[As Amended by House Committee of the Whole]

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          As Amended by House Committee

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          As Amended by Senate Committee          

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Session of 1999
          SENATE BILL No. 116           By Committee on Federal and State Affairs           1-21          

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12             AN  ACT relating to sales taxation; exemption exempting certain pur-
13             chases of the Kansas Academy of Science therefrom; amending K.S.A.
14             1998 1999 Supp. 79-3606 and repealing the existing section. amend-
15             ing and supplementing the Kansas and Missouri metropolitan
16             culture district compact; amending K.S.A. 1999 Supp. 12-2536
17             and repealing the existing section.
18      
19       Be it enacted by the Legislature of the State of Kansas:
20             Section  1. K.S.A. 1998 Supp. 79-3606 is hereby amended to read as
21       follows: 79-3606. The following shall be exempt from the tax imposed by
22       this act:
23             (a) All sales of motor-vehicle fuel or other articles upon which a sales
24       or excise tax has been paid, not subject to refund, under the laws of this
25       state except cigarettes as defined by K.S.A. 79-3301 and amendments
26       thereto, cereal malt beverages and malt products as defined by K.S.A. 79-
27       3817 and amendments thereto, including wort, liquid malt, malt syrup
28       and malt extract, which is not subject to taxation under the provisions of
29       K.S.A. 79-41a02 and amendments thereto, motor vehicles taxed pursuant
30       to K.S.A. 79-5117, and amendments thereto, tires taxed pursuant to
31       K.S.A. 1998 Supp. 65-3424d, and amendments thereto, and drycleaning
32       and laundry services taxed pursuant to K.S.A. 1998 Supp. 65-34,150, and
33       amendments thereto;
34             (b) all sales of tangible personal property or service, including the
35       renting and leasing of tangible personal property, purchased directly by
36       the state of Kansas, a political subdivision thereof, other than a school or
37       educational institution, or purchased by a public or private nonprofit hos-
38       pital or public hospital authority or nonprofit blood, tissue or organ bank
39       and used exclusively for state, political subdivision, hospital or public hos-
40       pital authority or nonprofit blood, tissue or organ bank purposes, except
41       when: (1) Such state, hospital or public hospital authority is engaged or

2
  1       proposes to engage in any business specifically taxable under the provi-
  2       sions of this act and such items of tangible personal property or service
  3       are used or proposed to be used in such business, or (2) such political
  4       subdivision is engaged or proposes to engage in the business of furnishing
  5       gas, water, electricity or heat to others and such items of personal prop-
  6       erty or service are used or proposed to be used in such business;
  7             (c) all sales of tangible personal property or services, including the
  8       renting and leasing of tangible personal property, purchased directly by
  9       a public or private elementary or secondary school or public or private
10       nonprofit educational institution and used primarily by such school or
11       institution for nonsectarian programs and activities provided or sponsored
12       by such school or institution or in the erection, repair or enlargement of
13       buildings to be used for such purposes. The exemption herein provided
14       shall not apply to erection, construction, repair, enlargement or equip-
15       ment of buildings used primarily for human habitation;
16             (d) all sales of tangible personal property or services purchased by a
17       contractor for the purpose of constructing, equipping, reconstructing,
18       maintaining, repairing, enlarging, furnishing or remodeling facilities for
19       any public or private nonprofit hospital or public hospital authority, public
20       or private elementary or secondary school or a public or private nonprofit
21       educational institution, which would be exempt from taxation under the
22       provisions of this act if purchased directly by such hospital or public hos-
23       pital authority, school or educational institution; and all sales of tangible
24       personal property or services purchased by a contractor for the purpose
25       of constructing, equipping, reconstructing, maintaining, repairing, en-
26       larging, furnishing or remodeling facilities for any political subdivision of
27       the state, the total cost of which is paid from funds of such political
28       subdivision and which would be exempt from taxation under the provi-
29       sions of this act if purchased directly by such political subdivision. Nothing
30       in this subsection or in the provisions of K.S.A. 12-3418 and amendments
31       thereto, shall be deemed to exempt the purchase of any construction
32       machinery, equipment or tools used in the constructing, equipping, re-
33       constructing, maintaining, repairing, enlarging, furnishing or remodeling
34       facilities for any political subdivision of the state. As used in this subsec-
35       tion, K.S.A. 12-3418 and 79-3640, and amendments thereto, ``funds of a
36       political subdivision'' shall mean general tax revenues, the proceeds of
37       any bonds and gifts or grants-in-aid. Gifts shall not mean funds used for
38       the purpose of constructing, equipping, reconstructing, repairing, enlarg-
39       ing, furnishing or remodeling facilities which are to be leased to the do-
40       nor. When any political subdivision of the state, public or private non-
41       profit hospital or public hospital authority, public or private elementary
42       or secondary school or public or private nonprofit educational institution
43       shall contract for the purpose of constructing, equipping, reconstructing,

3
  1       maintaining, repairing, enlarging, furnishing or remodeling facilities, it
  2       shall obtain from the state and furnish to the contractor an exemption
  3       certificate for the project involved, and the contractor may purchase ma-
  4       terials for incorporation in such project. The contractor shall furnish the
  5       number of such certificate to all suppliers from whom such purchases are
  6       made, and such suppliers shall execute invoices covering the same bearing
  7       the number of such certificate. Upon completion of the project the con-
  8       tractor shall furnish to the political subdivision, hospital or public hospital
  9       authority, school or educational institution concerned a sworn statement,
10       on a form to be provided by the director of taxation, that all purchases so
11       made were entitled to exemption under this subsection. As an alternative
12       to the foregoing procedure, any such contracting entity may apply to the
13       secretary of revenue for agent status for the sole purpose of issuing and
14       furnishing project exemption certificates to contractors pursuant to rules
15       and regulations adopted by the secretary establishing conditions and stan-
16       dards for the granting and maintaining of such status. All invoices shall
17       be held by the contractor for a period of five years and shall be subject
18       to audit by the director of taxation. If any materials purchased under such
19       a certificate are found not to have been incorporated in the building or
20       other project or not to have been returned for credit or the sales or
21       compensating tax otherwise imposed upon such materials which will not
22       be so incorporated in the building or other project reported and paid by
23       such contractor to the director of taxation not later than the 20th day of
24       the month following the close of the month in which it shall be deter-
25       mined that such materials will not be used for the purpose for which such
26       certificate was issued, the political subdivision, hospital or public hospital
27       authority, school or educational institution concerned shall be liable for
28       tax on all materials purchased for the project, and upon payment thereof
29       it may recover the same from the contractor together with reasonable
30       attorney fees. Any contractor or any agent, employee or subcontractor
31       thereof, who shall use or otherwise dispose of any materials purchased
32       under such a certificate for any purpose other than that for which such a
33       certificate is issued without the payment of the sales or compensating tax
34       otherwise imposed upon such materials, shall be guilty of a misdemeanor
35       and, upon conviction therefor, shall be subject to the penalties provided
36       for in subsection (g) of K.S.A. 79-3615, and amendments thereto;
37             (e) all sales of tangible personal property or services purchased by a
38       contractor for the erection, repair or enlargement of buildings or other
39       projects for the government of the United States, its agencies or instru-
40       mentalities, which would be exempt from taxation if purchased directly
41       by the government of the United States, its agencies or instrumentalities.
42       When the government of the United States, its agencies or instrumen-
43       talities shall contract for the erection, repair, or enlargement of any build-

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

5
  1       such meals to employees of any restaurant, eating house, dining car, hotel,
  2       drugstore or other place where meals or drinks are regularly sold to the
  3       public if such employees' duties are related to the furnishing or sale of
  4       such meals or drinks;
  5             (k) any motor vehicle, semitrailer or pole trailer, as such terms are
  6       defined by K.S.A. 8-126 and amendments thereto, or aircraft sold and
  7       delivered in this state to a bona fide resident of another state, which motor
  8       vehicle, semitrailer, pole trailer or aircraft is not to be registered or based
  9       in this state and which vehicle, semitrailer, pole trailer or aircraft will not
10       remain in this state more than 10 days;
11             (l) all isolated or occasional sales of tangible personal property, serv-
12       ices, substances or things, except isolated or occasional sale of motor
13       vehicles specifically taxed under the provisions of subsection (o) of K.S.A.
14       79-3603 and amendments thereto;
15             (m) all sales of tangible personal property which become an ingre-
16       dient or component part of tangible personal property or services pro-
17       duced, manufactured or compounded for ultimate sale at retail within or
18       without the state of Kansas; and any such producer, manufacturer or
19       compounder may obtain from the director of taxation and furnish to the
20       supplier an exemption certificate number for tangible personal property
21       for use as an ingredient or component part of the property or services
22       produced, manufactured or compounded;
23             (n) all sales of tangible personal property which is consumed in the
24       production, manufacture, processing, mining, drilling, refining or com-
25       pounding of tangible personal property, the treating of by-products or
26       wastes derived from any such production process, the providing of serv-
27       ices or the irrigation of crops for ultimate sale at retail within or without
28       the state of Kansas; and any purchaser of such property may obtain from
29       the director of taxation and furnish to the supplier an exemption certifi-
30       cate number for tangible personal property for consumption in such pro-
31       duction, manufacture, processing, mining, drilling, refining, compound-
32       ing, treating, irrigation and in providing such services;
33             (o) all sales of animals, fowl and aquatic plants and animals, the pri-
34       mary purpose of which is use in agriculture or aquaculture, as defined in
35       K.S.A. 47-1901, and amendments thereto, the production of food for
36       human consumption, the production of animal, dairy, poultry or aquatic
37       plant and animal products, fiber or fur, or the production of offspring for
38       use for any such purpose or purposes;
39             (p) all sales of drugs, as defined by K.S.A. 65-1626 and amendments
40       thereto, dispensed pursuant to a prescription order, as defined by K.S.A.
41       65-1626 and amendments thereto, by a licensed practitioner;
42             (q) all sales of insulin dispensed by a person licensed by the state
43       board of pharmacy to a person for treatment of diabetes at the direction

6
  1       of a person licensed to practice medicine by the board of healing arts;
  2             (r) all sales of prosthetic and orthopedic appliances prescribed in
  3       writing by a person licensed to practice the healing arts, dentistry or
  4       optometry. For the purposes of this subsection, the term prosthetic and
  5       orthopedic appliances means any apparatus, instrument, device, or equip-
  6       ment used to replace or substitute for any missing part of the body; used
  7       to alleviate the malfunction of any part of the body; or used to assist any
  8       disabled person in leading a normal life by facilitating such person's mo-
  9       bility; such term shall include accessories attached or to be attached to
10       motor vehicles, but such term shall not include motor vehicles or personal
11       property which when installed becomes a fixture to real property;
12             (s) all sales of tangible personal property or services purchased di-
13       rectly by a groundwater management district organized or operating un-
14       der the authority of K.S.A. 82a-1020 et seq. and amendments thereto,
15       which property or services are used in the operation or maintenance of
16       the district;
17             (t) all sales of farm machinery and equipment or aquaculture ma-
18       chinery and equipment, repair and replacement parts therefor and serv-
19       ices performed in the repair and maintenance of such machinery and
20       equipment. For the purposes of this subsection the term ``farm machinery
21       and equipment or aquaculture machinery and equipment'' shall include
22       machinery and equipment used in the operation of Christmas tree farm-
23       ing but shall not include any passenger vehicle, truck, truck tractor, trailer,
24       semitrailer or pole trailer, other than a farm trailer, as such terms are
25       defined by K.S.A. 8-126 and amendments thereto. Each purchaser of
26       farm machinery and equipment or aquaculture machinery and equipment
27       exempted herein must certify in writing on the copy of the invoice or
28       sales ticket to be retained by the seller that the farm machinery and
29       equipment or aquaculture machinery and equipment purchased will be
30       used only in farming, ranching or aquaculture production. Farming or
31       ranching shall include the operation of a feedlot and farm and ranch work
32       for hire and the operation of a nursery;
33             (u) all leases or rentals of tangible personal property used as a dwell-
34       ing if such tangible personal property is leased or rented for a period of
35       more than 28 consecutive days;
36             (v) all sales of food products to any contractor for use in preparing
37       meals for delivery to homebound elderly persons over 60 years of age and
38       to homebound disabled persons or to be served at a group-sitting at a
39       location outside of the home to otherwise homebound elderly persons
40       over 60 years of age and to otherwise homebound disabled persons, as
41       all or part of any food service project funded in whole or in part by
42       government or as part of a private nonprofit food service project available
43       to all such elderly or disabled persons residing within an area of service

7
  1       designated by the private nonprofit organization, and all sales of food
  2       products for use in preparing meals for consumption by indigent or home-
  3       less individuals whether or not such meals are consumed at a place des-
  4       ignated for such purpose;
  5             (w) all sales of natural gas, electricity, heat and water delivered
  6       through mains, lines or pipes: (1) To residential premises for noncom-
  7       mercial use by the occupant of such premises; (2) for agricultural use and
  8       also, for such use, all sales of propane gas; (3) for use in the severing of
  9       oil; and (4) to any property which is exempt from property taxation pur-
10       suant to K.S.A. 79-201b Second through Sixth. As used in this paragraph,
11       ``severing'' shall have the meaning ascribed thereto by subsection (k) of
12       K.S.A. 79-4216, and amendments thereto;
13             (x) all sales of propane gas, LP-gas, coal, wood and other fuel sources
14       for the production of heat or lighting for noncommercial use of an oc-
15       cupant of residential premises;
16             (y) all sales of materials and services used in the repairing, servicing,
17       altering, maintaining, manufacturing, remanufacturing, or modification of
18       railroad rolling stock for use in interstate or foreign commerce under
19       authority of the laws of the United States;
20             (z) all sales of tangible personal property and services purchased di-
21       rectly by a port authority or by a contractor therefor as provided by the
22       provisions of K.S.A. 12-3418 and amendments thereto;
23             (aa) all sales of materials and services applied to equipment which is
24       transported into the state from without the state for repair, service, al-
25       teration, maintenance, remanufacture or modification and which is sub-
26       sequently transported outside the state for use in the transmission of
27       liquids or natural gas by means of pipeline in interstate or foreign com-
28       merce under authority of the laws of the United States;
29             (bb) all sales of used mobile homes or manufactured homes. As used
30       in this subsection: (1) ``Mobile homes'' and ``manufactured homes'' shall
31       have the meanings ascribed thereto by K.S.A. 58-4202 and amendments
32       thereto; and (2) ``sales of used mobile homes or manufactured homes''
33       means sales other than the original retail sale thereof;
34             (cc) all sales of tangible personal property or services purchased for
35       the purpose of and in conjunction with constructing, reconstructing, en-
36       larging or remodeling a business or retail business which meets the
37       requirements established in K.S.A. 74-50,115 and amendments thereto,
38       and the sale and installation of machinery and equipment purchased for
39       installation at any such business or retail business. When a person shall
40       contract for the construction, reconstruction, enlargement or remodeling
41       of any such business or retail business, such person shall obtain from the
42       state and furnish to the contractor an exemption certificate for the project
43       involved, and the contractor may purchase materials, machinery and

8
  1       equipment for incorporation in such project. The contractor shall furnish
  2       the number of such certificates to all suppliers from whom such purchases
  3       are made, and such suppliers shall execute invoices covering the same
  4       bearing the number of such certificate. Upon completion of the project
  5       the contractor shall furnish to the owner of the business or retail business
  6       a sworn statement, on a form to be provided by the director of taxation,
  7       that all purchases so made were entitled to exemption under this subsec-
  8       tion. All invoices shall be held by the contractor for a period of five years
  9       and shall be subject to audit by the director of taxation. Any contractor
10       or any agent, employee or subcontractor thereof, who shall use or oth-
11       erwise dispose of any materials, machinery or equipment purchased un-
12       der such a certificate for any purpose other than that for which such a
13       certificate is issued without the payment of the sales or compensating tax
14       otherwise imposed thereon, shall be guilty of a misdemeanor and, upon
15       conviction therefor, shall be subject to the penalties provided for in sub-
16       section (g) of K.S.A. 79-3615 and amendments thereto. As used in this
17       subsection, ``business'' and ``retail business'' have the meanings respec-
18       tively ascribed thereto by K.S.A. 74-50,114 and amendments thereto;
19             (dd) all sales of tangible personal property purchased with food
20       stamps issued by the United States department of agriculture;
21             (ee) all sales of lottery tickets and shares made as part of a lottery
22       operated by the state of Kansas;
23             (ff) on and after July 1, 1988, all sales of new mobile homes or man-
24       ufactured homes to the extent of 40% of the gross receipts, determined
25       without regard to any trade-in allowance, received from such sale. As used
26       in this subsection, ``mobile homes'' and ``manufactured homes'' shall have
27       the meanings ascribed thereto by K.S.A. 58-4202 and amendments
28       thereto;
29             (gg) all sales of tangible personal property purchased in accordance
30       with vouchers issued pursuant to the federal special supplemental food
31       program for women, infants and children;
32             (hh) all sales of medical supplies and equipment purchased directly
33       by a nonprofit skilled nursing home or nonprofit intermediate nursing
34       care home, as defined by K.S.A. 39-923, and amendments thereto, for
35       the purpose of providing medical services to residents thereof. This ex-
36       emption shall not apply to tangible personal property customarily used
37       for human habitation purposes;
38             (ii) all sales of tangible personal property purchased directly by a non-
39       profit organization for nonsectarian comprehensive multidiscipline youth
40       development programs and activities provided or sponsored by such or-
41       ganization, and all sales of tangible personal property by or on behalf of
42       any such organization. This exemption shall not apply to tangible personal
43       property customarily used for human habitation purposes;

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

10
  1             (E) computers and related peripheral equipment utilized for research
  2       and development and product design.
  3             (3) ``Machinery and equipment used directly and primarily'' shall not
  4       include:
  5             (A) Hand tools;
  6             (B) machinery, equipment and tools used in maintaining and repair-
  7       ing any type of machinery and equipment;
  8             (C) transportation equipment not used in the manufacturing, assem-
  9       bling, processing, furnishing, storing, warehousing or distributing process
10       at the plant or facility;
11             (D) office machines and equipment including computers and related
12       peripheral equipment not directly and primarily used in controlling or
13       measuring the manufacturing process;
14             (E) furniture and buildings; and
15             (F) machinery and equipment used in administrative, accounting,
16       sales or other such activities of the business;
17             (4) for purposes of this subsection, ``repair and replacement parts and
18       accessories'' means all parts and accessories for exempt machinery and
19       equipment, including but not limited to dies, jigs, molds, and patterns
20       which are attached to exempt machinery or which are otherwise used in
21       production, short-lived replaceable parts that can be readily detached
22       from exempt machinery or equipment, such as belts, drill bits, grinding
23       wheels, cutting bars and saws, and other replacement parts for production
24       equipment, including refractory brick and other refractory items for kiln
25       equipment used in production operations;
26             (ll) all sales of educational materials purchased for distribution to the
27       public at no charge by a nonprofit corporation organized for the purpose
28       of encouraging, fostering and conducting programs for the improvement
29       of public health;
30             (mm) all sales of seeds and tree seedlings; fertilizers, insecticides,
31       herbicides, germicides, pesticides and fungicides; and services, purchased
32       and used for the purpose of producing plants in order to prevent soil
33       erosion on land devoted to agricultural use;
34             (nn) except as otherwise provided in this act, all sales of services ren-
35       dered by an advertising agency or licensed broadcast station or any mem-
36       ber, agent or employee thereof;
37             (oo) all sales of tangible personal property purchased by a community
38       action group or agency for the exclusive purpose of repairing or weath-
39       erizing housing occupied by low income individuals;
40             (pp) all sales of drill bits and explosives actually utilized in the explo-
41       ration and production of oil or gas;
42             (qq) all sales of tangible personal property and services purchased by
43       a nonprofit museum or historical society or any combination thereof, in-

11
  1       cluding a nonprofit organization which is organized for the purpose of
  2       stimulating public interest in the exploration of space by providing edu-
  3       cational information, exhibits and experiences, which is exempt from fed-
  4       eral income taxation pursuant to section 501(c)(3) of the federal internal
  5       revenue code of 1986;
  6             (rr) all sales of tangible personal property which will admit the pur-
  7       chaser thereof to any annual event sponsored by a nonprofit organization
  8       which is exempt from federal income taxation pursuant to section
  9       501(c)(3) of the federal internal revenue code of 1986;
10             (ss) all sales of tangible personal property and services purchased by
11       a public broadcasting station licensed by the federal communications
12       commission as a noncommercial educational television or radio station;
13             (tt) all sales of tangible personal property and services purchased by
14       or on behalf of a not-for-profit corporation which is exempt from federal
15       income taxation pursuant to section 501(c)(3) of the federal internal rev-
16       enue code of 1986, for the sole purpose of constructing a Kansas Korean
17       War memorial;
18             (uu) all sales of tangible personal property and services purchased by
19       or on behalf of any rural volunteer fire-fighting organization for use ex-
20       clusively in the performance of its duties and functions;
21             (vv) all sales of tangible personal property purchased by any of the
22       following organizations which are exempt from federal income taxation
23       pursuant to section 501 (c)(3) of the federal internal revenue code of
24       1986, for the following purposes, and all sales of any such property by or
25       on behalf of any such organization for any such purpose:
26             (1) The American Heart Association, Kansas Affiliate, Inc. for the
27       purposes of providing education, training, certification in emergency car-
28       diac care, research and other related services to reduce disability and
29       death from cardiovascular diseases and stroke;
30             (2) the Kansas Alliance for the Mentally Ill, Inc. for the purpose of
31       advocacy for persons with mental illness and to education, research and
32       support for their families;
33             (3) the Kansas Mental Illness Awareness Council for the purposes of
34       advocacy for persons who are mentally ill and to education, research and
35       support for them and their families;
36             (4) the American Diabetes Association Kansas Affiliate, Inc. for the
37       purpose of eliminating diabetes through medical research, public edu-
38       cation focusing on disease prevention and education, patient education
39       including information on coping with diabetes, and professional education
40       and training;
41             (5) the American Lung Association of Kansas, Inc. for the purpose of
42       eliminating all lung diseases through medical research, public education
43       including information on coping with lung diseases, professional educa-

12
  1       tion and training related to lung disease and other related services to
  2       reduce the incidence of disability and death due to lung disease;
  3             (6) the Kansas chapters of the Alzheimer's Disease and Related Dis-
  4       orders Association, Inc. for the purpose of providing assistance and sup-
  5       port to persons in Kansas with Alzheimer's disease, and their families and
  6       caregivers; and
  7             (ww) all sales of tangible personal property purchased by the Habitat
  8       for Humanity for the exclusive use of being incorporated within a housing
  9       project constructed by such organization.
10             (xx) all sales of tangible personal property and services purchased by
11       a nonprofit zoo which is exempt from federal income taxation pursuant
12       to section 501 (c)(3) of the federal internal revenue code of 1986, or on
13       behalf of such zoo by an entity itself exempt from federal income taxation
14       pursuant to section 50 501 (c)(3) of the federal internal revenue code of
15       1986 contracted with to operate such zoo and all sales of tangible personal
16       property or services purchased by a contractor for the purpose of con-
17       structing, equipping, reconstructing, maintaining, repairing, enlarging,
18       furnishing or remodeling facilities for any nonprofit zoo which would be
19       exempt from taxation under the provisions of this section if purchased
20       directly by such nonprofit zoo or the entity operating such zoo. Nothing
21       in this subsection shall be deemed to exempt the purchase of any con-
22       struction machinery, equipment or tools used in the constructing, equip-
23       ping, reconstructing, maintaining, repairing, enlarging, furnishing or re-
24       modeling facilities for any nonprofit zoo. When any nonprofit zoo shall
25       contract for the purpose of constructing, equipping, reconstructing, main-
26       taining, repairing, enlarging, furnishing or remodeling facilities, it shall
27       obtain from the state and furnish to the contractor an exemption certifi-
28       cate for the project involved, and the contractor may purchase materials
29       for incorporation in such project. The contractor shall furnish the number
30       of such certificate to all suppliers from whom such purchases are made,
31       and such suppliers shall execute invoices covering the same bearing the
32       number of such certificate. Upon completion of the project the contractor
33       shall furnish to the nonprofit zoo concerned a sworn statement, on a form
34       to be provided by the director of taxation, that all purchases so made were
35       entitled to exemption under this subsection. All invoices shall be held by
36       the contractor for a period of five years and shall be subject to audit by
37       the director of taxation. If any materials purchased under such a certifi-
38       cate are found not to have been incorporated in the building or other
39       project or not to have been returned for credit or the sales or compen-
40       sating tax otherwise imposed upon such materials which will not be so
41       incorporated in the building or other project reported and paid by such
42       contractor to the director of taxation not later than the 20th day of the
43       month following the close of the month in which it shall be determined

13
  1       that such materials will not be used for the purpose for which such cer-
  2       tificate was issued, the nonprofit zoo concerned shall be liable for tax on
  3       all materials purchased for the project, and upon payment thereof it may
  4       recover the same from the contractor together with reasonable attorney
  5       fees. Any contractor or any agent, employee or subcontractor thereof,
  6       who shall use or otherwise dispose of any materials purchased under such
  7       a certificate for any purpose other than that for which such a certificate
  8       is issued without the payment of the sales or compensating tax otherwise
  9       imposed upon such materials, shall be guilty of a misdemeanor and, upon
10       conviction therefor, shall be subject to the penalties provided for in sub-
11       section (g) of K.S.A. 79-3615, and amendments thereto;
12             (yy) all sales of tangible personal property and services purchased by
13       a parent-teacher association or organization, and all sales of tangible per-
14       sonal property by or on behalf of such association or organization;
15             (zz) all sales of machinery and equipment purchased by over-the-air,
16       free access radio or television station which is used directly and primarily
17       for the purpose of producing a broadcast signal or is such that the failure
18       of the machinery or equipment to operate would cause broadcasting to
19       cease. For purposes of this subsection, machinery and equipment shall
20       include, but not be limited to, that required by rules and regulations of
21       the federal communications commission, and all sales of electricity which
22       are essential or necessary for the purpose of producing a broadcast signal
23       or is such that the failure of the electricity would cause broadcasting to
24       cease;
25             (aaa) all sales of tangible personal property and services purchased
26       by a religious organization which is exempt from federal income taxation
27       pursuant to section 501 (c)(3) of the federal internal revenue code, and
28       used exclusively for religious purposes; and
29             (bbb) all sales of food for human consumption by an organization
30       which is exempt from federal income taxation pursuant to section 501
31       (c)(3) of the federal internal revenue code of 1986, pursuant to a food
32       distribution program which offers such food at a price below cost in
33       exchange for the performance of community service by the purchaser
34       thereof; and
35             (ccc) all sales of tangible personal property and services purchased
36       by or on behalf of the Kansas Academy of Science which is exempt from
37       federal income taxation pursuant to section 501 (c)(3) of the federal in-
38       ternal revenue code of 1986. 
39        Section 1. K.S.A. 1999 Supp. 79-3606 is hereby amended to
40       read as follows: 79-3606. The following shall be exempt from the
41       tax imposed by this act:
42        (a) All sales of motor-vehicle fuel or other articles upon which a
43       sales or excise tax has been paid, not subject to refund, under the

14
  1       laws of this state except cigarettes as defined by K.S.A. 79-3301 and
  2       amendments thereto, cereal malt beverages and malt products as
  3       defined by K.S.A. 79-3817 and amendments thereto, including wort,
  4       liquid malt, malt syrup and malt extract, which is not subject to
  5       taxation under the provisions of K.S.A. 79-41a02 and amendments
  6       thereto, motor vehicles taxed pursuant to K.S.A. 79-5117, and
  7       amendments thereto, tires taxed pursuant to K.S.A. 1999 Supp. 65-
  8       3424d, and amendments thereto, and drycleaning and laundry serv-
  9       ices taxed pursuant to K.S.A. 1999 Supp. 65-34,150, and amend-
10       ments thereto;
11        (b) all sales of tangible personal property or service, including
12       the renting and leasing of tangible personal property, purchased
13       directly by the state of Kansas, a political subdivision thereof, other
14       than a school or educational institution, or purchased by a public
15       or private nonprofit hospital or public hospital authority or non-
16       profit blood, tissue or organ bank and used exclusively for state,
17       political subdivision, hospital or public hospital authority or non-
18       profit blood, tissue or organ bank purposes, except when: (1) Such
19       state, hospital or public hospital authority is engaged or proposes
20       to engage in any business specifically taxable under the provisions
21       of this act and such items of tangible personal property or service
22       are used or proposed to be used in such business, or (2) such polit-
23       ical subdivision is engaged or proposes to engage in the business of
24       furnishing gas, water, electricity or heat to others and such items
25       of personal property or service are used or proposed to be used in
26       such business;
27        (c) all sales of tangible personal property or services, including
28       the renting and leasing of tangible personal property, purchased
29       directly by a public or private elementary or secondary school or
30       public or private nonprofit educational institution and used pri-
31       marily by such school or institution for nonsectarian programs and
32       activities provided or sponsored by such school or institution or in
33       the erection, repair or enlargement of buildings to be used for such
34       purposes. The exemption herein provided shall not apply to erec-
35       tion, construction, repair, enlargement or equipment of buildings
36       used primarily for human habitation;
37        (d) all sales of tangible personal property or services purchased
38       by a contractor for the purpose of constructing, equipping, recon-
39       structing, maintaining, repairing, enlarging, furnishing or remod-
40       eling facilities for any public or private nonprofit hospital or public
41       hospital authority, public or private elementary or secondary
42       school or a public or private nonprofit educational institution,
43       which would be exempt from taxation under the provisions of this

15
  1       act if purchased directly by such hospital or public hospital au-
  2       thority, school or educational institution; and all sales of tangible
  3       personal property or services purchased by a contractor for the
  4       purpose of constructing, equipping, reconstructing, maintaining,
  5       repairing, enlarging, furnishing or remodeling facilities for any po-
  6       litical subdivision of the state, the total cost of which is paid from
  7       funds of such political subdivision and which would be exempt from
  8       taxation under the provisions of this act if purchased directly by
  9       such political subdivision. Nothing in this subsection or in the pro-
10       visions of K.S.A. 12-3418 and amendments thereto, shall be deemed
11       to exempt the purchase of any construction machinery, equipment
12       or tools used in the constructing, equipping, reconstructing, main-
13       taining, repairing, enlarging, furnishing or remodeling facilities for
14       any political subdivision of the state. As used in this subsection,
15       K.S.A. 12-3418 and 79-3640, and amendments thereto, ``funds of a
16       political subdivision'' shall mean general tax revenues, the proceeds
17       of any bonds and gifts or grants-in-aid. Gifts shall not mean funds
18       used for the purpose of constructing, equipping, reconstructing, re-
19       pairing, enlarging, furnishing or remodeling facilities which are to
20       be leased to the donor. When any political subdivision of the state,
21       public or private nonprofit hospital or public hospital authority,
22       public or private elementary or secondary school or public or pri-
23       vate nonprofit educational institution shall contract for the purpose
24       of constructing, equipping, reconstructing, maintaining, repairing,
25       enlarging, furnishing or remodeling facilities, it shall obtain from
26       the state and furnish to the contractor an exemption certificate for
27       the project involved, and the contractor may purchase materials for
28       incorporation in such project. The contractor shall furnish the num-
29       ber of such certificate to all suppliers from whom such purchases
30       are made, and such suppliers shall execute invoices covering the
31       same bearing the number of such certificate. Upon completion of
32       the project the contractor shall furnish to the political subdivision,
33       hospital or public hospital authority, school or educational insti-
34       tution concerned a sworn statement, on a form to be provided by
35       the director of taxation, that all purchases so made were entitled to
36       exemption under this subsection. As an alternative to the foregoing
37       procedure, any such contracting entity may apply to the secretary
38       of revenue for agent status for the sole purpose of issuing and fur-
39       nishing project exemption certificates to contractors pursuant to
40       rules and regulations adopted by the secretary establishing condi-
41       tions and standards for the granting and maintaining of such status.
42       All invoices shall be held by the contractor for a period of five years
43       and shall be subject to audit by the director of taxation. If any

16
  1       materials purchased under such a certificate are found not to have
  2       been incorporated in the building or other project or not to have
  3       been returned for credit or the sales or compensating tax otherwise
  4       imposed upon such materials which will not be so incorporated in
  5       the building or other project reported and paid by such contractor
  6       to the director of taxation not later than the 20th day of the month
  7       following the close of the month in which it shall be determined that
  8       such materials will not be used for the purpose for which such cer-
  9       tificate was issued, the political subdivision, hospital or public hos-
10       pital authority, school or educational institution concerned shall be
11       liable for tax on all materials purchased for the project, and upon
12       payment thereof it may recover the same from the contractor to-
13       gether with reasonable attorney fees. Any contractor or any agent,
14       employee or subcontractor thereof, who shall use or otherwise dis-
15       pose of any materials purchased under such a certificate for any
16       purpose other than that for which such a certificate is issued with-
17       out the payment of the sales or compensating tax otherwise imposed
18       upon such materials, shall be guilty of a misdemeanor and, upon
19       conviction therefor, shall be subject to the penalties provided for in
20       subsection (g) of K.S.A. 79-3615, and amendments thereto;
21        (e) all sales of tangible personal property or services purchased
22       by a contractor for the erection, repair or enlargement of buildings
23       or other projects for the government of the United States, its agen-
24       cies or instrumentalities, which would be exempt from taxation if
25       purchased directly by the government of the United States, its agen-
26       cies or instrumentalities. When the government of the United States,
27       its agencies or instrumentalities shall contract for the erection, re-
28       pair, or enlargement of any building or other project, it shall obtain
29       from the state and furnish to the contractor an exemption certificate
30       for the project involved, and the contractor may purchase materials
31       for incorporation in such project. The contractor shall furnish the
32       number of such certificates to all suppliers from whom such pur-
33       chases are made, and such suppliers shall execute invoices covering
34       the same bearing the number of such certificate. Upon completion
35       of the project the contractor shall furnish to the government of the
36       United States, its agencies or instrumentalities concerned a sworn
37       statement, on a form to be provided by the director of taxation, that
38       all purchases so made were entitled to exemption under this sub-
39       section. As an alternative to the foregoing procedure, any such con-
40       tracting entity may apply to the secretary of revenue for agent
41       status for the sole purpose of issuing and furnishing project exemp-
42       tion certificates to contractors pursuant to rules and regulations
43       adopted by the secretary establishing conditions and standards for

17
  1       the granting and maintaining of such status. All invoices shall be
  2       held by the contractor for a period of five years and shall be subject
  3       to audit by the director of taxation. Any contractor or any agent,
  4       employee or subcontractor thereof, who shall use or otherwise dis-
  5       pose of any materials purchased under such a certificate for any
  6       purpose other than that for which such a certificate is issued with-
  7       out the payment of the sales or compensating tax otherwise imposed
  8       upon such materials, shall be guilty of a misdemeanor and, upon
  9       conviction therefor, shall be subject to the penalties provided for in
10       subsection (g) of K.S.A. 79-3615 and amendments thereto;
11        (f) tangible personal property purchased by a railroad or public
12       utility for consumption or movement directly and immediately in
13       interstate commerce;
14        (g) sales of aircraft including remanufactured and modified air-
15       craft, sales of aircraft repair, modification and replacement parts
16       and sales of services employed in the remanufacture, modification
17       and repair of aircraft sold to persons using directly or through an
18       authorized agent such aircraft and aircraft repair, modification and
19       replacement parts as certified or licensed carriers of persons or
20       property in interstate or foreign commerce under authority of the
21       laws of the United States or any foreign government or sold to any
22       foreign government or agency or instrumentality of such foreign
23       government and all sales of aircraft, aircraft parts, replacement
24       parts and services employed in the remanufacture, modification and
25       repair of aircraft for use outside of the United States;
26        (h) all rentals of nonsectarian textbooks by public or private el-
27       ementary or secondary schools;
28        (i) the lease or rental of all films, records, tapes, or any type of
29       sound or picture transcriptions used by motion picture exhibitors;
30        (j) meals served without charge or food used in the preparation
31       of such meals to employees of any restaurant, eating house, dining
32       car, hotel, drugstore or other place where meals or drinks are reg-
33       ularly sold to the public if such employees' duties are related to the
34       furnishing or sale of such meals or drinks;
35        (k) any motor vehicle, semitrailer or pole trailer, as such terms
36       are defined by K.S.A. 8-126 and amendments thereto, or aircraft
37       sold and delivered in this state to a bona fide resident of another
38       state, which motor vehicle, semitrailer, pole trailer or aircraft is not
39       to be registered or based in this state and which vehicle, semitrailer,
40       pole trailer or aircraft will not remain in this state more than 10
41       days;
42        (l) all isolated or occasional sales of tangible personal property,
43       services, substances or things, except isolated or occasional sale of

18
  1       motor vehicles specifically taxed under the provisions of subsection
  2       (o) of K.S.A. 79-3603 and amendments thereto;
  3        (m) all sales of tangible personal property which become an in-
  4       gredient or component part of tangible personal property or serv-
  5       ices produced, manufactured or compounded for ultimate sale at
  6       retail within or without the state of Kansas; and any such producer,
  7       manufacturer or compounder may obtain from the director of tax-
  8       ation and furnish to the supplier an exemption certificate number
  9       for tangible personal property for use as an ingredient or compo-
10       nent part of the property or services produced, manufactured or
11       compounded;
12        (n) all sales of tangible personal property which is consumed in
13       the production, manufacture, processing, mining, drilling, refining
14       or compounding of tangible personal property, the treating of by-
15       products or wastes derived from any such production process, the
16       providing of services or the irrigation of crops for ultimate sale at
17       retail within or without the state of Kansas; and any purchaser of
18       such property may obtain from the director of taxation and furnish
19       to the supplier an exemption certificate number for tangible per-
20       sonal property for consumption in such production, manufacture,
21       processing, mining, drilling, refining, compounding, treating, irri-
22       gation and in providing such services;
23        (o) all sales of animals, fowl and aquatic plants and animals, the
24       primary purpose of which is use in agriculture or aquaculture, as
25       defined in K.S.A. 47-1901, and amendments thereto, the production
26       of food for human consumption, the production of animal, dairy,
27       poultry or aquatic plant and animal products, fiber or fur, or the
28       production of offspring for use for any such purpose or purposes;
29        (p) all sales of drugs, as defined by K.S.A. 65-1626 and amend-
30       ments thereto, dispensed pursuant to a prescription order, as de-
31       fined by K.S.A. 65-1626 and amendments thereto, by a licensed
32       practitioner or a mid-level practitioner as defined by K.S.A. 65-
33       1626, and amendments thereto;
34        (q) all sales of insulin dispensed by a person licensed by the state
35       board of pharmacy to a person for treatment of diabetes at the di-
36       rection of a person licensed to practice medicine by the board of
37       healing arts;
38        (r) all sales of prosthetic and orthopedic appliances prescribed in
39       writing by a person licensed to practice the healing arts, dentistry
40       or optometry. For the purposes of this subsection, the term pros-
41       thetic and orthopedic appliances means any apparatus, instrument,
42       device, or equipment used to replace or substitute for any missing
43       part of the body; used to alleviate the malfunction of any part of

19
  1       the body; or used to assist any disabled person in leading a normal
  2       life by facilitating such person's mobility; such term shall include
  3       accessories attached or to be attached to motor vehicles, but such
  4       term shall not include motor vehicles or personal property which
  5       when installed becomes a fixture to real property;
  6        (s) all sales of tangible personal property or services purchased
  7       directly by a groundwater management district organized or op-
  8       erating under the authority of K.S.A. 82a-1020 et seq. and amend-
  9       ments thereto, which property or services are used in the operation
10       or maintenance of the district;
11        (t) all sales of farm machinery and equipment or aquaculture
12       machinery and equipment, repair and replacement parts therefor
13       and services performed in the repair and maintenance of such ma-
14       chinery and equipment. For the purposes of this subsection the term
15       ``farm machinery and equipment or aquaculture machinery and
16       equipment'' shall include machinery and equipment used in the op-
17       eration of Christmas tree farming but shall not include any passen-
18       ger vehicle, truck, truck tractor, trailer, semitrailer or pole trailer,
19       other than a farm trailer, as such terms are defined by K.S.A. 8-126
20       and amendments thereto. Each purchaser of farm machinery and
21       equipment or aquaculture machinery and equipment exempted
22       herein must certify in writing on the copy of the invoice or sales
23       ticket to be retained by the seller that the farm machinery and
24       equipment or aquaculture machinery and equipment purchased
25       will be used only in farming, ranching or aquaculture production.
26       Farming or ranching shall include the operation of a feedlot and
27       farm and ranch work for hire and the operation of a nursery;
28        (u) all leases or rentals of tangible personal property used as a
29       dwelling if such tangible personal property is leased or rented for
30       a period of more than 28 consecutive days;
31        (v) all sales of food products to any contractor for use in prepar-
32       ing meals for delivery to homebound elderly persons over 60 years
33       of age and to homebound disabled persons or to be served at a
34       group-sitting at a location outside of the home to otherwise home-
35       bound elderly persons over 60 years of age and to otherwise home-
36       bound disabled persons, as all or part of any food service project
37       funded in whole or in part by government or as part of a private
38       nonprofit food service project available to all such elderly or dis-
39       abled persons residing within an area of service designated by the
40       private nonprofit organization, and all sales of food products for
41       use in preparing meals for consumption by indigent or homeless
42       individuals whether or not such meals are consumed at a place des-
43       ignated for such purpose;

20
  1        (w) all sales of natural gas, electricity, heat and water delivered
  2       through mains, lines or pipes: (1) To residential premises for non-
  3       commercial use by the occupant of such premises; (2) for agricul-
  4       tural use and also, for such use, all sales of propane gas; (3) for use
  5       in the severing of oil; and (4) to any property which is exempt from
  6       property taxation pursuant to K.S.A. 79-201b Second through Sixth.
  7       As used in this paragraph, ``severing'' shall have the meaning as-
  8       cribed thereto by subsection (k) of K.S.A. 79-4216, and amendments
  9       thereto;
10        (x) all sales of propane gas, LP-gas, coal, wood and other fuel
11       sources for the production of heat or lighting for noncommercial
12       use of an occupant of residential premises;
13        (y) all sales of materials and services used in the repairing, serv-
14       icing, altering, maintaining, manufacturing, remanufacturing, or
15       modification of railroad rolling stock for use in interstate or foreign
16       commerce under authority of the laws of the United States;
17        (z) all sales of tangible personal property and services purchased
18       directly by a port authority or by a contractor therefor as provided
19       by the provisions of K.S.A. 12-3418 and amendments thereto;
20        (aa) all sales of materials and services applied to equipment
21       which is transported into the state from without the state for repair,
22       service, alteration, maintenance, remanufacture or modification
23       and which is subsequently transported outside the state for use in
24       the transmission of liquids or natural gas by means of pipeline in
25       interstate or foreign commerce under authority of the laws of the
26       United States;
27        (bb) all sales of used mobile homes or manufactured homes. As
28       used in this subsection: (1) ``Mobile homes'' and ``manufactured
29       homes'' shall have the meanings ascribed thereto by K.S.A. 58-4202
30       and amendments thereto; and (2) ``sales of used mobile homes or
31       manufactured homes'' means sales other than the original retail sale
32       thereof;
33        (cc) all sales of tangible personal property or services purchased
34       for the purpose of and in conjunction with constructing, recon-
35       structing, enlarging or remodeling a business or retail business
36       which meets the requirements established in K.S.A. 74-50,115 and
37       amendments thereto, and the sale and installation of machinery and
38       equipment purchased for installation at any such business or retail
39       business. When a person shall contract for the construction, recon-
40       struction, enlargement or remodeling of any such business or retail
41       business, such person shall obtain from the state and furnish to the
42       contractor an exemption certificate for the project involved, and the
43       contractor may purchase materials, machinery and equipment for

21
  1       incorporation in such project. The contractor shall furnish the num-
  2       ber of such certificates to all suppliers from whom such purchases
  3       are made, and such suppliers shall execute invoices covering the
  4       same bearing the number of such certificate. Upon completion of
  5       the project the contractor shall furnish to the owner of the business
  6       or retail business a sworn statement, on a form to be provided by
  7       the director of taxation, that all purchases so made were entitled to
  8       exemption under this subsection. All invoices shall be held by the
  9       contractor for a period of five years and shall be subject to audit
10       by the director of taxation. Any contractor or any agent, employee
11       or subcontractor thereof, who shall use or otherwise dispose of any
12       materials, machinery or equipment purchased under such a certif-
13       icate for any purpose other than that for which such a certificate is
14       issued without the payment of the sales or compensating tax oth-
15       erwise imposed thereon, shall be guilty of a misdemeanor and, upon
16       conviction therefor, shall be subject to the penalties provided for in
17       subsection (g) of K.S.A. 79-3615 and amendments thereto. As used
18       in this subsection, ``business'' and ``retail business'' have the mean-
19       ings respectively ascribed thereto by K.S.A. 74-50,114 and amend-
20       ments thereto;
21        (dd) all sales of tangible personal property purchased with food
22       stamps issued by the United States department of agriculture;
23        (ee) all sales of lottery tickets and shares made as part of a lottery
24       operated by the state of Kansas;
25        (ff) on and after July 1, 1988, all sales of new mobile homes or
26       manufactured homes to the extent of 40% of the gross receipts, de-
27       termined without regard to any trade-in allowance, received from
28       such sale. As used in this subsection, ``mobile homes'' and ``manu-
29       factured homes'' shall have the meanings ascribed thereto by K.S.A.
30       58-4202 and amendments thereto;
31        (gg) all sales of tangible personal property purchased in accord-
32       ance with vouchers issued pursuant to the federal special supple-
33       mental food program for women, infants and children;
34        (hh) all sales of medical supplies and equipment purchased di-
35       rectly by a nonprofit skilled nursing home or nonprofit intermediate
36       nursing care home, as defined by K.S.A. 39-923, and amendments
37       thereto, for the purpose of providing medical services to residents
38       thereof. This exemption shall not apply to tangible personal prop-
39       erty customarily used for human habitation purposes;
40        (ii) all sales of tangible personal property purchased directly by
41       a nonprofit organization for nonsectarian comprehensive multidis-
42       cipline youth development programs and activities provided or
43       sponsored by such organization, and all sales of tangible personal

22
  1       property by or on behalf of any such organization. This exemption
  2       shall not apply to tangible personal property customarily used for
  3       human habitation purposes;
  4        (jj) all sales of tangible personal property or services, including
  5       the renting and leasing of tangible personal property, purchased
  6       directly on behalf of a community-based mental retardation facility
  7       or mental health center organized pursuant to K.S.A. 19-4001 et seq.,
  8       and amendments thereto, and licensed in accordance with the pro-
  9       visions of K.S.A. 75-3307b and amendments thereto. This exemption
10       shall not apply to tangible personal property customarily used for
11       human habitation purposes;
12        (kk) on and after January 1, 1989, all sales of machinery and
13       equipment used directly and primarily for the purposes of manu-
14       facturing, assembling, processing, finishing, storing, warehousing
15       or distributing articles of tangible personal property in this state
16       intended for resale by a manufacturing or processing plant or fa-
17       cility or a storage, warehousing or distribution facility, and all sales
18       of repair and replacement parts and accessories purchased for such
19       machinery and equipment:
20        (1) For purposes of this subsection, machinery and equipment
21       shall be deemed to be used directly and primarily in the manufac-
22       ture, assemblage, processing, finishing, storing, warehousing or dis-
23       tributing of tangible personal property where such machinery and
24       equipment is used during a manufacturing, assembling, processing
25       or finishing, storing, warehousing or distributing operation:
26        (A) To effect a direct and immediate physical change upon the
27       tangible personal property;
28        (B) to guide or measure a direct and immediate physical change
29       upon such property where such function is an integral and essential
30       part of tuning, verifying or aligning the component parts of such
31       property;
32        (C) to test or measure such property where such function is an
33       integral part of the production flow or function;
34        (D) to transport, convey or handle such property during the man-
35       ufacturing, processing, storing, warehousing or distribution oper-
36       ation at the plant or facility; or
37        (E) to place such property in the container, package or wrapping
38       in which such property is normally sold or transported.
39        (2) For purposes of this subsection ``machinery and equipment
40       used directly and primarily'' shall include, but not be limited to:
41        (A) Mechanical machines or components thereof contributing to
42       a manufacturing, assembling or finishing process;
43        (B) molds and dies that determine the physical characteristics of

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

24
  1        (oo) all sales of tangible personal property purchased by a com-
  2       munity action group or agency for the exclusive purpose of repair-
  3       ing or weatherizing housing occupied by low income individuals;
  4        (pp) all sales of drill bits and explosives actually utilized in the
  5       exploration and production of oil or gas;
  6        (qq) all sales of tangible personal property and services pur-
  7       chased by a nonprofit museum or historical society or any combi-
  8       nation thereof, including a nonprofit organization which is organ-
  9       ized for the purpose of stimulating public interest in the exploration
10       of space by providing educational information, exhibits and expe-
11       riences, which is exempt from federal income taxation pursuant to
12       section 501(c)(3) of the federal internal revenue code of 1986;
13        (rr) all sales of tangible personal property which will admit the
14       purchaser thereof to any annual event sponsored by a nonprofit
15       organization which is exempt from federal income taxation pursu-
16       ant to section 501(c)(3) of the federal internal revenue code of 1986;
17        (ss) all sales of tangible personal property and services purchased
18       by a public broadcasting station licensed by the federal communi-
19       cations commission as a noncommercial educational television or
20       radio station;
21        (tt) all sales of tangible personal property and services purchased
22       by or on behalf of a not-for-profit corporation which is exempt from
23       federal income taxation pursuant to section 501(c)(3) of the federal
24       internal revenue code of 1986, for the sole purpose of constructing
25       a Kansas Korean War memorial;
26        (uu) all sales of tangible personal property and services pur-
27       chased by or on behalf of any rural volunteer fire-fighting organi-
28       zation for use exclusively in the performance of its duties and
29       functions;
30        (vv) all sales of tangible personal property purchased by any of
31       the following organizations which are exempt from federal income
32       taxation pursuant to section 501 (c)(3) of the federal internal rev-
33       enue code of 1986, for the following purposes, and all sales of any
34       such property by or on behalf of any such organization for any such
35       purpose:
36        (1) The American Heart Association, Kansas Affiliate, Inc. for the
37       purposes of providing education, training, certification in emer-
38       gency cardiac care, research and other related services to reduce
39       disability and death from cardiovascular diseases and stroke;
40        (2) the Kansas Alliance for the Mentally Ill, Inc. for the purpose
41       of advocacy for persons with mental illness and to education, re-
42       search and support for their families;
43        (3) the Kansas Mental Illness Awareness Council for the purposes

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

26
  1       such suppliers shall execute invoices covering the same bearing the
  2       number of such certificate. Upon completion of the project the con-
  3       tractor shall furnish to the nonprofit zoo concerned a sworn state-
  4       ment, on a form to be provided by the director of taxation, that all
  5       purchases so made were entitled to exemption under this subsection.
  6       All invoices shall be held by the contractor for a period of five years
  7       and shall be subject to audit by the director of taxation. If any
  8       materials purchased under such a certificate are found not to have
  9       been incorporated in the building or other project or not to have
10       been returned for credit or the sales or compensating tax otherwise
11       imposed upon such materials which will not be so incorporated in
12       the building or other project reported and paid by such contractor
13       to the director of taxation not later than the 20th day of the month
14       following the close of the month in which it shall be determined that
15       such materials will not be used for the purpose for which such cer-
16       tificate was issued, the nonprofit zoo concerned shall be liable for
17       tax on all materials purchased for the project, and upon payment
18       thereof it may recover the same from the contractor together with
19       reasonable attorney fees. Any contractor or any agent, employee or
20       subcontractor thereof, who shall use or otherwise dispose of any
21       materials purchased under such a certificate for any purpose other
22       than that for which such a certificate is issued without the payment
23       of the sales or compensating tax otherwise imposed upon such ma-
24       terials, shall be guilty of a misdemeanor and, upon conviction there-
25       for, shall be subject to the penalties provided for in subsection (g)
26       of K.S.A. 79-3615, and amendments thereto;
27        (yy) all sales of tangible personal property and services pur-
28       chased by a parent-teacher association or organization, and all
29       sales of tangible personal property by or on behalf of such associ-
30       ation or organization;
31        (zz) all sales of machinery and equipment purchased by over-the-
32       air, free access radio or television station which is used directly and
33       primarily for the purpose of producing a broadcast signal or is such
34       that the failure of the machinery or equipment to operate would
35       cause broadcasting to cease. For purposes of this subsection, ma-
36       chinery and equipment shall include, but not be limited to, that
37       required by rules and regulations of the federal communications
38       commission, and all sales of electricity which are essential or nec-
39       essary for the purpose of producing a broadcast signal or is such
40       that the failure of the electricity would cause broadcasting to cease;
41        (aaa) all sales of tangible personal property and services pur-
42       chased by a religious organization which is exempt from federal
43       income taxation pursuant to section 501(c)(3) of the federal internal

27
  1       revenue code, and used exclusively for religious purposes, and all
  2       sales of tangible personal property or services purchased by a con-
  3       tractor for the purpose of constructing, equipping, reconstructing,
  4       maintaining, repairing, enlarging, furnishing or remodeling facili-
  5       ties for any such organization which would be exempt from taxation
  6       under the provisions of this section if purchased directly by such
  7       organization. Nothing in this subsection shall be deemed to exempt
  8       the purchase of any construction machinery, equipment or tools
  9       used in the constructing, equipping, reconstructing, maintaining,
10       repairing, enlarging, furnishing or remodeling facilities for any
11       such organization. When any such organization shall contract for
12       the purpose of constructing, equipping, reconstructing, maintain-
13       ing, repairing, enlarging, furnishing or remodeling facilities, it shall
14       obtain from the state and furnish to the contractor an exemption
15       certificate for the project involved, and the contractor may pur-
16       chase materials for incorporation in such project. The contractor
17       shall furnish the number of such certificate to all suppliers from
18       whom such purchases are made, and such suppliers shall execute
19       invoices covering the same bearing the number of such certificate.
20       Upon completion of the project the contractor shall furnish to such
21       organization concerned a sworn statement, on a form to be provided
22       by the director of taxation, that all purchases so made were entitled
23       to exemption under this subsection. All invoices shall be held by the
24       contractor for a period of five years and shall be subject to audit
25       by the director of taxation. If any materials purchased under such
26       a certificate are found not to have been incorporated in the building
27       or other project or not to have been returned for credit or the sales
28       or compensating tax otherwise imposed upon such materials which
29       will not be so incorporated in the building or other project reported
30       and paid by such contractor to the director of taxation not later
31       than the 20th day of the month following the close of the month in
32       which it shall be determined that such materials will not be used
33       for the purpose for which such certificate was issued, such organi-
34       zation concerned shall be liable for tax on all materials purchased
35       for the project, and upon payment thereof it may recover the same
36       from the contractor together with reasonable attorney fees. Any
37       contractor or any agent, employee or subcontractor thereof, who
38       shall use or otherwise dispose of any materials purchased under
39       such a certificate for any purpose other than that for which such a
40       certificate is issued without the payment of the sales or compensat-
41       ing tax otherwise imposed upon such materials, shall be guilty of a
42       misdemeanor and, upon conviction therefor, shall be subject to the
43       penalties provided for in subsection (g) of K.S.A. 79-3615, and

28
  1       amendments thereto. Sales tax paid on and after July 1, 1998, but
  2       prior to the effective date of this act upon the gross receipts received
  3       from any sale exempted by the amendatory provisions of this sub-
  4       section shall be refunded. Each claim for a sales tax refund shall be
  5       verified and submitted to the director of taxation upon forms fur-
  6       nished by the director and shall be accompanied by any additional
  7       documentation required by the director. The director shall review
  8       each claim and shall refund that amount of sales tax paid as deter-
  9       mined under the provisions of this subsection. All refunds shall be
10       paid from the sales tax refund fund upon warrants of the director
11       of accounts and reports pursuant to vouchers approved by the di-
12       rector or the director's designee;
13        (bbb) all sales of food for human consumption by an organization
14       which is exempt from federal income taxation pursuant to section
15       501 (c)(3) of the federal internal revenue code of 1986, pursuant to
16       a food distribution program which offers such food at a price below
17       cost in exchange for the performance of community service by the
18       purchaser thereof;
19        (ccc) on and after July 1, 1999, all sales of tangible personal prop-
20       erty and services purchased by a primary care clinic or health cen-
21       ter the primary purpose of which is to provide services to medically
22       underserved individuals and families, and which is exempt from fed-
23       eral income taxation pursuant to section 501 (c)(3) of the federal
24       internal revenue code, and all sales of tangible personal property
25       or services purchased by a contractor for the purpose of construct-
26       ing, equipping, reconstructing, maintaining, repairing, enlarging,
27       furnishing or remodeling facilities for any such clinic or center
28       which would be exempt from taxation under the provisions of this
29       section if purchased directly by such clinic or center. Nothing in
30       this subsection shall be deemed to exempt the purchase of any con-
31       struction machinery, equipment or tools used in the constructing,
32       equipping, reconstructing, maintaining, repairing, enlarging, fur-
33       nishing or remodeling facilities for any such clinic or center. When
34       any such clinic or center shall contract for the purpose of construct-
35       ing, equipping, reconstructing, maintaining, repairing, enlarging,
36       furnishing or remodeling facilities, it shall obtain from the state and
37       furnish to the contractor an exemption certificate for the project
38       involved, and the contractor may purchase materials for incorpo-
39       ration in such project. The contractor shall furnish the number of
40       such certificate to all suppliers from whom such purchases are
41       made, and such suppliers shall execute invoices covering the same
42       bearing the number of such certificate. Upon completion of the pro-
43       ject the contractor shall furnish to such clinic or center concerned

29
  1       a sworn statement, on a form to be provided by the director of tax-
  2       ation, that all purchases so made were entitled to exemption under
  3       this subsection. All invoices shall be held by the contractor for a
  4       period of five years and shall be subject to audit by the director of
  5       taxation. If any materials purchased under such a certificate are
  6       found not to have been incorporated in the building or other project
  7       or not to have been returned for credit or the sales or compensating
  8       tax otherwise imposed upon such materials which will not be so
  9       incorporated in the building or other project reported and paid by
10       such contractor to the director of taxation not later than the 20th
11       day of the month following the close of the month in which it shall
12       be determined that such materials will not be used for the purpose
13       for which such certificate was issued, such clinic or center con-
14       cerned shall be liable for tax on all materials purchased for the
15       project, and upon payment thereof it may recover the same from
16       the contractor together with reasonable attorney fees. Any contrac-
17       tor or any agent, employee or subcontractor thereof, who shall use
18       or otherwise dispose of any materials purchased under such a cer-
19       tificate for any purpose other than that for which such a certificate
20       is issued without the payment of the sales or compensating tax oth-
21       erwise imposed upon such materials, shall be guilty of a misde-
22       meanor and, upon conviction therefor, shall be subject to the pen-
23       alties provided for in subsection (g) of K.S.A. 79-3615, and
24       amendments thereto;
25        (ddd) on and after January 1, 1999, and before January 1, 2000,
26       all sales of materials and services purchased by any class II or III
27       railroad as classified by the federal surface transportation board
28       for the construction, renovation, repair or replacement of class II
29       or III railroad track and facilities used directly in interstate com-
30       merce. In the event any such track or facility for which materials
31       and services were purchased sales tax exempt is not operational for
32       five years succeeding the allowance of such exemption, the total
33       amount of sales tax which would have been payable except for the
34       operation of this subsection shall be recouped in accordance with
35       rules and regulations adopted for such purpose by the secretary of
36       revenue; and
37        (eee) on and after January 1, 1999, and before January 1, 2000,
38       all sales of materials and services purchased for the original con-
39       struction, reconstruction, repair or replacement of grain storage
40       facilities, including railroad sidings providing access thereto; and
41        (fff) all sales of tangible personal property and services purchased by
42       or on behalf of the Kansas Academy of Science which is exempt from
43       federal income taxation pursuant to section 501(c)(3) of the federal inter-

30
  1       nal revenue code of 1986, and used solely by such academy for the prep-
  2       aration, publication and dissemination of educational materials.
  3        Sec.  2. K.S.A. 1998 1999 Supp. 79-3606 is hereby repealed.
  4        Sec.  3. This act shall take effect and be in force from and after its
  5       publication in the statute book.
  6        Section  1. K.S.A. 1999 Supp. 12-2536 is hereby amended to
  7       read as follows: 12-2536. The Kansas and Missouri metropolitan
  8       culture district compact is hereby enacted into law and entered
  9       into by the state of Kansas with the state of Missouri legally joining
10       therein, in the form substantially as follows:
11       Kansas and Missouri Metropolitan 12       Culture District Compact 13       Article I.--Agreement and Pledge 14             The states of Kansas and Missouri agree to and pledge, each to
15       the other, faithful cooperation in the future planning and devel-
16       opment of the metropolitan culture district, holding in high trust
17       for the benefit of its people and of the nation, the special blessings
18       and natural advantages thereof.
19       Article II.--Policy and Purpose 20             The party states, desiring by common action to fully utilize and
21       improve their cultural facilities, coordinate the services of their
22       cultural organizations, enhance the cultural activities of their cit-
23       izens, and achieve solid financial support for such cultural facili-
24       ties, organizations and activities, declare that it is the policy of each
25       state to realize such desires on a basis of cooperation with one
26       another, thereby serving the best interests of their citizenry and
27       effecting economies in capital expenditures and operational costs.
28       The purpose of this compact is to provide for the creation of a
29       metropolitan culture district as the means to implementation of
30       the policy herein declared with the most beneficial and economical
31       use of human and material resources.
32       Article III.--Definitions 33             As used in this compact, unless the context clearly requires
34       otherwise:
35             (a) ``Metropolitan culture district'' means a political subdivi-
36       sion of the states of Kansas and Missouri which is created under
37       and pursuant to the provisions of this compact and which is com-
38       posed of the counties in the states of Kansas and Missouri which
39       act to create or to become a part of the district in accordance with
40       the provisions of Article IV.
41             (b) ``Commission'' means the governing body of the metropol-
42       itan culture district.
43             (c) ``Cultural activities'' means sports or activities which con-

31
  1       tribute to or enhance the aesthetic, artistic, historical, intellectual
  2       or social development or appreciation of members of the general
  3       public.
  4             (d) ``Cultural organizations'' means nonprofit and tax exempt
  5       social, civic or community organizations and associations which are
  6       dedicated to the development, provision, operation, supervision,
  7       promotion or support of cultural activities in which members of
  8       the general public may engage or participate.
  9             (e) ``Cultural facilities'' means facilities operated or used for
10       sports or participation or engagement in cultural activities by mem-
11       bers of the general public. [No preference for admittance to any
12       cultural facility which receives any financial aid from the proceeds
13       of any tax imposed pursuant to the provisions of this compact shall
14       be based upon residence.]
15       Article IV.--The District 16             (a) The counties in Kansas and Missouri eligible to create and
17       initially compose the metropolitan culture district shall be those
18       counties which meet one or more of the following criteria: (1) The
19       county has a population in excess of 300,000, and is adjacent to the
20       state line; (2) the county contains a part of a city with a population
21       according to the most recent federal census of at least 400,000; or
22       (3) the county is contiguous to any county described in provisions
23       (1) or (2) of this subpart (a). The counties of Johnson in Kansas and
24       Jackson in Missouri shall be sine qua non to the creation and initial
25       composition of the district. Additional counties in Kansas and Mis-
26       souri shall be eligible to become a part of the metropolitan culture
27       district if such counties are contiguous to any one or more of the
28       counties which compose the district and within 60 miles of the
29       counties required by this article to establish the district.
30             (b)  (1) Whenever the governing body of any county which is
31       eligible to create or become a part of the metropolitan culture
32       district shall determine that creation of or participation in the dis-
33       trict is in the best interests of the citizens of the county and that
34       the levy of a tax to provide on a cooperative basis with another
35       county or other counties for financial support of the district would
36       be economically practical and cost beneficial to the citizens of the
37       county, the governing body may adopt by majority vote a resolu-
38       tion authorizing the same.
39             (2) Whenever a petition, signed by not less than the number of
40       qualified electors of an eligible county equal to 5% of the number
41       of ballots cast and counted at the last preceding gubernatorial
42       election held in the county and requesting adoption of a resolution
43       authorizing creation of or participation in the metropolitan culture

32
  1       district and the levy of a tax for the purpose of contributing to the
  2       financial support of the district, is filed with the governing body
  3       of the county, the governing body shall adopt such a resolution.
  4             (3) Implementation of a resolution adopted under this subpart
  5       (b) shall be conditioned upon approval of the resolution by a ma-
  6       jority of the qualified electors of the county voting at an election
  7       conducted for such purpose.
  8             (c)  (1) Upon adoption of a resolution pursuant to subpart (b)(1)
  9       or subpart (b)(2), the governing body of the county shall request,
10       within 36 months after adoption of the resolution, the county elec-
11       tion officer to submit to the qualified electors of the county the
12       question of whether the governing body shall be authorized to
13       implement the resolution. The resolution shall be printed on the
14       ballot and in the notice of election. The question shall be submitted
15       to the electors of the county at the primary or general election
16       next following the date of the request filed with the county election
17       officer. If a majority of the qualified electors are opposed to im-
18       plementation of the resolution authorizing creation of or partici-
19       pation in the district and the levy of a tax for financial support
20       thereof, the same shall not be implemented. The governing body
21       of the county may renew procedures for authorization to create or
22       become a part of the district and to levy a tax for financial support
23       thereof at any time following rejection of the question.
24             (2) The ballot for the proposition in any county shall be sub-
25       stantially the following form:

26       27

``Shall a retail sales tax of (insert amount, not to exceed 1/4 cent) be levied and collected in Kansas and Missouri metropolitan cultural district consisting of the county(ies) of (insert name of counties) for the support of cultural facilities and organizations within thedistrict?''

Yes       No

28             The governing body of the county may place additional language
29       on the ballot to describe the use or allocation of the funds.
30             (d)  (1) The metropolitan culture district shall be created when
31       implementation of a resolution authorizing the creation of the dis-
32       trict and the levy of a tax for contribution to the financial support
33       thereof is approved by respective majorities of the qualified elec-
34       tors of at least Johnson county, Kansas, and Jackson county, Mis-
35       souri.
36             (2) When implementation of a resolution authorizing partici-
37       pation in the metropolitan culture district and the levy of a tax for
38       contribution to the financial support thereof is approved by a ma-

33
  1       jority of the qualified electors of any county eligible to become a
  2       part of the district, the governing body of the county shall proceed
  3       with the performance of all things necessary and incidental to par-
  4       ticipation in the district.
  5             (3) Any question for the levy of a tax submitted after July 1, 2000,
  6       may be submitted to the electors of the county at the primary or general
  7       election next following the date of the request filed with the county election
  8       officer; at a special election called and held as otherwise provided by law;
  9       at an election called and held on the first Tuesday after the first Monday
10       in February, except in presidential election years; at an election called and
11       held on the first Tuesday after the first Monday in March, June, August
12       or November; or at an election called and held on the first Tuesday in
13       April, except that no question for a tax levy may be submitted to the
14       electors prior to January 1, 2002.
15             (4) No question shall be submitted to the electors authorizing the levy
16       of a tax the proceeds of which will be exclusively dedicated to sports or
17       sports facilities. [Whenever any portion of the proceeds of a tax is
18       dedicated to sports or sports facilities, there also shall be dedicated
19       from the proceeds of such tax an amount to be used to provide
20       grants to community homeless shelters in the district. The amount
21       dedicated for such grants shall not be less than 10% of the amount
22       dedicated to sports and sports facilities.]
23             (e) Any of the counties composing the metropolitan culture dis-
24       trict may withdraw from the district by adoption of a resolution
25       and approval of the resolution by a majority of the qualified elec-
26       tors of the county, all in the same manner provided in this Article
27       IV for creating or becoming a part of the metropolitan culture
28       district. The governing body of a withdrawing county shall provide
29       for the sending of formal written notice of withdrawal from the
30       district to the governing body of the other county or each of the
31       other counties comprising the district. Actual withdrawal shall not
32       take effect until 90 days after notice has been sent. A withdrawing
33       county shall not be relieved from any obligation which such county
34       may have assumed or incurred by reason of being a part of the
35       district, including, but not limited to, the retirement of any out-
36       standing bonded indebtedness of the district.
37       Article V.--The Commission 38             (a) The metropolitan culture district shall be governed by the
39       metropolitan culture commission which shall be a body corporate
40       and politic and which shall be composed of resident electors of the
41       states of Kansas and Missouri, respectively, as follows: (1) A mem-
42       ber of the governing body of each county which is a part of the
43       district, who shall be appointed by majority vote of such governing

34
  1       body; (2) a member of the governing body of each city, with a
  2       population according to the most recent federal census of at least
  3       50,000, located in whole or in part within each county which is a
  4       part of the district, who shall be appointed by majority vote of such
  5       governing body; and (3) two members of the governing body of a county
  6       with a consolidated or unified county government and city of the first
  7       class which is a part of the district, who shall be appointed by majority
  8       vote of such governing body; (3) (4) a member of the arts commission
  9       of Kansas or the Kansas commission for the humanities, who shall
10       be appointed by the governor of Kansas; and (5) a member of the
11       arts commission of Missouri or the Missouri humanities council,
12       who shall be appointed by the governor of Missouri. To the extent
13       possible, the gubernatorial appointees to the commission shall be
14       residents of the district. The term of each commissioner initially
15       appointed by a county governing body shall expire concurrently
16       with such commissioner's tenure as a county officer or three years
17       after the date of appointment as a commissioner, whichever occurs
18       sooner. The term of each commissioner succeeding a commis-
19       sioner initially appointed by a county governing body shall expire
20       concurrently with such successor commissioner's tenure as a
21       county officer or four years after the date of appointment as a
22       commissioner, whichever occurs sooner. The term of each com-
23       missioner initially appointed by a city governing body shall expire
24       concurrently with such commissioner's tenure as a city officer or
25       two years after the date of appointment as a commissioner, which-
26       ever occurs sooner. The term of each commissioner succeeding a
27       commissioner initially appointed by a city governing body shall
28       expire concurrently with such successor commissioner's tenure as
29       a city officer or four years after the date of appointment as a com-
30       missioner, whichever occurs sooner. The term of each commis-
31       sioner appointed by the governor of Kansas or the governor of
32       Missouri shall expire concurrently with the term of the appointing
33       governor, the commissioner's tenure as a state officer, or four
34       years after the date of appointment as a commissioner of the dis-
35       trict, whichever occurs sooner. Any vacancy occurring in a com-
36       missioner position for reasons other than expiration of terms of
37       office shall be filled for the unexpired term by appointment in the
38       same manner that the original appointment was made. Any com-
39       missioner may be removed for cause by the appointing authority
40       of the commissioner.
41             (b) The commission shall select annually, from its membership,
42       a chairperson, a vice-chairperson, and a treasurer. The treasurer
43       shall be bonded in such amounts as the commission may require.

35
  1             (c) The commission may appoint such officers, agents and em-
  2       ployees as it may require for the performance of its duties, and
  3       shall determine the qualifications and duties and fix the compen-
  4       sation of such officers, agents and employees.
  5             (d) The commission shall fix the time and place at which its
  6       meetings shall be held. Meetings shall be held within the district
  7       and shall be open to the public. Public notice shall be given of all
  8       meetings.
  9             (e) A majority of the commissioners from each state shall con-
10       stitute, in the aggregate, a quorum for the transaction of business.
11       No action of the commission shall be binding unless taken at a
12       meeting at which at least a quorum is present, and unless a ma-
13       jority of the commissioners from each state, present at such meet-
14       ing, shall vote in favor thereof. No action of the commission taken
15       at a meeting thereof shall be binding unless the subject of such
16       action is included in a written agenda for such meeting, the agenda
17       and notice of meeting having been mailed to each commissioner
18       by postage paid first-class mail at least 14 calendar days prior to
19       the meeting.
20             (f) The commissioners from each state shall be subject to the
21       provisions of the laws of the states of Kansas and Missouri, re-
22       spectively, which relate to conflicts of interest of public officers
23       and employees. If any commissioner has a direct or indirect finan-
24       cial interest in any cultural facility, organization or activity sup-
25       ported by the district or commission or in any other business trans-
26       action of the district or commission, the commissioner shall
27       disclose such interest in writing to the other commissioners and
28       shall abstain from voting on any matter relating to such facility,
29       organization or activity or to such business transaction.
30             (g) If any action at law or equity, or other legal proceeding,
31       shall be brought against any commissioner for any act or omission
32       arising out of the performance of duties as a commissioner, the
33       commissioner shall be indemnified in whole and held harmless by
34       the commission for any judgment or decree entered against the
35       commissioner and, further, shall be defended at the cost and ex-
36       pense of the commission in any such proceeding.
37       Article VI.--Powers and Duties of the Commission 38             (a) The commission shall adopt a seal and suitable bylaws gov-
39       erning its management and procedure.
40             (b) The commission has the power to contract and to be con-
41       tracted with, and to sue and to be sued.
42             (c) The commission may receive for any of its purposes and
43       functions any contributions or moneys appropriated by counties

36
  1       or cities and may solicit and receive any and all donations, and
  2       grants of money, equipment, supplies, materials and services from
  3       any state or the United States or any agency thereof, or from any
  4       institution, foundation, organization, person, firm or corporation,
  5       and may utilize and dispose of the same.
  6             (d) Upon receipt of recommendations from the advisory com-
  7       mittee provided in subsection (g), the commission may provide do-
  8       nations, contributions and grants or other support, financial or
  9       otherwise, for or in aid of cultural organizations, facilities or ac-
10       tivities in counties which are part of the district. In determining
11       whether to provide any such support the commission shall consider
12       the following factors:
13             (1) Economic impact upon the district;
14             (2) cultural benefit to citizens of the district and to the general
15       public;
16             (3) contribution to the quality of life and popular image of the
17       district;
18             (4) contribution to the geographical balance of cultural facili-
19       ties and activities within and outside the district;
20             (5) the breadth of popular appeal within and outside the dis-
21       trict;
22             (6) the needs of the community as identified in an objective
23       cultural needs assessment study of the metropolitan area; and
24             (7) any other factor deemed appropriate by the commission.
25       On and after the effective date of this act, in the performance of its duties
26       regarding the provision of financing of cultural activities, organizations
27       or facilities in Kansas and Missouri, the commission shall not provide for
28       more than 50% of the revenue produced from sales taxes levied within
29       the metropolitan culture district to activities, organizations or facilities
30       performed or located in either state.
31             (e) The commission may own and acquire by gift, purchase,
32       lease or devise cultural facilities within the territory of the district.
33       The commission may plan, construct, operate and maintain and
34       contract for the operation and maintenance of cultural facilities
35       within the territory of the district. The commission may sell, lease
36       or otherwise dispose of cultural facilities within the territory of the
37       district.
38             (f) At any time following five years from and after the creation
39       of the metropolitan cultural district as provided in paragraph (1)
40       of subsection (d) of article IV, the commission, may borrow moneys
41       for the planning, construction, equipping, operation, mainte-
42       nance, repair, extension, expansion, or improvement of any cul-
43       tural facility and, in that regard, the commission at such time may:

37
  1             (1) Issue notes, bonds or other instruments in writing of the
  2       commission in evidence of the sum or sums to be borrowed. No
  3       notes, bonds or other instruments in writing shall be issued pur-
  4       suant to this subsection until the issuance of such notes, bonds or
  5       instruments has been submitted to and approved by a majority of
  6       the qualified electors of the district voting at an election called and
  7       held thereon. Such election shall be called and held in the manner
  8       provided by the general bond law;
  9             (2) issue refunding notes, bonds or other instruments in writ-
10       ing for the purpose of refunding, extending or unifying the whole
11       or any part of its outstanding indebtedness from time to time,
12       whether evidenced by notes, bonds or other instruments in writ-
13       ing. Such refunding notes, bonds or other instruments in writing
14       shall not exceed in amount the principal of the outstanding in-
15       debtedness to be refunded and the accrued interest thereon to the
16       date of such refunding;
17             (3) provide that all notes, bonds and other instruments in writ-
18       ing issued hereunder shall or may be payable, both as to principal
19       and interest, from sales tax revenues authorized under this com-
20       pact and disbursed to the district by counties comprising the dis-
21       trict, admissions and other revenues collected from the use of any
22       cultural facility or facilities constructed hereunder, or from any
23       other resources of the commission, and further may be secured by
24       a mortgage or deed of trust upon any property interest of the com-
25       mission; and
26             (4) prescribe the details of all notes, bonds or other instru-
27       ments in writing, and of the issuance and sale thereof. The com-
28       mission shall have the power to enter into covenants with the hold-
29       ers of such notes, bonds or other instruments in writing, not
30       inconsistent with the powers granted herein, without further leg-
31       islative authority.
32             (g) The commission shall appoint an advisory committee com-
33       posed of members of the general public consisting of an equal
34       number of persons from both the states of Kansas and Missouri
35       who have demonstrated interest, expertise, knowledge or experi-
36       ence in cultural organizations or activities. The advisory commit-
37       tee shall make recommendations annually to the commission re-
38       garding donations, contributions and grants or other support,
39       financial or otherwise, for or in aid of cultural organizations, fa-
40       cilities and activities in counties which are part of the district.
41             (h) The commission may provide for actual and necessary ex-
42       penses of commissioners and advisory committee members in-
43       curred in the performance of their official duties.

38
  1             (i) The commission shall cause to be prepared annually a re-
  2       port on the operations and transactions conducted by the commis-
  3       sion during the preceding year. The report shall be submitted to
  4       the legislatures and governors of the compacting states, to the gov-
  5       erning bodies of the counties comprising the district, and to the
  6       governing body of each city that appoints a commissioner. The
  7       commission shall publish the annual report in the official county
  8       newspaper of each of the counties comprising the district.
  9             (j) The commission has the power to apply to the congress of
10       the United States for its consent and approval of the compact. In
11       the absence of the consent of congress and until consent is secured,
12       the compact is binding upon the states of Kansas and Missouri in
13       all respects permitted by law for the two states, without the consent
14       of congress, for the purposes enumerated and in the manner pro-
15       vided in the compact.
16             (k) The commission has the power to perform all other nec-
17       essary and incidental functions and duties and to exercise all other
18       necessary and appropriate powers not inconsistent with the con-
19       stitution or laws of the United States or of either of the states of
20       Kansas or Missouri to effectuate the same.
21       Article VII.--Finance 22             (a) The moneys necessary to finance the operation of the met-
23       ropolitan culture district and the execution of the powers, duties
24       and responsibilities of the commission shall be appropriated to the
25       commission by the counties comprising the district. The moneys
26       to be appropriated to the commission shall be raised by the gov-
27       erning bodies of the respective counties by the levy of taxes as
28       authorized by the legislatures of the respective party states.
29             (b) The commission shall not incur any indebtedness or obli-
30       gation of any kind; nor shall the commission pledge the credit of
31       either or any of the counties comprising the district or either of
32       the states party to this compact, except as authorized by article VI.
33       The budget of the district shall be prepared, adopted and pub-
34       lished as provided by law for other political subdivisions of the
35       party states. No budget shall be adopted by the commission until
36       it has been submitted to and reviewed by the governing bodies of
37       the counties comprising the district and the governing body of
38       each city represented on the commission.
39             (c) The commission shall keep accurate accounts of all receipts
40       and disbursements. The receipts and disbursements of the com-
41       mission shall be audited yearly by a certified or licensed public
42       accountant and the report of the audit shall be included in and
43       become part of the annual report of the commission.

39
  1             (d) The accounts of the commission shall be open at any rea-
  2       sonable time for inspection by duly authorized representatives of
  3       the compacting states, the counties comprising the district, the cit-
  4       ies that appoint a commissioner, and other persons authorized by
  5       the commission.
  6       Article VIII.--Entry into Force   7             (a) This compact shall enter into force and become effective
  8       and binding upon the states of Kansas and Missouri when it has
  9       been enacted into law by the legislatures of the respective states.
10             (b) Amendments to the compact shall become effective upon
11       enactment by the legislatures of the respective states.
12       Article IX.--Termination 13             This compact shall continue in force and remain binding upon
14       a party state until its legislature shall have enacted a statute re-
15       pealing the same and providing for the sending of formal written
16       notice of enactment of such statute to the legislature of the other
17       party state. Upon enactment of such a statute by the legislature of
18       either party state, the sending of notice thereof to the other party
19       state, and payment of any obligations which the metropolitan cul-
20       ture district commission may have incurred prior to the effective
21       date of such statute, including, but not limited to, the retirement
22       of any outstanding bonded indebtedness of the district, the agree-
23       ment of the party states embodied in the compact shall be deemed
24       fully executed, the compact shall be null and void and of no further
25       force or effect, the metropolitan culture district shall be dissolved,
26       and the metropolitan culture district commission shall be abol-
27       ished.
28       Article X.--Construction and Severability 29             The provisions of this compact shall be liberally construed and
30       shall be severable. If any phrase, clause, sentence or provision of
31       this compact is declared to be contrary to the constitution of either
32       of the party states or of the United States or the applicability
33       thereof to any government, agency, person or circumstance is held
34       invalid, the validity of the remainder of this compact and the ap-
35       plicability thereof to any government, agency, person or circum-
36       stance shall not be affected thereby. If this compact shall be held
37       contrary to the constitution of either of the states party thereto,
38       the compact shall thereby be nullified and voided and of no further
39       force or effect.
40        [New Sec.  2. To carry out the purpose and intent of this act to
41       provide equal access to funds within the metropolitan culture dis-
42       trict to support activities, organizations or facilities performed or
43       located in either state, 50% of the net tax revenues derived from

40
  1       Missouri riverboat gaming activities shal be made available to the
  2       state of Kansas.]
  3        Sec.  2. [3.] K.S.A. 1999 Supp. 12-2536 is hereby repealed.
  4             Sec.  3. [4.] This act shall take effect and be in force from and
  5       after its publication in the statute book.
  6