       interstate telephone or telegraph services, which (A) originate
37       within this state and terminate outside the state and are billed to
38       a customer's telephone number or account in this state; or (B) orig-
39       inate outside this state and terminate within this state and are
40       billed to a customer's telephone number or account in this state
41       except that the sale of interstate telephone or telegraph service
42       does not include: (A) Any interstate incoming or outgoing wide
43       area telephone service or wide area transmission type service

HB 2048--Am. by HCW

15

  1       which entitles the subscriber to make or receive an unlimited num-
  2       ber of communications to or from persons having telephone serv-
  3       ice in a specified area which is outside the state in which the station
  4       provided this service is located; (B) any interstate private com-
  5       munications service to the persons contracting for the receipt of
  6       that service that entitles the purchaser to exclusive or priority use
  7       of a communications channel or group of channels between ex-
  8       changes; (C) any value-added nonvoice service in which computer
  9       processing applications are used to act on the form, content, code
10       or protocol of the information to be transmitted; (D) any telecom-
11       munication service to a provider of telecommunication services
12       which will be used to render telecommunications services, includ-
13       ing carrier access services; or (E) any service or transaction de-
14       fined in this section among entities classified as members of an
15       affiliated group as provided by federal law (U.S.C. Section 1504).
16       For the purposes of this subsection the term gross receipts does
17       not include purchases of telephone, telegraph or telecommunica-
18       tions using a prepaid telephone calling card or pre-paid authori-
19       zation number. As used in this subsection, a pre-paid telephone
20       calling card or pre-paid authorization number means the right to
21       exclusively make telephone calls, paid for in advance, with the pre-
22       paid value measured in minutes or other time units, that enables
23       the origination of calls using an access number or authorization
24       code or both, whether manually or electronically dialed;
25             [(c) the gross receipts from the sale or furnishing of gas, water,
26       electricity and heat, which sale is not otherwise exempt from tax-
27       ation under the provisions of this act, and whether furnished by
28       municipally or privately owned utilities;
29             [(d) the gross receipts from the sale of meals or drinks fur-
30       nished at any private club, drinking establishment, catered event,
31       restaurant, eating house, dining car, hotel, drugstore or other
32       place where meals or drinks are regularly sold to the public;
33             [(e) the gross receipts from the sale of admissions to any place
34       providing amusement, entertainment or recreation services in-
35       cluding admissions to state, county, district and local fairs, but such
36       tax shall not be levied and collected upon the gross receipts re-
37       ceived from sales of admissions to any cultural and historical event
38       which occurs triennially;
39             [(f) the gross receipts from the operation of any coin-operated
40       device dispensing or providing tangible personal property, amuse-
41       ment or other services except laundry services, whether automatic
42       or manually operated;
43             [(g) the gross receipts from the service of renting of rooms by

HB 2048--Am. by HCW

16

  1       hotels, as defined by K.S.A. 36-501 and amendments thereto, or
  2       by accommodation brokers, as defined by K.S.A. 12-1692, and
  3       amendments thereto;
  4             [(h) the gross receipts from the service of renting or leasing of
  5       tangible personal property except such tax shall not apply to the
  6       renting or leasing of machinery, equipment or other personal
  7       property owned by a city and purchased from the proceeds of in-
  8       dustrial revenue bonds issued prior to July 1, 1973, in accordance
  9       with the provisions of K.S.A. 12-1740 through 12-1749, and amend-
10       ments thereto, and any city or lessee renting or leasing such ma-
11       chinery, equipment or other personal property purchased with the
12       proceeds of such bonds who shall have paid a tax under the pro-
13       visions of this section upon sales made prior to July 1, 1973, shall
14       be entitled to a refund from the sales tax refund fund of all taxes
15       paid thereon;
16             [(i) the gross receipts from the rendering of dry cleaning,
17       pressing, dyeing and laundry services except laundry services ren-
18       dered through a coin-operated device whether automatic or man-
19       ually operated;
20             [(j) the gross receipts from the rendering of the services of
21       washing and washing and waxing of vehicles;
22             [(k) the gross receipts from cable, community antennae and
23       other subscriber radio and television services;
24             [(l) the gross receipts received from the sales of tangible per-
25       sonal property to all contractors, subcontractors or repairmen of
26       materials and supplies for use by them in erecting structures for
27       others, or building on, or otherwise improving, altering, or re-
28       pairing real or personal property of others;
29             [(m) the gross receipts received from fees and charges by pub-
30       lic and private clubs, drinking establishments, organizations and
31       businesses for participation in sports, games and other recrea-
32       tional activities, but such tax shall not be levied and collected upon
33       the gross receipts received from: (1) Fees and charges by any po-
34       litical subdivision, by any organization exempt from property tax-
35       ation pursuant to paragraph Ninth of K.S.A. 79-201, and amend-
36       ments thereto, or by any youth recreation organization exclusively
37       providing services to persons 18 years of age or younger which is
38       exempt from federal income taxation pursuant to section 501(c)(3)
39       of the federal internal revenue code of 1986, for participation in
40       sports, games and other recreational activities; and (2) entry fees
41       and charges for participation in a special event or tournament
42       sanctioned by a national sporting association to which spectators
43       are charged an admission which is taxable pursuant to subsection

HB 2048--Am. by HCW

17

  1       (e);
  2             [(n) the gross receipts received from dues charged by public
  3       and private clubs, drinking establishments, organizations and busi-
  4       nesses, payment of which entitles a member to the use of facilities
  5       for recreation or entertainment, but such tax shall not be levied
  6       and collected upon the gross receipts received from: (1) Dues
  7       charged by any organization exempt from property taxation pur-
  8       suant to paragraphs Eighth and Ninth of K.S.A. 79-201, and amend-
  9       ments thereto; and (2) sales of memberships in a nonprofit or-
10       ganization which is exempt from federal income taxation pursuant
11       to section 501 (c)(3) of the federal internal revenue code of 1986,
12       and whose purpose is to support the operation of a nonprofit zoo;
13             [(o) the gross receipts received from the isolated or occasional
14       sale of motor vehicles or trailers but not including: (1) The transfer
15       of motor vehicles or trailers by a person to a corporation solely in
16       exchange for stock securities in such corporation; or (2) the trans-
17       fer of motor vehicles or trailers by one corporation to another
18       when all of the assets of such corporation are transferred to such
19       other corporation; or (3) the sale of motor vehicles or trailers
20       which are subject to taxation pursuant to the provisions of K.S.A.
21       79-5101 et seq., and amendments thereto, by an immediate family
22       member to another immediate family member. For the purposes
23       of clause (3), immediate family member means lineal ascendants
24       or descendants, and their spouses. In determining the base for
25       computing the tax on such isolated or occasional sale, the fair mar-
26       ket value of any motor vehicle or trailer traded in by the purchaser
27       to the seller may be deducted from the selling price;
28             [(p) the gross receipts received for the service of installing or
29       applying tangible personal property which when installed or ap-
30       plied is not being held for sale in the regular course of business,
31       and whether or not such tangible personal property when installed
32       or applied remains tangible personal property or becomes a part
33       of real estate, except that no tax shall be imposed upon the service
34       of installing or applying tangible personal property in connection
35       with the original construction of a building or facility, the original
36       construction, reconstruction, restoration, remodeling, renovation,
37       repair or replacement of a residence or the construction, recon-
38       struction, restoration, replacement or repair of a bridge or
39       highway.
40             [For the purposes of this subsection:
41             [(1) "Original construction" shall mean the first or initial con-
42       struction of a new building or facility. The term "original construc-
43       tion" shall include the addition of an entire room or floor to any

HB 2048--Am. by HCW

18

  1       existing building or facility, the completion of any unfinished por-
  2       tion of any existing building or facility and the restoration, recon-
  3       struction or replacement of a building or facility damaged or de-
  4       stroyed by fire, flood, tornado, lightning, explosion or earthquake,
  5       but such term, except with regard to a residence, shall not include
  6       replacement, remodeling, restoration, renovation or reconstruc-
  7       tion under any other circumstances;
  8             [(2) "building" shall mean only those enclosures within which
  9       individuals customarily are employed, or which are customarily
10       used to house machinery, equipment or other property, and in-
11       cluding the land improvements immediately surrounding such
12       building;
13             [(3) "facility" shall mean a mill, plant, refinery, oil or gas well,
14       water well, feedlot or any conveyance, transmission or distribution
15       line of any cooperative, nonprofit, membership corporation or-
16       ganized under or subject to the provisions of K.S.A. 17-4601 et
17       seq., and amendments thereto, or of any municipal or quasi-mu-
18       nicipal corporation, including the land improvements immediately
19       surrounding such facility; and
20             [(4) "residence" shall mean only those enclosures within which
21       individuals customarily live;
22             (q) the gross receipts received for the service of repairing,
23       servicing, altering or maintaining tangible personal property, ex-
24       cept computer software described in subsection (s), which when
25       such services are rendered is not being held for sale in the regular
26       course of business, and whether or not any tangible personal prop-
27       erty is transferred in connection therewith. The tax imposed by
28       this subsection shall be applicable to the services of repairing, serv-
29       icing, altering or maintaining an item of tangible personal prop-
30       erty which has been and is fastened to, connected with or built into
31       real property;
32             [(r) the gross receipts from fees or charges made under service
33       or maintenance agreement contracts for services, charges for the
34       providing of which are taxable under the provisions of subsection
35       (p) or (q);
36             [(s) the gross receipts received from the sale of computer soft-
37       ware, and the sale of the services of modifying, altering, updating
38       or maintaining computer software. As used in this subsection,
39       "computer software" means information and directions loaded
40       into a computer which dictate different functions to be performed
41       by the computer. Computer software includes any canned or pre-
42       written program which is held or existing for general or repeated
43       sale, even if the program was originally developed for a single end

HB 2048--Am. by HCW

19

  1       user as custom computer software. The sale of computer software
  2       or services does not include: (1) The initial sale of any custom com-
  3       puter program which is originally developed for the exclusive use
  4       of a single end user; or (2) those services rendered in the modifi-
  5       cation of computer software when the modification is developed
  6       exclusively for a single end user only to the extent of the modifi-
  7       cation and only to the extent that the actual amount charged for
  8       the modification is separately stated on invoices, statements and
  9       other billing documents provided to the end user. The services of
10       modification, alteration, updating and maintenance of computer
11       software shall only include the modification, alteration, updating
12       and maintenance of computer software taxable under this subsec-
13       tion whether or not the services are actually provided; and
14             [(t) the gross receipts received for telephone answering serv-
15       ices, including mobile phone services, beeper services and other
16       similar services; and
17             [(u) the gross receipts received from the sale of prepaid tele-
18       phone calling cards or pre-paid authorization numbers and the
19       recharge of such cards or numbers. A pre-paid telephone calling
20       card or pre-paid authorization number means the right to exclu-
21       sively make telephone calls, paid for in advance, with the prepaid
22       value measured in minutes or other time units, that enables the
23       origination of calls using an access number or authorization code
24       or both, whether manually or electronically dialed. If the dale or
25       recharge of such card or number does not take place at the ven-
26       dor's place of business, it shall be conclusively determined to take
27       place at the customer's shipping address; if there is no item
28       shipped then it shall be the customer's billing address.; and
29             [(v)  (1) the gross receipts received from sales of food for human con-
30       sumption at the rate of: (A) 3.3% on July 1, 1999, and before June 1, 2001;
31       and (B) 2.2% on June 1, 2001, and before June 1, 2002; (2) on and after
32       June 1, 2002, all sales of food for human consumption are hereby exempt;
33       and (3) as used in this subsection, "food for human consumption" means
34       only that food which is eligible for purchase with food stamps issued by
35       the United States department of agriculture pursuant to regulations in
36       effect on January 1, 1998, regardless of whether the retailer from which
37       the food is purchased is participating in the food stamp program. Such
38       phrase shall not include meals prepared for immediate consumption on
39       or off premises of the retailer.
40             [Sec.  3. K.S.A. 1998 Supp. 79-3703 is hereby amended to read
41       as follows: 79-3703. There is hereby levied and there shall be col-
42       lected from every person in this state a tax or excise for the priv-
43       ilege of using, storing, or consuming within this state any article

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  1       of tangible personal property. Such tax shall be levied and col-
  2       lected in an amount equal to the consideration paid by the tax-
  3       payer multiplied by the rate of 4.9%, except that the rate imposed
  4       upon sales of food for human consumption shall be identical to the rate
  5       of sales tax imposed thereon. Within a redevelopment district estab-
  6       lished pursuant to K.S.A. 1998 Supp. 74-8921, and amendments
  7       thereto, there is hereby levied and there shall be collected and
  8       paid an additional tax of 1% until the earlier of: (1) The date the
  9       bonds issued to finance or refinance the redevelopment project
10       undertaken in the district have been paid in full; or (2) twenty years
11       after the establishment of the redevelopment district. All property
12       purchased or leased within or without this state and subsequently
13       used, stored or consumed in this state shall be subject to the com-
14       pensating tax if the same property or transaction would have been
15       subject to the Kansas retailers' sales tax had the transaction been
16       wholly within this state.
17             [Sec.  4. K.S.A. 12-189a is hereby amended to read as follows:
18       12-189a. The following sales shall be subject to the taxes levied
19       and collected by all cities and counties under the provisions of
20       K.S.A. 12-187 et seq. and amendments thereto:
21             [(a) All sales of natural gas, electricity, heat and water deliv-
22       ered through mains, lines or pipes to residential premises for non-
23       commercial use by the occupant of such premises and all sales of
24       natural gas, electricity, heat and water delivered through mains,
25       lines or pipes for agricultural use;
26             [(b) All sales of propane gas, LP-gas, coal, wood and other fuel
27       sources for the production of heat or lighting for noncommercial
28       use of an occupant of residential premises;
29             [(c) All sales of intrastate telephone and telegraph services for
30       noncommercial use.; and
31             [(d) all sales of food for human consumption, as defined by subsection
32       (v) of K.S.A. 79-3603, and amendments thereto.
33             [Sec.  5. K.S.A. 79-2959 is hereby amended to read as follows:
34       79-2959. (a) There is hereby created the local ad valorem tax re-
35       duction fund. All moneys transferred or credited to such fund un-
36       der the provisions of this act or any other law shall be apportioned
37       and distributed in the manner provided herein.
38             [(b) On January 15 and on July 15 of each year, the director of
39       accounts and reports shall make transfers in equal amounts which
40       in the aggregate equal 4.5% of the total retail sales and compen-
41       sating taxes credited to the state general fund pursuant to articles
42       36 and 37 of chapter 79 of Kansas Statutes Annotated and acts
43       amendatory thereof and supplemental thereto during the preced-

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21

  1       ing calendar year from the state general fund to the local ad va-
  2       lorem tax reduction fund, except that: (1) The transfers on January
  3       15 and July 15 of each year shall be in equal amounts which in the
  4       aggregate equal 3.630% of such taxes credited to the state general
  5       fund during the preceding calendar year; and (2) the amount of
  6       the transfer on each such date during state fiscal year 1998 shall be
  7       equal to 101.75% of the amount transferred on the same date during
  8       state fiscal year 1997 2000, shall be in equal amounts which in the aggre-
  9       gate equal 3.671% of such taxes credited to the state general fund during
10       the preceding calendar year; (3) the amount of the transfer on each such
11       date during fiscal year 2001, shall be in equal amounts which in the ag-
12       gregate equal 3.752% of such taxes credited to the state general fund
13       during the preceding calendar year; (4) the amount of the transfer on
14       each such date during fiscal year 2002, shall be in equal amounts which
15       in the aggregate equal 3.823% of such taxes credited to the state general
16       fund during the preceding calendar year; (5) the amount of the transfer
17       on each such date during fiscal year 2003, shall be in equal amounts which
18       in the aggregate equal 3.948% of such taxes credited to the state general
19       fund during the preceding calendar year; (6) the amount of the transfer
20       on each such date during fiscal year 2004, shall be in equal amounts which
21       in the aggregate equal 4.11% of such taxes credited to the state general
22       fund during the preceding calendar year; and (7) the amount of the trans-
23       fer on each such date during fiscal year 2005, and all such years there-
24       after, shall be in equal amounts which in the aggregate equal 4.178% of
25       such taxes credited to the state general fund during the preceding calendar
26       year. All such transfers are subject to reduction under K.S.A. 75-
27       6704 and amendments thereto. All transfers made in accordance
28       with the provisions of this section shall be considered to be demand
29       transfers from the state general fund.
30             [(c) The state treasurer shall apportion and pay the amounts
31       transferred under subsection (b) to the several county treasurers
32       on January 15 and on July 15 in each year as follows: (1) Sixty-five
33       percent of the amount to be distributed shall be apportioned on
34       the basis of the population figures of the counties certified to the
35       secretary of state pursuant to K.S.A. 11-201 and amendments
36       thereto on July 1 of the preceding year; and (2) thirty-five percent
37       of such amount shall be apportioned on the basis of the equalized
38       assessed tangible valuations on the tax rolls of the counties on No-
39       vember 1 of the preceding year as certified by the director of prop-
40       erty valuation.
41             [Sec.  6. K.S.A. 1998 Supp. 79-2964 is hereby amended to read
42       as follows: 79-2964. There is hereby created the county and city
43       revenue sharing fund. All moneys transferred or credited to such

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22

  1       fund under the provisions of this act or any other law shall be
  2       allocated and distributed in the manner provided herein. The di-
  3       rector of accounts and reports in each year on July 15 and Decem-
  4       ber 10, shall make transfers in equal amounts which in the aggre-
  5       gate equal 3.5% of the total retail sales and compensating taxes
  6       credited to the state general fund pursuant to articles 36 and 37
  7       of chapter 79 of the Kansas Statutes Annotated and acts amenda-
  8       tory thereof and supplemental thereto during the preceding cal-
  9       endar year from the state general fund to the county and city rev-
10       enue sharing fund, except that: (a) The transfers on July 15 and
11       December 10 of each year shall be in equal amounts which in the
12       aggregate equal 2.823% of such taxes credited to the state general
13       fund during the preceding calendar year; and (b) the amount of
14       the transfer on each such date during state fiscal year 1999 shall be
15       equal to 102.4% of the amount transferred on the same date during state
16       fiscal year 1998 2001, shall be in equal amounts which in the aggregate
17       equal 2.886% of such taxes credited to the state general fund during the
18       preceding calendar year; (c) the amount of the transfer on each such date
19       during fiscal year 2002, shall be in equal amounts which in the aggregate
20       equal 2.949% of such taxes credited to the state general fund during the
21       preceding calendar year; (d) the amount of the transfer on each such date
22       during fiscal year 2003, shall be in equal amounts which in the aggregate
23       equal 2.996% of such taxes credited to the state general fund during the
24       preceding calendar year; (e) the amount of the transfer on each such date
25       during fiscal year 2004, shall be in equal amounts which in the aggregate
26       equal 3.144% of such taxes credited to the state general fund during the
27       preceding calendar year; and (f) the amount of the transfer on each such
28       date during fiscal year 2005, and all such years thereafter, shall be in
29       equal amounts which in the aggregate equal 3.248% of such taxes credited
30       to the state general fund during the preceding calendar year. All such
31       transfers are subject to reduction under K.S.A. 75-6704 and
32       amendments thereto. All transfers made in accordance with the
33       provisions of this section shall be considered to be demand trans-
34       fers from the state general fund.
35             [Sec.  7. K.S.A. 1998 Supp. 79-34,147 is hereby amended to
36       read as follows: 79-34,147. (a) On each January 1, April 1, July 1
37       and October 1, the secretary of revenue shall certify to the director
38       of accounts and reports the amount equal to 7.628% of the total
39       revenues received by the secretary from the taxes imposed under
40       the Kansas retailers' sales tax act and deposited in the state treas-
41       ury and credited to the state general fund during the preceding
42       three calendar months, except that: (1) The amount so certified during
43       fiscal year 2000, shall be the amount equal to 8.2% of the total revenues

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23

  1       received from such tax and so deposited and credited during such months;
  2       (2) the amount so certified during fiscal year 2001, shall be the amount
  3       equal to 8.3% of the total revenues received from such tax and so deposited
  4       and credited during such months; (3) the amount so certified during fiscal
  5       year 2002, shall be the amount equal to 8.726% of the total revenues
  6       received from such tax so deposited and credited during such months; (4)
  7       the amount so certified during fiscal year 2003, shall be the amount equal
  8       to 9.745% of the total revenues received from such tax so deposited and
  9       credited during such months; and (5) the amount so certified during fiscal
10       year 2004, and all such years thereafter, shall be the amount equal to
11       9.932% of the total revenues received from such tax so deposited and
12       credited during such months.
13             [(b) Upon receipt of each certification under subsection (a), the
14       director of accounts and reports shall transfer from the state gen-
15       eral fund to the state highway fund an amount equal to the amount
16       so certified, on each January 1, April 1, July 1 and October 1, ex-
17       cept that the amount of the transfer on each such date during state
18       fiscal year 1999 shall not exceed the amount equal to 102.4% of
19       the amount transferred on the same date during state fiscal year
20       1998. All transfers made pursuant to this section are subject to
21       reduction under K.S.A. 75-6704, and amendments thereto.
22             [(c) All transfers made in accordance with the provisions of this
23       section shall be considered to be demand transfers from the state
24       general fund.
25             [Sec.  8. K.S.A. 12-189a, 79-2959 and K.S.A. 1998 Supp. 79-
26       2964, 79-34,147, 79-3603 and 79-3703 are hereby repealed.]
27        Sec.  3. [9.] This act shall take effect and be in force from and after
28       its publication in the Kansas register.