CHAPTER 154 SENATE BILL No. 45 (Amends Chapter 115) An  Act enacting the tax reform and relief act of 1999; amending K.S.A. 2-610, 2-1318, 2-
1319, 2-1322, 2-2007, 3-121, 12-1403, 12-1405, 12-1617h, 19-236, 19-807d, 19-2803,
19-2803e, 19-3105, 19-3106, 19-3305, 19-4004, 19-4011, 19-4102, 65-212, 68-166, 68-
518c, 68-582, 73-407, 76-326a, 79-201, 79-5a01, 79-1945, 79-1946, 79-1962, 79-32,197,
79-32,201, 80-115, 80-119, 80-808, 80-903, 80-932, 80-1417, 80-1503, 80-1509, 80-1537,
80-1806, 80-1903, 80-1909, 80-1916, 80-1920, 80-1921, 80-1924, 80-2006, 80-2021, 80-
2201, 80-2204 and 82a-308 and K.S.A. 1998 Supp. 79-201a, 79-201b, 79-32,117, 79-
32,195, 79-3602, 79-3606 and 79-3606, as amended by section 6 of this act, and repealing
the existing sections; also repealing K.S.A. 79-1947, 79-1947b, 79-1948, 79-1949, 79-
1950, 79-1951, 79-1952 and 79-1953 and K.S.A. 1998 Supp. 79-3606, as amended by
section 18 of House Bill No. 2168.
Be it enacted by the Legislature of the State of Kansas:

      Section  1. On and after July 1, 1999, K.S.A. 1998 Supp. 79-3602 is
hereby amended to read as follows: 79-3602. (a) ``Persons'' means any
individual, firm, copartnership, joint adventure, association, corporation,
estate or trust, receiver or trustee, or any group or combination acting as
a unit, and the plural as well as the singular number; and shall specifically
mean any city or other political subdivision of the state of Kansas engaging
in a business or providing a service specifically taxable under the provi-
sions of this act.

      (b) ``Director'' means the state director of taxation.

      (c) ``Sale'' or ``sales'' means the exchange of tangible personal prop-
erty, as well as the sale thereof for money, and every transaction, condi-
tional or otherwise, for a consideration, constituting a sale, including the
sale or furnishing of electrical energy, gas, water, services or entertain-
ment taxable under the terms of this act and including, except as provided
in the following provision, the sale of the use of tangible personal property
by way of a lease, license to use or the rental thereof regardless of the
method by which the title, possession or right to use the tangible personal
property is transferred. The term ``sale'' or ``sales'' shall not mean the sale
of the use of any tangible personal property used as a dwelling by way of
a lease or rental thereof for a term of more than 28 consecutive days.

      (d) ``Retailer'' means a person regularly engaged in the business of
selling tangible personal property at retail or furnishing electrical energy,
gas, water, services or entertainment, and selling only to the user or con-
sumer and not for resale.

      (e) ``Retail sale'' or ``sale at retail'' means all sales made within the
state of tangible personal property or electrical energy, gas, water, services
or entertainment for use or consumption and not for resale.

      (f) ``Tangible personal property'' means corporeal personal property.
Such term shall include;: (1) Any computer software program which is
not a custom computer software program, as described by subsection (s)
of K.S.A. 79-3603, and amendments thereto; and (2) and any prepaid
telephone calling card or prepaid authorization number, or recharge of
such card or number, as described by subsection (b) of K.S.A. 79-3603,
and amendments thereto.

      (g) ``Selling price'' means the total cost to the consumer exclusive of
discounts allowed and credited, but including freight and transportation
charges from retailer to consumer.

      (h) ``Gross receipts'' means the total selling price or the amount re-
ceived as defined in this act, in money, credits, property or other consid-
eration valued in money from sales at retail within this state; and em-
braced within the provisions of this act. The taxpayer, may take credit in
the report of gross receipts for: (1) An amount equal to the selling price
of property returned by the purchaser when the full sale price thereof,
including the tax collected, is refunded in cash or by credit; and (2) an
amount equal to the allowance given for the trade-in of property.

      (i) ``Taxpayer'' means any person obligated to account to the director
for taxes collected under the terms of this act.

      (j) ``Isolated or occasional sale'' means the nonrecurring sale of tan-
gible personal property, or services taxable hereunder by a person not
engaged at the time of such sale in the business of selling such property
or services. Any religious organization which makes a nonrecurring sale
of tangible personal property acquired for the purpose of resale shall be
deemed to be not engaged at the time of such sale in the business of
selling such property. Such term shall include: (1) Any sale by a bank,
savings and loan institution, credit union or any finance company licensed
under the provisions of the Kansas uniform consumer credit code of tan-
gible personal property which has been repossessed by any such entity;
and (2) any sale of tangible personal property made by an auctioneer or
agent on behalf of not more than two principals or households if such
sale is nonrecurring and any such principal or household is not engaged
at the time of such sale in the business of selling tangible personal prop-
erty.

      (k) ``Service'' means those services described in and taxed under the
provisions of K.S.A. 79-3603 and amendments thereto.

      (l) ``Ingredient or component part'' means tangible personal property
which is necessary or essential to, and which is actually used in and be-
comes an integral and material part of tangible personal property or serv-
ices produced, manufactured or compounded for sale by the producer,
manufacturer or compounder in its regular course of business. The fol-
lowing items of tangible personal property are hereby declared to be
ingredients or component parts, but the listing of such property shall not
be deemed to be exclusive nor shall such listing be construed to be a
restriction upon, or an indication of, the type or types of property to be
included within the definition of ``ingredient or component part'' as
herein set forth:

      (1) Containers, labels and shipping cases used in the distribution of
property produced, manufactured or compounded for sale which are not
to be returned to the producer, manufacturer or compounder for reuse.

      (2) Containers, labels, shipping cases, paper bags, drinking straws,
paper plates, paper cups, twine and wrapping paper used in the distri-
bution and sale of property taxable under the provisions of this act by
wholesalers and retailers and which is not to be returned to such whole-
saler or retailer for reuse.

      (3) Seeds and seedlings for the production of plants and plant prod-
ucts produced for resale.

      (4) Paper and ink used in the publication of newspapers.

      (5) Fertilizer used in the production of plants and plant products
produced for resale.

      (6) Feed for animals, fowl and aquatic plants and animals, the primary
purpose of which is use in agriculture or aquaculture, as defined in K.S.A.
47-1901, and amendments thereto, the production of food for human
consumption, the production of animal, dairy, poultry or aquatic plant
and animal products, fiber, fur, or the production of offspring for use for
any such purpose or purposes.

      (m) ``Property which is consumed'' means tangible personal property
which is essential or necessary to and which is used in the actual process
of and immediately consumed, depleted or dissipated within one year in
(1) the production, manufacture, processing, mining, drilling, refining or
compounding of tangible personal property, (2) the providing of services
or, (3) the irrigation of crops, for sale in the regular course of business,
or (4) the storage or processing of grain by a public grain warehouse or
other grain storage facility, and which is not reusable for such purpose.
The following items of tangible personal property are hereby declared to
be ``consumed'' but the listing of such property shall not be deemed to
be exclusive nor shall such listing be construed to be a restriction upon
or an indication of, the type or types of property to be included within
the definition of ``property which is consumed'' as herein set forth is a
listing of tangible personal property, included by way of illustration but
not of limitation, which qualifies as property which is consumed:

      (A) Insecticides, herbicides, germicides, pesticides, fungicides, fu-
migants, antibiotics, biologicals, pharmaceuticals, vitamins and chemicals
for use in commercial or agricultural production, processing or storage of
fruit, vegetables, feeds, seeds, grains, animals or animal products whether
fed, injected, applied, combined with or otherwise used; and

      (B) electricity, gas and water; and

      (C) petroleum products, lubricants, chemicals, solvents, reagents and
catalysts.

      (n) ``Political subdivision'' means any municipality, agency or subdi-
vision of the state which is, or shall hereafter be, authorized to levy taxes
upon tangible property within the state or which certifies a levy to a
municipality, agency or subdivision of the state which is, or shall hereafter
be, authorized to levy taxes upon tangible property within the state. Such
term also shall include any public building commission, housing, airport,
port, metropolitan transit or similar authority established pursuant to law.

      (o) ``Municipal corporation'' means any city incorporated under the
laws of Kansas.

      (p) ``Quasi-municipal corporation'' means any county, township,
school district, drainage district or any other governmental subdivision in
the state of Kansas having authority to receive or hold moneys or funds.

      (q) ``Nonprofit blood bank'' means any nonprofit place, organization,
institution or establishment that is operated wholly or in part for the
purpose of obtaining, storing, processing, preparing for transfusing, fur-
nishing, donating or distributing human blood or parts or fractions of
single blood units or products derived from single blood units, whether
or not any remuneration is paid therefor, or whether such procedures are
done for direct therapeutic use or for storage for future use of such prod-
ucts.

      (r) ``Contractor, subcontractor or repairman'' means a person who
agrees to furnish and install tangible personal property or install tangible
personal property at a specified price. A person who maintains an inven-
tory of tangible personal property which enables such person to furnish
and install the tangible personal property or install the tangible personal
property shall not be deemed a contractor, subcontractor or repairman
but shall be deemed a retailer.

      (s) ``Educational institution'' means any nonprofit school, college and
university that offers education at a level above the twelfth grade, and
conducts regular classes and courses of study required for accreditation
by, or membership in, the North Central Association of Colleges and
Schools, the state board of education, or that otherwise qualify as an
``educational institution,'' as defined by K.S.A. 74-50,103, and amend-
ments thereto. Such phrase shall include: (1) A group of educational in-
stitutions that operates exclusively for an educational purpose; (2) non-
profit endowment associations and foundations organized and operated
exclusively to receive, hold, invest and administer moneys and property
as a permanent fund for the support and sole benefit of an educational
institution; (3) nonprofit trusts, foundations and other entities organized
and operated principally to hold and own receipts from intercollegiate
sporting events and to disburse such receipts, as well as grants and gifts,
in the interest of collegiate and intercollegiate athletic programs for the
support and sole benefit of an educational institution; and (4) nonprofit
trusts, foundations and other entities organized and operated for the pri-
mary purpose of encouraging, fostering and conducting scholarly inves-
tigations and industrial and other types of research for the support and
sole benefit of an educational institution.

      New Sec.  2. For the tax year commencing after December 31, 1997,
there shall be allowed as a credit against the tax liability of a taxpayer
imposed under the Kansas income tax act, an amount equal to 75% of
the total amount of property tax levied for property tax year 1998 actually
and timely paid by the taxpayer which is attributable to the working in-
terest of an oil lease the average daily production per well from which is
15 barrels or less. For all taxable years commencing after December 31,
1998, there shall be allowed as a credit against the tax liability of a taxpayer
imposed under the Kansas income tax act, an amount equal to 50% of
the total amount of property tax levied for the property tax year when the
price per barrel of oil is $16 or less, as promulgated in the oil and gas
appraisal guide prescribed by the director of property valuation for the
applicable tax year. The credit allowed by the preceding sentence shall
apply to taxes actually and timely paid by the taxpayer which are attrib-
utable to the working interest of an oil lease the average daily production
per well from which is 15 barrels or less. No credit shall be allowed for
property tax paid upon machinery and equipment attributable to the
working interest for which a credit is claimed pursuant to K.S.A. 1998
Supp. 79-32,206, and amendments thereto. If the amount of such tax
credit exceeds the taxpayer's income tax liability for the taxable year, the
amount thereof which exceeds such tax liability shall be refunded to the
taxpayer. If the taxpayer is a corporation having an election in effect under
subchapter S of the federal internal revenue code, a partnership or a
limited liability company, the credit provided by this section shall be
claimed by the shareholders of such corporation, the partners of such
partnership or the members of such limited liability company in the same
manner as such shareholders, partners and members account for their
proportionate shares of the income or loss of the corporation, partnership
or limited liability company.

      Sec.  3. K.S.A. 79-201 is hereby amended to read as follows: 79-201.
The following described property, to the extent herein specified, shall be
and is hereby exempt from all property or ad valorem taxes levied under
the laws of the state of Kansas:

      First. All buildings used exclusively as places of public worship and all
buildings used exclusively by school districts and school district interlocal
cooperatives organized under the laws of this state, with the furniture and
books therein contained and used exclusively for the accommodation of
religious meetings or for school district or school district interlocal co-
operative purposes, whichever is applicable, together with the grounds
owned thereby if not leased or otherwise used for the realization of profit,
except that: (a) (1) Any school building, or portion thereof, together with
the grounds upon which the building is located, shall be considered to be
used exclusively by the school district for the purposes of this section
when leased by the school district to any political or taxing subdivision of
the state, including a school district interlocal cooperative, or to any as-
sociation, organization or nonprofit corporation entitled to tax exemption
with respect to such property; and (2) any school building, together with
the grounds upon which the building is located, shall be considered to be
used exclusively by a school district interlocal cooperative for the purposes
of this section when being acquired pursuant to a lease-purchase agree-
ment; and (b) any building, or portion thereof, used as a place of worship,
together with the grounds upon which the building is located, shall be
considered to be used exclusively for the religious purposes of this section
when used as a not-for-profit day care center for children which is li-
censed pursuant to K.S.A. 65-501 et seq., and amendments thereto, or
when used to house an area where the congregation of a church society
and others may purchase tracts, books and other items relating to the
promulgation of the church society's religious doctrines.

      Second. All real property, and all tangible personal property, actually
and regularly used exclusively for literary, educational, scientific, relig-
ious, benevolent or charitable purposes, including property used exclu-
sively for such purposes by more than one agency or organization for one
or more of such exempt purposes. Except with regard to real property
which is owned by a religious organization, is to be used exclusively for
religious purposes and is not used for a nonexempt purpose prior to its
exclusive use for religious purposes which property shall be deemed to
be actually and regularly used exclusively for religious purposes for the
purposes of this paragraph, this exemption shall not apply to such prop-
erty, not actually used or occupied for the purposes set forth herein, nor
to such property held or used as an investment even though the income
or rentals received therefrom is used wholly for such literary, educational,
scientific, religious, benevolent or charitable purposes. In the event any
such property which has been exempted pursuant to the preceding sen-
tence is not used for religious purposes prior to its conveyance which
results in its use for nonreligious purposes, there shall be a recoupment
of property taxes in an amount equal to the tax which would have been
levied upon such property except for such exemption for all taxable years
for which such exemption was in effect. Such recoupment tax shall be-
come due and payable in such year as provided by K.S.A. 79-2004, and
amendments thereto. A lien for such taxes shall attach to the real property
subject to the same on November 1 in the year such taxes become due
and all such taxes remaining due and unpaid after the date prescribed for
the payment thereof shall be collected in the manner provided by law for
the collection of delinquent taxes. Moneys collected from the recoupment
tax hereunder shall be credited by the county treasurer to the several
taxing subdivisions within which such real property is located in the pro-
portion that the total tangible property tax levies made in the preceding
year for each such taxing subdivision bear to the total of all such levies
made in that year by all such taxing subdivisions. Such moneys shall be
credited to the general fund of the taxing subdivision or if such taxing
subdivision is making no property tax levy for the support of a general
fund such moneys may be credited to any other tangible property tax
fund of general application of such subdivision. This exemption shall not
be deemed inapplicable to property which would otherwise be exempt
pursuant to this paragraph because an agency or organization: (a) Is re-
imbursed for the provision of services accomplishing the purposes enu-
merated in this paragraph based upon the ability to pay by the recipient
of such services; or (b) is reimbursed for the actual expense of using such
property for purposes enumerated in this paragraph; or (c) uses such
property for a nonexempt purpose which is minimal in scope and insub-
stantial in nature if such use is incidental to the exempt purposes of this
paragraph; or (d) charges a reasonable fee for admission to cultural or
educational activities or permits the use of its property for such activities
by a related agency or organization, if any such activity is in furtherance
of the purposes of this paragraph.

      Third. All moneys and credits belonging exclusively to universities, col-
leges, academies or other public schools of any kind, or to religious, lit-
erary, scientific or benevolent and charitable institutions or associations,
appropriated solely to sustain such institutions or associations, not ex-
ceeding in amount or in income arising therefrom the limit prescribed
by the charter of such institution or association.

      Fourth. The reserve or emergency funds of fraternal benefit societies
authorized to do business under the laws of the state of Kansas.

      Fifth. All buildings of private nonprofit universities or colleges which
are owned and operated by such universities and colleges as student union
buildings, presidents' homes and student dormitories.

      Sixth. All real and tangible personal property actually and regularly
used exclusively by the alumni association associated by its articles of
incorporation with any public or nonprofit Kansas college or university
approved by the Kansas board of regents to confer academic degrees or
with any community college approved by its board of trustees to grant
certificates of completion of courses or curriculum, to provide accom-
modations and services to such college or university or to the alumni, staff
or faculty thereof.

      Seventh. All parsonages owned by a church society and actually and
regularly occupied and used predominantly as a residence by a minister
or other clergyman of such church society who is actually and regularly
engaged in conducting the services and religious ministrations of such
society, and the land upon which such parsonage is located to the extent
necessary for the accommodation of such parsonage.

      Eighth. All real property, all buildings located on such property and all
personal property contained therein, actually and regularly used exclu-
sively by any individually chartered organization of honorably discharged
military veterans of the United States armed forces or auxiliary of any
such organization, which is exempt from federal income taxation pursuant
to section 501(c)(19) of the federal internal revenue code of 1986, for
clubhouse, place of meeting or memorial hall purposes, and real property
to the extent of not more than two acres, and all buildings located on
such property, actually and regularly used exclusively by any such veter-
ans' organization or its auxiliary as a memorial park.

      Ninth. All real property and tangible personal property actually and
regularly used by a community service organization for the predominant
purpose of providing humanitarian services, which is owned and operated
by a corporation organized not for profit under the laws of the state of
Kansas or by a corporation organized not for profit under the laws of
another state and duly admitted to engage in business in this state as a
foreign not-for-profit corporation if: (a) The directors of such corporation
serve without pay for such services; (b) the corporation is operated in a
manner which does not result in the accrual of distributable profits, re-
alization of private gain resulting from the payment of compensation in
excess of a reasonable allowance for salary or other compensation for
services rendered or the realization of any other form of private gain; (c)
no officer, director or member of such corporation has any pecuniary
interest in the property for which exemption is claimed; (d) the corpo-
ration is organized for the purpose of providing humanitarian services;
(e) the actual use of property for which an exemption is claimed must be
substantially and predominantly related to the purpose of providing hu-
manitarian services, except that, the use of such property for a nonexempt
purpose which is minimal in scope and insubstantial in nature shall not
result in the loss of exemption if such use is incidental to the purpose of
providing humanitarian services by the corporation; (f) the corporation is
exempt from federal income taxation pursuant to section 501(c)(3) of the
internal revenue code of 1986 and; (g) contributions to the corporation
are deductible under the Kansas income tax act. As used in this clause,
``humanitarian services'' means the conduct of activities which substan-
tially and predominantly meet a demonstrated community need and
which improve the physical, mental, social, cultural or spiritual welfare of
others or the relief, comfort or assistance of persons in distress or any
combination thereof including but not limited to health and recreation
services, child care, individual and family counseling, employment and
training programs for handicapped persons and meals or feeding pro-
grams. Notwithstanding any other provision of this clause, motor vehicles
shall not be exempt hereunder unless such vehicles are exclusively used
for the purposes described therein.

      Tenth. For all taxable years commencing after December 31, 1986, any
building, and the land upon which such building is located to the extent
necessary for the accommodation of such building, owned by a church or
nonprofit religious society or order which is exempt from federal income
taxation pursuant to section 501(c)(3) of the federal internal revenue code
of 1986, and actually and regularly occupied and used exclusively for
residential and religious purposes by a community of persons who are
bound by vows to a religious life and who conduct or assist in the conduct
of religious services and actually and regularly engage in religious, be-
nevolent, charitable or educational ministrations or the performance of
health care services.

      Eleventh. For all taxable years commencing after December 31, 1998,
all real property upon which is located facilities which utilize renewable
energy resources or technologies for the purpose and as the primary
means to produce and generate electricity and which is used predomi-
nantly for such purpose, to the extent necessary to accommodate such
facilities, and all tangible personal property which comprises such facili-
ties. For purposes of this section, ``renewable energy resources or tech-
nologies'' shall include wind, solar, thermal, photovoltaic, biomass, hy-
dropower, geothermal and landfill gas resources or technologies. For
purposes of valuation of property subject to valuation under K.S.A. 79-
5a01 et seq., and amendments thereto, the value of the exempt property
set forth in this clause shall be removed from the unit value prior to
apportionment under K.S.A. 79-5a25, and amendments thereto.

      The provisions of this section, except as otherwise more specifically
provided, shall apply to all taxable years commencing after December 31,
1995.

      Sec.  4. K.S.A. 79-5a01 is hereby amended to read as follows: 79-
5a01. (a) As used in this act, the terms ``public utility'' or ``public utilities''
shall mean every individual, company, corporation, association of persons,
lessees or receivers that now or hereafter are in control, manage or op-
erate a business of:

      (1) A railroad or railroad corporation if such railroad or railroad cor-
poration owns or holds, by deed or other instrument, an interest in right-
of-way, track, franchise, roadbed or trackage in this state;

      (2) transmitting to, from, through or in this state telegraphic messa-
ges;

      (3) transmitting to, from, through or in this state telephonic messages;

      (4) transporting or distributing to, from, through or in this state nat-
ural gas, oil or other commodities in pipes or pipelines, or engaging pri-
marily in the business of storing natural gas in an underground formation;

      (5) generating, conducting or distributing to, from, through or in this
state electric power, except for private use;

      (6) transmitting to, from, through or in this state water if for profit
or subject to regulation of the state corporation commission;

      (7) transporting to, from, through or in this state cargo or passengers
by means of any vessel or boat used in navigating any of the navigable
watercourses within or bordering upon this state.

      (b) The terms ``public utility'' or ``public utilities'' shall not include:
(1) Rural water districts established under the laws of the state of Kansas;
or (2) any individual, company, corporation, association of persons, lessee
or receiver owning or operating an oil or natural gas production gathering
line which is situated within one county in this state and does not cross
any state boundary line; or (3) any individual, company, corporation, as-
sociation of persons, lessee or receiver owning any vessel or boat operated
upon the surface of any manmade waterway located entirely within one
county in the state.

      Sec.  5. K.S.A. 79-32,201 is hereby amended to read as follows: 79-
32,201. (a) Any taxpayer who makes expenditures for a qualified alter-
native-fueled motor vehicle property or alternative-fuel fueling station
shall be allowed a credit against the income tax imposed by article 32 of
chapter 79 of the Kansas Statutes Annotated, as follows:

      (1) For any qualified alternative-fueled motor vehicle property placed
in service on or after January 1, 1996, and before January 1, 1999 2005,
an amount equal to 50% of the total amount expended incremental cost
or conversion cost for each qualified alternative-fueled motor vehicle
property but not to exceed $2,500 $3,000 for each such motor vehicle
with a gross vehicle weight of less than 10,000 lbs.; $5,000 for a heavy
duty motor vehicle with a gross vehicle weight of greater than 10,000 lbs.
but less than 26,000 lbs.; and $50,000 for motor vehicles having a gross
vehicle weight of greater than 26,000 lbs.;

      (2) for any qualified alternative-fueled motor vehicle property placed
in service on or after January 1, 1999 2005, an amount equal to 40% of
the total amount expended incremental cost or conversion cost for each
qualified alternative-fueled motor vehicle property, but not to exceed
$2,000 $2,400 for each such motor vehicle with a gross vehicle weight of
less than 10,000 lbs.; $4,000 for a heavy duty motor vehicle with a gross
vehicle weight of greater than 10,000 lbs. but less than 26,000 lbs.; and
$40,000 for motor vehicles having a gross vehicle weight of greater than
26,000 lbs.;

      (3) for any qualified alternative-fuel fueling station placed in service
on or after January 1, 1996, and before January 1, 2005, an amount equal
to 50% of the total amount expended for each qualified alternative-fuel
fueling station but not to exceed $200,000 for each fueling station;

      (4) for any qualified alternative-fuel fueling station placed in service
on or after January 1, 2005, an amount equal to 40% of the total amount
expended for each qualified alternative-fuel fueling station, but not to
exceed $160,000 for each fueling station.

      (b) If no credit has been claimed pursuant to subsection (a), a credit
in an amount not exceeding the lesser of 5% of the cost of the vehicle or
$750 shall be allowed to a taxpayer who purchases a motor vehicle
equipped by the vehicle manufacturer with qualified alternative-fueled
motor vehicle property an alternative fuel system and who is unable or
elects not to determine the exact basis attributable to such property. The
credit under this subsection shall be allowed only to the first individual
to take title to such motor vehicle, other than for resale.

      (c) The tax credit under subsection (a) or (b) shall be deducted from
the taxpayer's income tax liability for the taxable year in which the ex-
penditures are made by the taxpayer. If the amount of the tax credit
exceeds the taxpayer's income tax liability for the taxable year, the amount
which exceeds the tax liability may be carried over for deduction from
the taxpayer's income tax liability in the next succeeding taxable year or
years until the total amount of the tax credit has been deducted from tax
liability, except that no such tax credit shall be carried over for deduction
after the third taxable year succeeding the taxable year in which the ex-
penditures are made.

      (d) As used in this section:

      (1) ``Alternative fuel'' has the meaning provided by 42 U.S.C. 13211.

      (2) ``Qualified alternative-fueled motor vehicle property'' means:

      (A) Equipment installed to modify a motor vehicle which is propelled
by gasoline so that the vehicle may be propelled by an alternative fuel;

      (B) a motor vehicle originally equipped to be propelled only by an
alternative fuel, but only to the extent of the portion of the basis of such
motor vehicle which is attributable to the storage of such fuel, the delivery
to the engine of such motor vehicle of such fuel and the exhaust of gases
from combustion of such fuel; or

      (C) property which is directly related to the delivery of an alternative
fuel into the fuel tank of a motor vehicle propelled by such fuel, including
compression equipment and storage tanks for such fuel at the point where
such fuel is so delivered but only if such property is not used to deliver
such fuel into any other type of storage tank or receptacle and such fuel
is not used for any purpose other than to propel a motor vehicle.

      (2) ``Qualified alternative-fueled motor vehicle'' means a motor ve-
hicle that operates on an alternative fuel, meets or exceeds the clean fuel
vehicle standards in the federal clean air act amendments of 1990, Title
II and meets one of the following categories:

      (A) Bi-fuel motor vehicle: A motor vehicle with two separate fuel sys-
tems designed to run on either an alternative fuel or conventional fuel,
using only one fuel at a time;

      (B) dedicated motor vehicle: A motor vehicle with an engine designed
to operate on a single alternative fuel only; or

      (C) flexible fuel motor vehicle: A motor vehicle that may operate on
a blend of an alternative fuel with a conventional fuel, such as E-85 (85%
ethanol and 15% gasoline) or M-85 (85% methanol and 15% gasoline),
as long as such motor vehicle is capable of operating on at least an 85%
alternative fuel blend.

      (3) ``Qualified alternative-fuel fueling station'' means the property
which is directly related to the delivery of alternative fuel into the fuel
tank of a motor vehicle propelled by such fuel, including the compression
equipment, storage vessels and dispensers for such fuel at the point where
such fuel is delivered but only if such property is primarily used to deliver
such fuel for use in a qualified alternative-fueled motor vehicle.

      (4) ``Incremental cost'' means the cost that results from subtracting
the manufacturer's list price of the motor vehicle operating on conven-
tional gasoline or diesel fuel from the manufacturer's list price of the same
model motor vehicle designed to operate on an alternative fuel.

      (5) ``Conversion cost'' means the cost that results from modifying a
motor vehicle which is propelled by gasoline or diesel to be propelled by
an alternative fuel.

      (3) (6) ``Taxpayer'' means any person who owns and operates a fleet
of 10 or more motor vehicles and the average fuel consumption for such
fleet of motor vehicles is equal to or greater than 2,000 gallons per year
qualified alternative-fueled vehicle licensed in the state of Kansas or who
makes an expenditure for a qualified alternative-fuel fueling station.

      (4) (7) ``Person'' means every natural person, association, partnership,
limited liability company, limited partnership or corporation.

      (e) The provisions of this section shall apply to all taxable years com-
mencing after December 31, 1995.

      (f) The provisions of this section shall become effective on and after
January 1, 1996.

      Sec.  6. K.S.A. 1998 Supp. 79-3606 is hereby amended to read as
follows: 79-3606. The following shall be exempt from the tax imposed by
this act:

      (a) All sales of motor-vehicle fuel or other articles upon which a sales
or excise tax has been paid, not subject to refund, under the laws of this
state except cigarettes as defined by K.S.A. 79-3301 and amendments
thereto, cereal malt beverages and malt products as defined by K.S.A. 79-
3817 and amendments thereto, including wort, liquid malt, malt syrup
and malt extract, which is not subject to taxation under the provisions of
K.S.A. 79-41a02 and amendments thereto, motor vehicles taxed pursuant
to K.S.A. 79-5117, and amendments thereto, tires taxed pursuant to
K.S.A. 1998 Supp. 65-3424d, and amendments thereto, and drycleaning
and laundry services taxed pursuant to K.S.A. 1998 Supp. 65-34,150, and
amendments thereto;

      (b) all sales of tangible personal property or service, including the
renting and leasing of tangible personal property, purchased directly by
the state of Kansas, a political subdivision thereof, other than a school or
educational institution, or purchased by a public or private nonprofit hos-
pital or public hospital authority or nonprofit blood, tissue or organ bank
and used exclusively for state, political subdivision, hospital or public hos-
pital authority or nonprofit blood, tissue or organ bank purposes, except
when: (1) Such state, hospital or public hospital authority is engaged or
proposes to engage in any business specifically taxable under the provi-
sions of this act and such items of tangible personal property or service
are used or proposed to be used in such business, or (2) such political
subdivision is engaged or proposes to engage in the business of furnishing
gas, water, electricity or heat to others and such items of personal prop-
erty or service are used or proposed to be used in such business;

      (c) all sales of tangible personal property or services, including the
renting and leasing of tangible personal property, purchased directly by
a public or private elementary or secondary school or public or private
nonprofit educational institution and used primarily by such school or
institution for nonsectarian programs and activities provided or sponsored
by such school or institution or in the erection, repair or enlargement of
buildings to be used for such purposes. The exemption herein provided
shall not apply to erection, construction, repair, enlargement or equip-
ment of buildings used primarily for human habitation;

      (d) all sales of tangible personal property or services purchased by a
contractor for the purpose of constructing, equipping, reconstructing,
maintaining, repairing, enlarging, furnishing or remodeling facilities for
any public or private nonprofit hospital or public hospital authority, public
or private elementary or secondary school or a public or private nonprofit
educational institution, which would be exempt from taxation under the
provisions of this act if purchased directly by such hospital or public hos-
pital authority, school or educational institution; and all sales of tangible
personal property or services purchased by a contractor for the purpose
of constructing, equipping, reconstructing, maintaining, repairing, en-
larging, furnishing or remodeling facilities for any political subdivision of
the state, the total cost of which is paid from funds of such political
subdivision and which would be exempt from taxation under the provi-
sions of this act if purchased directly by such political subdivision. Nothing
in this subsection or in the provisions of K.S.A. 12-3418 and amendments
thereto, shall be deemed to exempt the purchase of any construction
machinery, equipment or tools used in the constructing, equipping, re-
constructing, maintaining, repairing, enlarging, furnishing or remodeling
facilities for any political subdivision of the state. As used in this subsec-
tion, K.S.A. 12-3418 and 79-3640, and amendments thereto, ``funds of a
political subdivision'' shall mean general tax revenues, the proceeds of
any bonds and gifts or grants-in-aid. Gifts shall not mean funds used for
the purpose of constructing, equipping, reconstructing, repairing, enlarg-
ing, furnishing or remodeling facilities which are to be leased to the do-
nor. When any political subdivision of the state, public or private non-
profit hospital or public hospital authority, public or private elementary
or secondary school or public or private nonprofit educational institution
shall contract for the purpose of constructing, equipping, reconstructing,
maintaining, repairing, enlarging, furnishing or remodeling facilities, it
shall obtain from the state and furnish to the contractor an exemption
certificate for the project involved, and the contractor may purchase ma-
terials for incorporation in such project. The contractor shall furnish the
number of such certificate to all suppliers from whom such purchases are
made, and such suppliers shall execute invoices covering the same bearing
the number of such certificate. Upon completion of the project the con-
tractor shall furnish to the political subdivision, hospital or public hospital
authority, school or educational institution concerned a sworn statement,
on a form to be provided by the director of taxation, that all purchases so
made were entitled to exemption under this subsection. As an alternative
to the foregoing procedure, any such contracting entity may apply to the
secretary of revenue for agent status for the sole purpose of issuing and
furnishing project exemption certificates to contractors pursuant to rules
and regulations adopted by the secretary establishing conditions and stan-
dards for the granting and maintaining of such status. All invoices shall
be held by the contractor for a period of five years and shall be subject
to audit by the director of taxation. If any materials purchased under such
a certificate are found not to have been incorporated in the building or
other project or not to have been returned for credit or the sales or
compensating tax otherwise imposed upon such materials which will not
be so incorporated in the building or other project reported and paid by
such contractor to the director of taxation not later than the 20th day of
the month following the close of the month in which it shall be deter-
mined that such materials will not be used for the purpose for which such
certificate was issued, the political subdivision, hospital or public hospital
authority, school or educational institution concerned shall be liable for
tax on all materials purchased for the project, and upon payment thereof
it may recover the same from the contractor together with reasonable
attorney fees. Any contractor or any agent, employee or subcontractor
thereof, who shall use or otherwise dispose of any materials purchased
under such a certificate for any purpose other than that for which such a
certificate is issued without the payment of the sales or compensating tax
otherwise imposed upon such materials, shall be guilty of a misdemeanor
and, upon conviction therefor, shall be subject to the penalties provided
for in subsection (g) of K.S.A. 79-3615, and amendments thereto;

      (e) all sales of tangible personal property or services purchased by a
contractor for the erection, repair or enlargement of buildings or other
projects for the government of the United States, its agencies or instru-
mentalities, which would be exempt from taxation if purchased directly
by the government of the United States, its agencies or instrumentalities.
When the government of the United States, its agencies or instrumen-
talities shall contract for the erection, repair, or enlargement of any build-
ing or other project, it shall obtain from the state and furnish to the
contractor an exemption certificate for the project involved, and the con-
tractor may purchase materials for incorporation in such project. The
contractor shall furnish the number of such certificates to all suppliers
from whom such purchases are made, and such suppliers shall execute
invoices covering the same bearing the number of such certificate. Upon
completion of the project the contractor shall furnish to the government
of the United States, its agencies or instrumentalities concerned a sworn
statement, on a form to be provided by the director of taxation, that all
purchases so made were entitled to exemption under this subsection. As
an alternative to the foregoing procedure, any such contracting entity may
apply to the secretary of revenue for agent status for the sole purpose of
issuing and furnishing project exemption certificates to contractors pur-
suant to rules and regulations adopted by the secretary establishing con-
ditions and standards for the granting and maintaining of such status. All
invoices shall be held by the contractor for a period of five years and shall
be subject to audit by the director of taxation. Any contractor or any agent,
employee or subcontractor thereof, who shall use or otherwise dispose of
any materials purchased under such a certificate for any purpose other
than that for which such a certificate is issued without the payment of
the sales or compensating tax otherwise imposed upon such materials,
shall be guilty of a misdemeanor and, upon conviction therefor, shall be
subject to the penalties provided for in subsection (g) of K.S.A. 79-3615
and amendments thereto;

      (f) tangible personal property purchased by a railroad or public utility
for consumption or movement directly and immediately in interstate
commerce;

      (g) sales of aircraft including remanufactured and modified aircraft,
sales of aircraft repair, modification and replacement parts and sales of
services employed in the remanufacture, modification and repair of air-
craft sold to persons using directly or through an authorized agent such
aircraft and aircraft repair, modification and replacement parts as certified
or licensed carriers of persons or property in interstate or foreign com-
merce under authority of the laws of the United States or any foreign
government or sold to any foreign government or agency or instrumen-
tality of such foreign government and all sales of aircraft, aircraft parts,
replacement parts and services employed in the remanufacture, modifi-
cation and repair of aircraft for use outside of the United States;

      (h) all rentals of nonsectarian textbooks by public or private elemen-
tary or secondary schools;

      (i) the lease or rental of all films, records, tapes, or any type of sound
or picture transcriptions used by motion picture exhibitors;

      (j) meals served without charge or food used in the preparation of
such meals to employees of any restaurant, eating house, dining car, hotel,
drugstore or other place where meals or drinks are regularly sold to the
public if such employees' duties are related to the furnishing or sale of
such meals or drinks;

      (k) any motor vehicle, semitrailer or pole trailer, as such terms are
defined by K.S.A. 8-126 and amendments thereto, or aircraft sold and
delivered in this state to a bona fide resident of another state, which motor
vehicle, semitrailer, pole trailer or aircraft is not to be registered or based
in this state and which vehicle, semitrailer, pole trailer or aircraft will not
remain in this state more than 10 days;

      (l) all isolated or occasional sales of tangible personal property, serv-
ices, substances or things, except isolated or occasional sale of motor
vehicles specifically taxed under the provisions of subsection (o) of K.S.A.
79-3603 and amendments thereto;

      (m) all sales of tangible personal property which become an ingre-
dient or component part of tangible personal property or services pro-
duced, manufactured or compounded for ultimate sale at retail within or
without the state of Kansas; and any such producer, manufacturer or
compounder may obtain from the director of taxation and furnish to the
supplier an exemption certificate number for tangible personal property
for use as an ingredient or component part of the property or services
produced, manufactured or compounded;

      (n) all sales of tangible personal property which is consumed in the
production, manufacture, processing, mining, drilling, refining or com-
pounding of tangible personal property, the treating of by-products or
wastes derived from any such production process, the providing of serv-
ices or the irrigation of crops for ultimate sale at retail within or without
the state of Kansas; and any purchaser of such property may obtain from
the director of taxation and furnish to the supplier an exemption certifi-
cate number for tangible personal property for consumption in such pro-
duction, manufacture, processing, mining, drilling, refining, compound-
ing, treating, irrigation and in providing such services;

      (o) all sales of animals, fowl and aquatic plants and animals, the pri-
mary purpose of which is use in agriculture or aquaculture, as defined in
K.S.A. 47-1901, and amendments thereto, the production of food for
human consumption, the production of animal, dairy, poultry or aquatic
plant and animal products, fiber or fur, or the production of offspring for
use for any such purpose or purposes;

      (p) all sales of drugs, as defined by K.S.A. 65-1626 and amendments
thereto, dispensed pursuant to a prescription order, as defined by K.S.A.
65-1626 and amendments thereto, by a licensed practitioner;

      (q) all sales of insulin dispensed by a person licensed by the state
board of pharmacy to a person for treatment of diabetes at the direction
of a person licensed to practice medicine by the board of healing arts;

      (r) all sales of prosthetic and orthopedic appliances prescribed in
writing by a person licensed to practice the healing arts, dentistry or
optometry. For the purposes of this subsection, the term prosthetic and
orthopedic appliances means any apparatus, instrument, device, or equip-
ment used to replace or substitute for any missing part of the body; used
to alleviate the malfunction of any part of the body; or used to assist any
disabled person in leading a normal life by facilitating such person's mo-
bility; such term shall include accessories attached or to be attached to
motor vehicles, but such term shall not include motor vehicles or personal
property which when installed becomes a fixture to real property;

      (s) all sales of tangible personal property or services purchased di-
rectly by a groundwater management district organized or operating un-
der the authority of K.S.A. 82a-1020 et seq. and amendments thereto,
which property or services are used in the operation or maintenance of
the district;

      (t) all sales of farm machinery and equipment or aquaculture ma-
chinery and equipment, repair and replacement parts therefor and serv-
ices performed in the repair and maintenance of such machinery and
equipment. For the purposes of this subsection the term ``farm machinery
and equipment or aquaculture machinery and equipment'' shall include
machinery and equipment used in the operation of Christmas tree farm-
ing but shall not include any passenger vehicle, truck, truck tractor, trailer,
semitrailer or pole trailer, other than a farm trailer, as such terms are
defined by K.S.A. 8-126 and amendments thereto. Each purchaser of
farm machinery and equipment or aquaculture machinery and equipment
exempted herein must certify in writing on the copy of the invoice or
sales ticket to be retained by the seller that the farm machinery and
equipment or aquaculture machinery and equipment purchased will be
used only in farming, ranching or aquaculture production. Farming or
ranching shall include the operation of a feedlot and farm and ranch work
for hire and the operation of a nursery;

      (u) all leases or rentals of tangible personal property used as a dwell-
ing if such tangible personal property is leased or rented for a period of
more than 28 consecutive days;

      (v) all sales of food products to any contractor for use in preparing
meals for delivery to homebound elderly persons over 60 years of age and
to homebound disabled persons or to be served at a group-sitting at a
location outside of the home to otherwise homebound elderly persons
over 60 years of age and to otherwise homebound disabled persons, as
all or part of any food service project funded in whole or in part by
government or as part of a private nonprofit food service project available
to all such elderly or disabled persons residing within an area of service
designated by the private nonprofit organization, and all sales of food
products for use in preparing meals for consumption by indigent or home-
less individuals whether or not such meals are consumed at a place des-
ignated for such purpose;

      (w) all sales of natural gas, electricity, heat and water delivered
through mains, lines or pipes: (1) To residential premises for noncom-
mercial use by the occupant of such premises; (2) for agricultural use and
also, for such use, all sales of propane gas; (3) for use in the severing of
oil; and (4) to any property which is exempt from property taxation pur-
suant to K.S.A. 79-201b Second through Sixth. As used in this paragraph,
``severing'' shall have the meaning ascribed thereto by subsection (k) of
K.S.A. 79-4216, and amendments thereto;

      (x) all sales of propane gas, LP-gas, coal, wood and other fuel sources
for the production of heat or lighting for noncommercial use of an oc-
cupant of residential premises;

      (y) all sales of materials and services used in the repairing, servicing,
altering, maintaining, manufacturing, remanufacturing, or modification of
railroad rolling stock for use in interstate or foreign commerce under
authority of the laws of the United States;

      (z) all sales of tangible personal property and services purchased di-
rectly by a port authority or by a contractor therefor as provided by the
provisions of K.S.A. 12-3418 and amendments thereto;

      (aa) all sales of materials and services applied to equipment which is
transported into the state from without the state for repair, service, al-
teration, maintenance, remanufacture or modification and which is sub-
sequently transported outside the state for use in the transmission of
liquids or natural gas by means of pipeline in interstate or foreign com-
merce under authority of the laws of the United States;

      (bb) all sales of used mobile homes or manufactured homes. As used
in this subsection: (1) ``Mobile homes'' and ``manufactured homes'' shall
have the meanings ascribed thereto by K.S.A. 58-4202 and amendments
thereto; and (2) ``sales of used mobile homes or manufactured homes''
means sales other than the original retail sale thereof;

      (cc) all sales of tangible personal property or services purchased for
the purpose of and in conjunction with constructing, reconstructing, en-
larging or remodeling a business or retail business which meets the
requirements established in K.S.A. 74-50,115 and amendments thereto,
and the sale and installation of machinery and equipment purchased for
installation at any such business or retail business. When a person shall
contract for the construction, reconstruction, enlargement or remodeling
of any such business or retail business, such person shall obtain from the
state and furnish to the contractor an exemption certificate for the project
involved, and the contractor may purchase materials, machinery and
equipment for incorporation in such project. The contractor shall furnish
the number of such certificates to all suppliers from whom such purchases
are made, and such suppliers shall execute invoices covering the same
bearing the number of such certificate. Upon completion of the project
the contractor shall furnish to the owner of the business or retail business
a sworn statement, on a form to be provided by the director of taxation,
that all purchases so made were entitled to exemption under this subsec-
tion. All invoices shall be held by the contractor for a period of five years
and shall be subject to audit by the director of taxation. Any contractor
or any agent, employee or subcontractor thereof, who shall use or oth-
erwise dispose of any materials, machinery or equipment purchased un-
der such a certificate for any purpose other than that for which such a
certificate is issued without the payment of the sales or compensating tax
otherwise imposed thereon, shall be guilty of a misdemeanor and, upon
conviction therefor, shall be subject to the penalties provided for in sub-
section (g) of K.S.A. 79-3615 and amendments thereto. As used in this
subsection, ``business'' and ``retail business'' have the meanings respec-
tively ascribed thereto by K.S.A. 74-50,114 and amendments thereto;

      (dd) all sales of tangible personal property purchased with food
stamps issued by the United States department of agriculture;

      (ee) all sales of lottery tickets and shares made as part of a lottery
operated by the state of Kansas;

      (ff) on and after July 1, 1988, all sales of new mobile homes or man-
ufactured homes to the extent of 40% of the gross receipts, determined
without regard to any trade-in allowance, received from such sale. As used
in this subsection, ``mobile homes'' and ``manufactured homes'' shall have
the meanings ascribed thereto by K.S.A. 58-4202 and amendments
thereto;

      (gg) all sales of tangible personal property purchased in accordance
with vouchers issued pursuant to the federal special supplemental food
program for women, infants and children;

      (hh) all sales of medical supplies and equipment purchased directly
by a nonprofit skilled nursing home or nonprofit intermediate nursing
care home, as defined by K.S.A. 39-923, and amendments thereto, for
the purpose of providing medical services to residents thereof. This ex-
emption shall not apply to tangible personal property customarily used
for human habitation purposes;

      (ii) all sales of tangible personal property purchased directly by a non-
profit organization for nonsectarian comprehensive multidiscipline youth
development programs and activities provided or sponsored by such or-
ganization, and all sales of tangible personal property by or on behalf of
any such organization. This exemption shall not apply to tangible personal
property customarily used for human habitation purposes;

      (jj) all sales of tangible personal property or services, including the
renting and leasing of tangible personal property, purchased directly on
behalf of a community-based mental retardation facility or mental health
center organized pursuant to K.S.A. 19-4001 et seq., and amendments
thereto, and licensed in accordance with the provisions of K.S.A. 75-
3307b and amendments thereto. This exemption shall not apply to tan-
gible personal property customarily used for human habitation purposes;

      (kk) on and after January 1, 1989, all sales of machinery and equip-
ment used directly and primarily for the purposes of manufacturing, as-
sembling, processing, finishing, storing, warehousing or distributing ar-
ticles of tangible personal property in this state intended for resale by a
manufacturing or processing plant or facility or a storage, warehousing or
distribution facility, and all sales of repair and replacement parts and
accessories purchased for such machinery and equipment:

      (1) For purposes of this subsection, machinery and equipment shall
be deemed to be used directly and primarily in the manufacture, assem-
blage, processing, finishing, storing, warehousing or distributing of tan-
gible personal property where such machinery and equipment is used
during a manufacturing, assembling, processing or finishing, storing,
warehousing or distributing operation:

      (A) To effect a direct and immediate physical change upon the tan-
gible personal property;

      (B) to guide or measure a direct and immediate physical change upon
such property where such function is an integral and essential part of
tuning, verifying or aligning the component parts of such property;

      (C) to test or measure such property where such function is an in-
tegral part of the production flow or function;

      (D) to transport, convey or handle such property during the manu-
facturing, processing, storing, warehousing or distribution operation at
the plant or facility; or

      (E) to place such property in the container, package or wrapping in
which such property is normally sold or transported.

      (2)  For purposes of this subsection ``machinery and equipment used
directly and primarily'' shall include, but not be limited to:

      (A) Mechanical machines or components thereof contributing to a
manufacturing, assembling or finishing process;

      (B) molds and dies that determine the physical characteristics of the
finished product or its packaging material;

      (C) testing equipment to determine the quality of the finished prod-
uct;

      (D) computers and related peripheral equipment that directly control
or measure the manufacturing process or which are utilized for engi-
neering of the finished product; and

      (E) computers and related peripheral equipment utilized for research
and development and product design.

      (3) ``Machinery and equipment used directly and primarily'' shall not
include:

      (A) Hand tools;

      (B) machinery, equipment and tools used in maintaining and repair-
ing any type of machinery and equipment;

      (C) transportation equipment not used in the manufacturing, assem-
bling, processing, furnishing, storing, warehousing or distributing process
at the plant or facility;

      (D) office machines and equipment including computers and related
peripheral equipment not directly and primarily used in controlling or
measuring the manufacturing process;

      (E) furniture and buildings; and

      (F) machinery and equipment used in administrative, accounting,
sales or other such activities of the business;

      (4) for purposes of this subsection, ``repair and replacement parts and
accessories'' means all parts and accessories for exempt machinery and
equipment, including but not limited to dies, jigs, molds, and patterns
which are attached to exempt machinery or which are otherwise used in
production, short-lived replaceable parts that can be readily detached
from exempt machinery or equipment, such as belts, drill bits, grinding
wheels, cutting bars and saws, and other replacement parts for production
equipment, including refractory brick and other refractory items for kiln
equipment used in production operations;

      (ll) all sales of educational materials purchased for distribution to the
public at no charge by a nonprofit corporation organized for the purpose
of encouraging, fostering and conducting programs for the improvement
of public health;

      (mm) all sales of seeds and tree seedlings; fertilizers, insecticides,
herbicides, germicides, pesticides and fungicides; and services, purchased
and used for the purpose of producing plants in order to prevent soil
erosion on land devoted to agricultural use;

      (nn) except as otherwise provided in this act, all sales of services ren-
dered by an advertising agency or licensed broadcast station or any mem-
ber, agent or employee thereof;

      (oo) all sales of tangible personal property purchased by a community
action group or agency for the exclusive purpose of repairing or weath-
erizing housing occupied by low income individuals;

      (pp) all sales of drill bits and explosives actually utilized in the explo-
ration and production of oil or gas;

      (qq) all sales of tangible personal property and services purchased by
a nonprofit museum or historical society or any combination thereof, in-
cluding a nonprofit organization which is organized for the purpose of
stimulating public interest in the exploration of space by providing edu-
cational information, exhibits and experiences, which is exempt from fed-
eral income taxation pursuant to section 501(c)(3) of the federal internal
revenue code of 1986;

      (rr) all sales of tangible personal property which will admit the pur-
chaser thereof to any annual event sponsored by a nonprofit organization
which is exempt from federal income taxation pursuant to section
501(c)(3) of the federal internal revenue code of 1986;

      (ss) all sales of tangible personal property and services purchased by
a public broadcasting station licensed by the federal communications
commission as a noncommercial educational television or radio station;

      (tt) all sales of tangible personal property and services purchased by
or on behalf of a not-for-profit corporation which is exempt from federal
income taxation pursuant to section 501(c)(3) of the federal internal rev-
enue code of 1986, for the sole purpose of constructing a Kansas Korean
War memorial;

      (uu) all sales of tangible personal property and services purchased by
or on behalf of any rural volunteer fire-fighting organization for use ex-
clusively in the performance of its duties and functions;

      (vv) all sales of tangible personal property purchased by any of the
following organizations which are exempt from federal income taxation
pursuant to section 501 (c)(3) of the federal internal revenue code of
1986, for the following purposes, and all sales of any such property by or
on behalf of any such organization for any such purpose:

      (1) The American Heart Association, Kansas Affiliate, Inc. for the
purposes of providing education, training, certification in emergency car-
diac care, research and other related services to reduce disability and
death from cardiovascular diseases and stroke;

      (2) the Kansas Alliance for the Mentally Ill, Inc. for the purpose of
advocacy for persons with mental illness and to education, research and
support for their families;

      (3) the Kansas Mental Illness Awareness Council for the purposes of
advocacy for persons who are mentally ill and to education, research and
support for them and their families;

      (4) the American Diabetes Association Kansas Affiliate, Inc. for the
purpose of eliminating diabetes through medical research, public edu-
cation focusing on disease prevention and education, patient education
including information on coping with diabetes, and professional education
and training;

      (5) the American Lung Association of Kansas, Inc. for the purpose of
eliminating all lung diseases through medical research, public education
including information on coping with lung diseases, professional educa-
tion and training related to lung disease and other related services to
reduce the incidence of disability and death due to lung disease;

      (6) the Kansas chapters of the Alzheimer's Disease and Related Dis-
orders Association, Inc. for the purpose of providing assistance and sup-
port to persons in Kansas with Alzheimer's disease, and their families and
caregivers; and

      (ww) all sales of tangible personal property purchased by the Habitat
for Humanity for the exclusive use of being incorporated within a housing
project constructed by such organization.

      (xx) all sales of tangible personal property and services purchased by
a nonprofit zoo which is exempt from federal income taxation pursuant
to section 501 (c)(3) of the federal internal revenue code of 1986, or on
behalf of such zoo by an entity itself exempt from federal income taxation
pursuant to section 50 501 (c)(3) of the federal internal revenue code of
1986 contracted with to operate such zoo and all sales of tangible personal
property or services purchased by a contractor for the purpose of con-
structing, equipping, reconstructing, maintaining, repairing, enlarging,
furnishing or remodeling facilities for any nonprofit zoo which would be
exempt from taxation under the provisions of this section if purchased
directly by such nonprofit zoo or the entity operating such zoo. Nothing
in this subsection shall be deemed to exempt the purchase of any con-
struction machinery, equipment or tools used in the constructing, equip-
ping, reconstructing, maintaining, repairing, enlarging, furnishing or re-
modeling facilities for any nonprofit zoo. When any nonprofit zoo shall
contract for the purpose of constructing, equipping, reconstructing, main-
taining, repairing, enlarging, furnishing or remodeling facilities, it shall
obtain from the state and furnish to the contractor an exemption certifi-
cate for the project involved, and the contractor may purchase materials
for incorporation in such project. The contractor shall furnish the number
of such certificate to all suppliers from whom such purchases are made,
and such suppliers shall execute invoices covering the same bearing the
number of such certificate. Upon completion of the project the contractor
shall furnish to the nonprofit zoo concerned a sworn statement, on a form
to be provided by the director of taxation, that all purchases so made were
entitled to exemption under this subsection. All invoices shall be held by
the contractor for a period of five years and shall be subject to audit by
the director of taxation. If any materials purchased under such a certifi-
cate are found not to have been incorporated in the building or other
project or not to have been returned for credit or the sales or compen-
sating tax otherwise imposed upon such materials which will not be so
incorporated in the building or other project reported and paid by such
contractor to the director of taxation not later than the 20th day of the
month following the close of the month in which it shall be determined
that such materials will not be used for the purpose for which such cer-
tificate was issued, the nonprofit zoo concerned shall be liable for tax on
all materials purchased for the project, and upon payment thereof it may
recover the same from the contractor together with reasonable attorney
fees. Any contractor or any agent, employee or subcontractor thereof,
who shall use or otherwise dispose of any materials purchased under such
a certificate for any purpose other than that for which such a certificate
is issued without the payment of the sales or compensating tax otherwise
imposed upon such materials, shall be guilty of a misdemeanor and, upon
conviction therefor, shall be subject to the penalties provided for in sub-
section (g) of K.S.A. 79-3615, and amendments thereto;

      (yy) all sales of tangible personal property and services purchased by
a parent-teacher association or organization, and all sales of tangible per-
sonal property by or on behalf of such association or organization;

      (zz) all sales of machinery and equipment purchased by over-the-air,
free access radio or television station which is used directly and primarily
for the purpose of producing a broadcast signal or is such that the failure
of the machinery or equipment to operate would cause broadcasting to
cease. For purposes of this subsection, machinery and equipment shall
include, but not be limited to, that required by rules and regulations of
the federal communications commission, and all sales of electricity which
are essential or necessary for the purpose of producing a broadcast signal
or is such that the failure of the electricity would cause broadcasting to
cease;

      (aaa) all sales of tangible personal property and services purchased
by a religious organization which is exempt from federal income taxation
pursuant to section 501 (c)(3) of the federal internal revenue code, and
used exclusively for religious purposes, and all sales of tangible personal
property or services purchased by a contractor for the purpose of con-
structing, equipping, reconstructing, maintaining, repairing, enlarging,
furnishing or remodeling facilities for any such organization which would
be exempt from taxation under the provisions of this section if purchased
directly by such organization. Nothing in this subsection shall be deemed
to exempt the purchase of any construction machinery, equipment or tools
used in the constructing, equipping, reconstructing, maintaining, repair-
ing, enlarging, furnishing or remodeling facilities for any such organiza-
tion. When any such organization shall contract for the purpose of con-
structing, equipping, reconstructing, maintaining, repairing, enlarging,
furnishing or remodeling facilities, it shall obtain from the state and fur-
nish to the contractor an exemption certificate for the project involved,
and the contractor may purchase materials for incorporation in such pro-
ject. The contractor shall furnish the number of such certificate to all
suppliers from whom such purchases are made, and such suppliers shall
execute invoices covering the same bearing the number of such certificate.
Upon completion of the project the contractor shall furnish to such or-
ganization concerned a sworn statement, on a form to be provided by the
director of taxation, that all purchases so made were entitled to exemption
under this subsection. All invoices shall be held by the contractor for a
period of five years and shall be subject to audit by the director of taxation.
If any materials purchased under such a certificate are found not to have
been incorporated in the building or other project or not to have been
returned for credit or the sales or compensating tax otherwise imposed
upon such materials which will not be so incorporated in the building or
other project reported and paid by such contractor to the director of
taxation not later than the 20th day of the month following the close of
the month in which it shall be determined that such materials will not be
used for the purpose for which such certificate was issued, such organi-
zation concerned shall be liable for tax on all materials purchased for the
project, and upon payment thereof it may recover the same from the
contractor together with reasonable attorney fees. Any contractor or any
agent, employee or subcontractor thereof, who shall use or otherwise dis-
pose of any materials purchased under such a certificate for any purpose
other than that for which such a certificate is issued without the payment
of the sales or compensating tax otherwise imposed upon such materials,
shall be guilty of a misdemeanor and, upon conviction therefor, shall be
subject to the penalties provided for in subsection (g) of K.S.A. 79-3615,
and amendments thereto. Sales tax paid on and after July 1, 1998, but
prior to the effective date of this act upon the gross receipts received from
any sale exempted by the amendatory provisions of this subsection shall
be refunded. Each claim for a sales tax refund shall be verified and sub-
mitted to the director of taxation upon forms furnished by the director
and shall be accompanied by any additional documentation required by
the director. The director shall review each claim and shall refund that
amount of sales tax paid as determined under the provisions of this sub-
section. All refunds shall be paid from the sales tax refund fund upon
warrants of the director of accounts and reports pursuant to vouchers
approved by the director or the director's designee; and

      (bbb) all sales of food for human consumption by an organization
which is exempt from federal income taxation pursuant to section 501
(c)(3) of the federal internal revenue code of 1986, pursuant to a food
distribution program which offers such food at a price below cost in
exchange for the performance of community service by the purchaser
thereof.;

      (ccc) on and after July 1, 1999, all sales of tangible personal property
and services purchased by a primary care clinic or health center the pri-
mary purpose of which is to provide services to medically underserved
individuals and families, and which is exempt from federal income taxa-
tion pursuant to section 501 (c)(3) of the federal internal revenue code,
and all sales of tangible personal property or services purchased by a
contractor for the purpose of constructing, equipping, reconstructing,
maintaining, repairing, enlarging, furnishing or remodeling facilities for
any such clinic or center which would be exempt from taxation under the
provisions of this section if purchased directly by such clinic or center.
Nothing in this subsection shall be deemed to exempt the purchase of any
construction machinery, equipment or tools used in the constructing,
equipping, reconstructing, maintaining, repairing, enlarging, furnishing
or remodeling facilities for any such clinic or center. When any such clinic
or center shall contract for the purpose of constructing, equipping, recon-
structing, maintaining, repairing, enlarging, furnishing or remodeling fa-
cilities, it shall obtain from the state and furnish to the contractor an
exemption certificate for the project involved, and the contractor may
purchase materials for incorporation in such project. The contractor shall
furnish the number of such certificate to all suppliers from whom such
purchases are made, and such suppliers shall execute invoices covering
the same bearing the number of such certificate. Upon completion of the
project the contractor shall furnish to such clinic or center concerned a
sworn statement, on a form to be provided by the director of taxation,
that all purchases so made were entitled to exemption under this subsec-
tion. All invoices shall be held by the contractor for a period of five years
and shall be subject to audit by the director of taxation. If any materials
purchased under such a certificate are found not to have been incorpo-
rated in the building or other project or not to have been returned for
credit or the sales or compensating tax otherwise imposed upon such ma-
terials which will not be so incorporated in the building or other project
reported and paid by such contractor to the director of taxation not later
than the 20th day of the month following the close of the month in which
it shall be determined that such materials will not be used for the purpose
for which such certificate was issued, such clinic or center concerned shall
be liable for tax on all materials purchased for the project, and upon
payment thereof it may recover the same from the contractor together
with reasonable attorney fees. Any contractor or any agent, employee or
subcontractor thereof, who shall use or otherwise dispose of any materials
purchased under such a certificate for any purpose other than that for
which such a certificate is issued without the payment of the sales or
compensating tax otherwise imposed upon such materials, shall be guilty
of a misdemeanor and, upon conviction therefor, shall be subject to the
penalties provided for in subsection (g) of K.S.A. 79-3615, and amend-
ments thereto;

      (ddd) on and after January 1, 1999, and before January 1, 2000, all
sales of materials and services purchased by any class II or III railroad
as classified by the federal surface transportation board for the construc-
tion, renovation, repair or replacement of class II or III railroad track
and facilities used directly in interstate commerce. In the event any such
track or facility for which materials and services were purchased sales tax
exempt is not operational for five years succeeding the allowance of such
exemption, the total amount of sales tax which would have been payable
except for the operation of this subsection shall be recouped in accordance
with rules and regulations adopted for such purpose by the secretary of
revenue; and

      (eee) on and after January 1, 1999, and before January 1, 2000, all
sales of materials and services purchased for the original construction,
reconstruction, repair or replacement of grain storage facilities, including
railroad sidings providing access thereto.

      Sec.  7. K.S.A. 1998 Supp. 79-32,195 is hereby amended to read as
follows: 79-32,195. As used in this act, the following words and phrases
shall have the meanings ascribed to them herein: (a) ``Business firm''
means any business entity authorized to do business in the state of Kansas
which is subject to the state income tax imposed by the provisions of the
Kansas income tax act, any national banking association, state bank, trust
company or savings and loan association paying an annual tax on its net
income pursuant to article 11 of chapter 79 of the Kansas Statutes An-
notated, or any insurance company paying the premium tax and privilege
fees imposed pursuant to K.S.A. 40-252, and amendments thereto;

      (b) ``community services'' means:

      (1) The conduct of activities which meet a demonstrated community
need and which are designed to achieve improved educational and social
services for Kansas children and their families, and which are coordinated
with communities including, but not limited to, social and human services
organizations that address the causes of poverty through programs and
services that assist low income persons in the areas of employment, food,
housing, emergency assistance and health care;

      (2) crime prevention; and

      (3) health care services.

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

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

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

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

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

      (4) is chartered by the United States congress.

      (e) ``contributions'' shall mean and include the donation of cash, serv-
ices or property other than used clothing. Stocks and bonds contributed
shall be valued at the stock market price on the date of transfer. Services
contributed shall be valued at the standard billing rate for not-for-profit
clients. Personal property items contributed shall be valued at the lesser
of its fair market value or cost to the donor and may be inclusive of costs
incurred in making the contribution, but shall not include sales tax. Con-
tributions of real estate are allowable for credit only when title thereto is
in fee simple absolute and is clear of any encumbrances. The amount of
credit allowable shall be based upon the lesser of two current independent
appraisals conducted by state licensed appraisers.

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

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

      New Sec.  8. Any business firm or business entity not subject to Kan-
sas income, privilege or premiums tax, hereinafter designated the as-
signor, may sell, assign, convey or otherwise transfer tax credits allowed
and earned pursuant to K.S.A. 79-32,196, and amendments thereto. Such
credits shall be deemed to be allowed and earned by any such business
entity which is only disqualified therefrom by reason of not being subject
to such Kansas taxes. The business firm acquiring earned credits, here-
inafter designated the assignee, may use the amount of the acquired cred-
its to offset up to 100% of its income, privilege or premiums tax liability
for the taxable year in which such acquisition was made. Only the full
credit amount for any one contribution may be transferred and such
credit may be transferred one time. Unused credit amounts claimed by
the assignee may be carried forward for up to five years, except that all
such amounts shall be claimed within 10 years following the tax year in
which the contribution was made. The assignor shall enter into a written
agreement with the assignee establishing the terms and conditions of the
agreement and shall perfect such transfer by notifying the director of
community development of the department of commerce and housing in
writing within 30 calendar days following the effective date of the transfer
and shall provide any information as may be required by the director of
community development of the department of commerce and housing to
administer and carry out the provisions of this section. The amount re-
ceived by the assignor of such tax credit shall be taxable as income of the
assignor, and the excess of the value of such credit over the amount paid
by the assignee for such credit shall be taxable as income of the assignee.

      Sec.  9. K.S.A. 79-32,197 is hereby amended to read as follows: 79-
32,197. The amount of credit allowed pursuant to K.S.A. 79-32,196, and
amendments thereto, shall not exceed 50% of the total amount contrib-
uted during the taxable year by the business firm to a community service
organization or governmental entity for programs approved pursuant to
K.S.A. 79-32,198, and amendments thereto. The amount of credit allowed
pursuant to K.S.A. 79-32,196, and amendments thereto, shall not exceed
70% of the total amount contributed during the taxable year by the busi-
ness firm in a rural community to a community service organization or
governmental entity located therein for programs approved pursuant to
K.S.A. 79-32,198, and amendments thereto. Any tax credit not used for
the taxable year the contribution was made may be carried over to any
succeeding taxable year until the total amount of the credit is used. If the
amount of the credit allowed by K.S.A. 1998 Supp. 79-32,196, and amend-
ments thereto, exceeds the taxpayer's income tax liability imposed under
the Kansas income tax act, such excess amount shall be refunded to the
taxpayer. In no event shall the total amount of credits allowed under this
section exceed $5,000,000 for any one fiscal year.

      New Sec.  10. The provisions of sections 7 through 9 of this act shall
be applicable to all taxable years commencing after December 31, 1998.

      New Sec.  11. The legislature hereby declares that the availability of
improved access to and choice of higher education opportunities in this
state will benefit the residents of the state and that the establishment of
a postsecondary education savings program will assist residents in meeting
the expenses incurred in availing themselves of higher education oppor-
tunities. Therefore, it is the intention of sections 11 to 19, and amend-
ments thereto, to provide for development and administration of a post-
secondary education savings program and to vest the state treasurer with
powers to enable the treasurer to accomplish such purpose.

      New Sec.  12. There is hereby established a postsecondary education
savings program and such program shall be known and may be cited as
the Kansas postsecondary education savings program. The program shall
be implemented and become operational on July 1, 2000.

      New Sec.  13. The purpose of the Kansas postsecondary education
savings program is to authorize the establishment of family postsecondary
education savings accounts and to provide guidelines for the maintenance
of such accounts to:

      (a) Enable residents of this state and other states to benefit from the
tax incentive provided for qualified state tuition programs as defined in
section 529 of the federal internal revenue code of 1986, as amended;
and

      (b) attract residents of this state to institutions of postsecondary ed-
ucation.

      New Sec.  14. As used in sections 11 to 19, and amendments thereto:

      (a) ``Account'' or ``family postsecondary education savings account''
means an individual savings account established in accordance with the
provisions of sections 11 to 19, and amendments thereto.

      (b) ``Account owner'' means the individual or individuals who enter
into a postsecondary education savings agreement pursuant to the pro-
visions of sections 11 to 19, and amendments thereto. If the account is
owned by one individual, the account owner may also be the designated
beneficiary of the account.

      (c) ``Designated beneficiary'' means, with respect to an account, the
individual designated at the time the account is established as the indi-
vidual whose higher education expenses are expected to be paid from the
account or in the case of a change in beneficiaries, the individual who is
the new beneficiary.

      (d) ``Financial organization'' means an organization authorized to do
business in the state of Kansas and (1) which is an authorized fiduciary
to act as a trustee pursuant to the provisions of the federal employee
retirement income security act of 1974, an insurance company, or a reg-
istered investment advisor; and (2) (A) is licensed or chartered by the
commissioner of insurance, (B) is licensed or chartered by the state bank
commissioner, (C) is chartered by an agency of the federal government,
(D) is subject to the jurisdiction and regulation of the securities and
exchange commission of the federal government, or (E) is any other entity
otherwise authorized to act in this state as a trustee pursuant to the pro-
visions of the federal employee retirement income security act of 1974.

      (e) ``Institution of postsecondary education'' means any institution of
postsecondary education which is accredited by a nationally recognized
accrediting agency or association, offers credit toward an undergraduate
or graduate degree or other recognized postsecondary education creden-
tial, and qualifies as an eligible institution for federal student aid pro-
grams.

      (f) ``Member of the family'' has the meaning ascribed thereto in sec-
tion 529 of the federal internal revenue code of 1986, as amended.

      (g) ``Program'' means the Kansas postsecondary education savings
program established pursuant to sections 11 to 19, and amendments
thereto.

      (h) ``Qualified higher education expenses'' means any qualified higher
education expense included in section 529 of the federal internal revenue
code of 1986, as amended.

      (i) ``Qualified withdrawal'' means a withdrawal from an account to
pay the qualified higher education expenses of the designated beneficiary
of the account.

      (j) ``Nonqualified withdrawal'' means a withdrawal from an account
but does not mean:

      (1) A qualified withdrawal;

      (2) a withdrawal made as the result of the death or disability of the
designated beneficiary of an account; or

      (3) a withdrawal made on the account of a scholarship received by
the designated beneficiary to the extent the amount of the withdrawal
does not exceed the amount of the scholarship.

      (k) ``Treasurer'' means the state treasurer.

      (l) ``Management contract'' means the contract executed by the trea-
surer and a financial organization selected to act as a depository and man-
ager of the program.

      (m) ``Postsecondary education savings agreement'' means an agree-
ment between the state treasurer and the account owner or owners.

      (n) ``Program manager'' means a financial organization selected by
the treasurer to act as a depository and manager of the program.

      New Sec.  15. (a) The state treasurer shall implement and administer
the program under the terms and conditions established by sections 11
to 19, and amendments thereto.

      (b) In furtherance of such implementation and administration, the
state treasurer shall have the authority and responsibility to:

      (1) Develop and implement the program in a manner consistent with
the provisions of sections 11 to 19, and amendments thereto through
adoption of rules and regulations;

      (2) engage the services of consultants on a contract basis for render-
ing professional and technical assistance and advice;

      (3) seek rulings and other guidance from the United States depart-
ment of treasury and the federal internal revenue service relating to the
program;

      (4) make changes to the program required for the participants in the
program to obtain the federal income tax benefits or treatment provided
by section 529 of the federal internal revenue code of 1986, as amended,
or any similar successor legislation;

      (5) charge, impose and collect administrative fees and service charges
in connection with any agreement, contract or transaction relating to the
program;

      (6) develop marketing plans and promotion material;

      (7) establish the methods by which the funds held in accounts shall
be dispersed;

      (8) establish the method by which funds shall be allocated to pay for
administrative costs;

      (9) do all things necessary and proper to carry out the purposes of
sections 11 to 19, and amendments thereto;

      (10) adopt rules and regulations necessary to administer sections 11
to 19, and amendments thereto; and

      (11) evaluate the Kansas postsecondary education savings program
annually, and make a report thereon to the governor and legislature for
the period.

      New Sec.  16. (a) The state treasurer may implement the program
through use of financial organizations as account depositories and man-
agers.

      (b) The state treasurer may solicit proposals from financial organi-
zations to act as depositories and managers of the program. Financial
organizations submitting proposals shall describe the investment instru-
ment which will be held in accounts. The state treasurer shall select as
program depositories and managers the financial organization, from
among the bidding financial organizations, that demonstrates the most
advantageous combination, both to potential program participants and
this state, of the following factors:

      (1) Financial stability and integrity of the financial organization;

      (2) the safety of the investment instrument being offered;

      (3) the ability of the investment instrument to track increasing costs
of postsecondary education;

      (4) the ability of the financial organization to satisfy recordkeeping
and reporting requirements;

      (5) the financial organization's plan for promoting the program and
the investment the organization is willing to make to promote the pro-
gram;

      (6) the fees, if any, proposed to be charged to persons for opening
accounts;

      (7) the minimum initial deposit and minimum contributions that the
financial organization will require;

      (8) the ability of the financial organization to accept electronic with-
drawals, including payroll deduction plans; and

      (9) other benefits to the state or its residents included in the proposal,
including fees payable to the state to cover expenses of operation of the
program.

      (c) The state treasurer may enter into a contract with a financial or-
ganization. Such financial organization management shall provide only
one type of investment instrument.

      (d) The state treasurer may select more than one financial organiza-
tion and investment instrument for the program when the federal internal
revenue service has provided guidance that giving a contributor the choice
of two or more investment instruments under a state program will not
cause the program to fail to qualify for favorable tax treatment under
section 529 of the federal internal revenue code of 1986, as amended.

      (e) A management contract shall include, at a minimum, terms re-
quiring the financial organization to:

      (1) Take any action required to keep the program in compliance with
requirements of sections 11 to 19, and amendments thereto, and any
actions not contrary to its contract to manage the program to qualify as a
``qualified state tuition plan'' as defined in section 529 of the federal in-
ternal revenue code of 1986, as amended;

      (2) keep adequate records of each account, keep each account seg-
regated from each other account and provide the state treasurer with the
information necessary to prepare the statements required by section 17,
and amendments thereto;

      (3) compile and total information contained in statements required
to be prepared under section 17, and amendments thereto, and provide
such compilations to the state treasurer;

      (4) if there is more than one program manager, provide the state
treasurer with such information as is necessary to determine compliance
with section 17, and amendments thereto;

      (5) provide the state treasurer with access to the books and records
of the program manager to the extent needed to determine compliance
with the contract;

      (6) hold all accounts for the benefit of the account owner or owners;

      (7) be audited at least annually by a firm of certified public account-
ants selected by the program manager and provide the results of such
audit to the state treasurer;

      (8) provide the state treasurer with copies of all regulatory filings and
reports made by the financial organization during the term of the man-
agement contract or while the financial organization is holding any ac-
counts, other than confidential filings or reports that will not become part
of the program. The program manager shall make available for review by
the state treasurer the results of any periodic examination of such man-
ager by any state or federal banking, insurance or securities commission,
except to the extent that such report or reports may not be disclosed
under law; and

      (9) ensure that any description of the program, whether in writing or
through the use of any media, is consistent with the marketing plan de-
veloped pursuant to the provisions of sections 11 to 19, and amendments
thereto.

      (f) The state treasurer may provide that an audit shall be conducted
of the operations and financial position of the program depository and
manager at any time if the state treasurer has any reason to be concerned
about the financial position, the recordkeeping practices or the status of
accounts of such program depository and manager.

      (g) During the term of any contract with a program manager, the
state treasurer shall conduct an examination of such manager and the
manager's handling of accounts. Such examination shall be conducted at
least biennially if such manager is not otherwise subject to periodic ex-
amination by the state bank commissioner, the federal deposit insurance
corporation or other similar entity.

      (h)  (1) If selection of a financial organization as a program manager
or depository is not renewed, after the end of the financial organization's
term:

      (A) Accounts previously established and held in investment instru-
ments at such financial organization may be terminated;

      (B) additional contributions may be made to such accounts;

      (C) no new accounts may be placed with such financial organization;
and

      (D) existing accounts held by such depository shall remain subject to
all oversight and reporting requirements established by the state trea-
surer.

      (2) If the state treasurer terminates a financial organization as a pro-
gram manager or depository, the state treasurer shall take custody of
accounts held by such financial organization and shall seek to promptly
transfer such accounts to another financial organization that is selected
as a program manager or depository and into investment instruments as
similar to the original instruments as possible.

      (i) The state treasurer may enter into such contracts as it deems nec-
essary and proper for the implementation of the program.

      New Sec.  17. (a) Family postsecondary education savings accounts
established pursuant to the provisions of sections 11 to 19, and amend-
ments thereto shall be governed by the provisions of this section.

      (b) A family postsecondary education savings account may be opened
by any person or persons who desire to save money for the payment of
the qualified higher education expenses of the designated beneficiary.
Such persons shall be considered the account owner.

      (1) An application for such account shall be in the form prescribed
by the state treasurer and contain the following:

      (A) The name, address and social security number or employer iden-
tification number of the account owner or owners;

      (B) the designation of a designated beneficiary;

      (C) the name, address and social security number of the designated
beneficiary;

      (D) the certification relating to no excess contributions; and

      (E) such other information as the state treasurer may require.

      (2) The state treasurer shall establish a nominal nonrefundable ap-
plication fee for such application.

      (c) Only the account owner or owners may make contributions to the
account after the account is opened.

      (d) Contributions to accounts may be made only in cash.

      (e) An account owner may withdraw all or part of the balance from
an account on sixty-days notice or such shorter period as may be author-
ized under rules and regulations governing the program. Such rules and
regulations shall include provisions that will generally enable the deter-
mination as to whether a withdrawal is a nonqualified withdrawal or a
qualified withdrawal. Such rules and regulations may require one or more
of the following:

      (1) An account owner seeking to make a qualified withdrawal must
provide certification of qualified higher education expenses in a form and
manner and pursuant to the method consistent with the requirements of
sections 11 to 19, and amendments thereto; and

      (2) withdrawals not meeting the requirements of sections 11 to 19,
and amendments thereto shall be treated as nonqualified withdrawals by
the program manager and if such withdrawals are subsequently deemed
qualified withdrawals, the account owner must seek any refund of pen-
alties directly from the program.

      (f)  (1) An account owner may change the designated beneficiary of an
account to an individual who is a member of the family of the prior
designated beneficiary in accordance with procedures established pur-
suant to the provisions of sections 11 to 19, and amendments thereto.

      (2) An account owner may transfer all or a portion of an account to
another family postsecondary education savings account, the designated
beneficiary of which is a member of the family as defined in section 529
of the federal internal revenue code of 1986, as amended.

      (3) Changes in designated beneficiaries and transfers under this sub-
section shall not be permitted to the extent that they would constitute
excess contributions or unauthorized investment choices.

      (g) In the case of any nonqualified withdrawal from an account an
amount equal to 15% of the portion of the withdrawal constituting income
as determined in accordance with the principles of section 529 of the
federal internal revenue code of 1986, as amended, plus an amount equal
to the amount of interest earned on such portion shall be withheld as a
penalty and paid to the Kansas postsecondary education savings program.

      (h) The penalty prescribed in subsection (g) may be increased if the
state treasurer determines that the amount of such penalty must be in-
creased to constitute a greater than de minimis penalty for purposes of
qualifying the program as a qualified state tuition program as defined in
section 529 of the federal internal revenue code of 1986, as amended.

      (i) If an account owner makes a nonqualified withdrawal and no pen-
alty amount is withheld pursuant to subsection (g) or the amount withheld
was less than the amount required to be withheld under such subsection
for nonqualified withdrawals, the account owner shall pay the unpaid
portion of the penalty to the program at the same time that the account
owner files the earlier of the account owner's state or federal income tax
return for the taxable year of the withdrawal or if such account owner
does not file such return, the due date for such returns but in any event
on or before the due date for such return taking into account any au-
thorized extensions.

      (j) The program shall provide separate accounting for each desig-
nated beneficiary.

      (k) No account owner or designated beneficiary of any account shall
be permitted to direct the investment of any contributions to an account
or the earnings thereon.

      (l) Neither an account owner nor a designated beneficiary may use
an interest in an account as security for a loan. Any pledge of an interest
in an account shall be of no force and effect.

      (m)  (1) The state treasurer shall adopt rules and regulations to prevent
contributions on behalf of a designated beneficiary in excess of an amount
equal to the average amount of the qualified higher education expenses
that would be incurred for five years of study at institutions of postse-
condary education located in the midwest states. Such amount shall be
determined annually by the state treasurer.

      (2) Such rules and regulations shall include requirements that any
excess balance with respect to a designated beneficiary be promptly with-
drawn in a nonqualified withdrawal or transferred to another account.

      (n)  (1) If there is any distribution from an account to any individual
or for the benefit of any individual during a calendar year, such distri-
bution shall be reported to the federal internal revenue service and the
account owner or owners, the designated beneficiary, or the distributee
to the extent required by federal law or regulation.

      (2) Statements shall be provided to each account owner at least once
each year within 60 days after the end of the twelve-month period to
which they relate. The statement shall identify the contributions made
during a preceding twelve-month period, the total contributions made to
the account through the end of the period, the value of the account at
the end of such period, distributions made during such period and any
other information that the state treasurer shall require to be reported to
the account owner.

      (3) Statements and information relating to accounts shall be prepared
and filed to the extent required by federal and state tax law.

      (o)  (1) A local government or organization described in section
501(c) (3) of the federal internal revenue code of 1986, as amended, may
open and become the account owner of an account to fund scholarships
for persons whose identity will be determined upon disbursement.

      (2) In the case of any account opened pursuant to provision (1) of
this subsection, the requirement set forth in subsection (b) that a desig-
nated beneficiary be designated when an account is opened shall not
apply and each individual who receives an interest in such account as a
scholarship shall be treated as a designated beneficiary with respect to
such interest.

      (p) An annual fee may be imposed upon the account owner or owners
for the maintenance of the account.

      (q) An account must be opened before the designated beneficiary
attains 25 years of age and at least two calendar years before a qualified
withdrawal can be made. Qualified withdrawals must be completed by
the time the designated beneficiary attains 30 years of age or within 10
years after the initial qualified withdrawal is made, whichever occurs first.
The state treasurer may adopt rules and regulations providing for excep-
tions to the foregoing requirements for such extenuating circumstances
as the state treasurer deems necessary and appropriate.

      (r) An account owner or designated beneficiary of a Kansas postse-
condary education savings account may be a resident of any state but
must be a resident of the United States of America.

      (s) The program shall disclose the following information in writing to
each account owner and prospective account owner of a family postse-
condary education savings account:

      (1) The terms and conditions for purchasing a family postsecondary
education savings account;

      (2) any restrictions on the substitution of beneficiaries;

      (3) the person or entity entitled to terminate the savings agreement;

      (4) the period of time during which a beneficiary may receive benefits
under the savings agreement;

      (5) the terms and conditions under which money may be wholly or
partially withdrawn from the program, including, but not limited to, any
reasonable charges and fees that may be imposed for withdrawal;

      (6) the probable tax consequences associated with contributions to
and distributions from accounts; and

      (7) all other rights and obligations pursuant to savings agreements,
and any other terms, conditions and provisions deemed necessary and
appropriate by the state treasurer.

      (t) Nothing in sections 10 to 19, and amendments thereto, or in any
savings agreement entered into pursuant to sections 11 to 19, and amend-
ments thereto, shall be construed as a guarantee by the state of Kansas
or any institution of postsecondary education that a beneficiary will be
admitted to the institution of postsecondary education or, upon admission
to any institution of postsecondary education, will be permitted to con-
tinue to attend or will receive a degree from such institution of postse-
condary education.

      New Sec.  18. (a) Nothing in sections 11 to 19, and amendments
thereto, shall be construed to:

      (1) Give any designated beneficiary any rights or legal interest with
respect to an account unless the designated beneficiary is the account
owner;

      (2) guarantee that a designated beneficiary will be admitted to an
institution of postsecondary education;

      (3) create state residency for an individual merely because the indi-
vidual is a designated beneficiary; or

      (4) guarantee that amounts saved pursuant to the program will be
sufficient to cover the qualified higher education expenses of a designated
beneficiary.

      (b)  (1) Nothing in sections 11 to 19, and amendments thereto, shall
create or be construed to create any obligation of the state treasurer, the
state or any agency or instrumentality of the state to guarantee for the
benefit of any account owner or designated beneficiary with respect to:

      (A) The rate of interest or other return on any account; and

      (B) the payment of interest or other return on any account.

      (2) The state treasurer by rules and regulations shall provide that
every contract, application, deposit slip or other similar document that
may be used in connection with a contribution to an account clearly in-
dicate that the account is not insured by the state and neither the principal
deposited nor the investment return is guaranteed by the state.

      New Sec.  19. (a) The Kansas postsecondary education savings pro-
gram trust fund is hereby established in the state treasury. Such savings
trust fund shall consist of moneys deposited by depositors in accordance
with this act, moneys acquired from governmental and private sources
and state general fund appropriations, if any. All interest derived from
the deposit and investment of moneys in such savings trust fund shall be
credited to the fund. At the end of any fiscal year, all unexpended and
unencumbered moneys in such savings trust fund shall remain therein
and not be credited or transferred to the state general fund or to any
other fund.

      (b) The state treasurer shall credit all moneys received in connection
with the Kansas postsecondary education savings program to the Kansas
postsecondary education savings program trust fund.

      (c) All expenses incurred by the treasurer in developing and admin-
istering the postsecondary education savings program shall be payable
from the Kansas postsecondary education savings program trust fund.

      Sec.  20. K.S.A. 1998 Supp. 79-32,117 is hereby amended to read as
follows: 79-32,117. (a) The Kansas adjusted gross income of an individual
means such individual's federal adjusted gross income for the taxable year,
with the modifications specified in this section.

      (b) There shall be added to federal adjusted gross income:

      (i) Interest income less any related expenses directly incurred in the
purchase of state or political subdivision obligations, to the extent that
the same is not included in federal adjusted gross income, on obligations
of any state or political subdivision thereof, but to the extent that interest
income on obligations of this state or a political subdivision thereof issued
prior to January 1, 1988, is specifically exempt from income tax under the
laws of this state authorizing the issuance of such obligations, it shall be
excluded from computation of Kansas adjusted gross income whether or
not included in federal adjusted gross income. Interest income on obli-
gations of this state or a political subdivision thereof issued after Decem-
ber 31, 1987, shall be excluded from computation of Kansas adjusted
gross income whether or not included in federal adjusted gross income.

      (ii) Taxes on or measured by income or fees or payments in lieu of
income taxes imposed by this state or any other taxing jurisdiction to the
extent deductible in determining federal adjusted gross income and not
credited against federal income tax. This paragraph shall not apply to taxes
imposed under the provisions of K.S.A. 79-1107 or 79-1108, and amend-
ments thereto, for privilege tax year 1995, and all such years thereafter.

      (iii) The federal net operating loss deduction.

      (iv) Federal income tax refunds received by the taxpayer if the de-
duction of the taxes being refunded resulted in a tax benefit for Kansas
income tax purposes during a prior taxable year. Such refunds shall be
included in income in the year actually received regardless of the method
of accounting used by the taxpayer. For purposes hereof, a tax benefit
shall be deemed to have resulted if the amount of the tax had been de-
ducted in determining income subject to a Kansas income tax for a prior
year regardless of the rate of taxation applied in such prior year to the
Kansas taxable income, but only that portion of the refund shall be in-
cluded as bears the same proportion to the total refund received as the
federal taxes deducted in the year to which such refund is attributable
bears to the total federal income taxes paid for such year. For purposes
of the foregoing sentence, federal taxes shall be considered to have been
deducted only to the extent such deduction does not reduce Kansas tax-
able income below zero.

      (v) The amount of any depreciation deduction or business expense
deduction claimed on the taxpayer's federal income tax return for any
capital expenditure in making any building or facility accessible to the
handicapped, for which expenditure the taxpayer claimed the credit al-
lowed by K.S.A. 79-32,177, and amendments thereto.

      (vi) Any amount of designated employee contributions picked up by
an employer pursuant to K.S.A. 12-5005, 20-2603, 74-4919 and 74-4965,
and amendments to such sections.

      (vii) The amount of any charitable contribution made to the extent
the same is claimed as the basis for the credit allowed pursuant to K.S.A.
79-32,196, and amendments thereto.

      (viii) The amount of any costs incurred for improvements to a swine
facility, claimed for deduction in determining federal adjusted gross in-
come, to the extent the same is claimed as the basis for any credit allowed
pursuant to K.S.A. 1998 Supp. 79-32,204 and amendments thereto.

      (ix) The amount of any ad valorem taxes and assessments paid and
the amount of any costs incurred for habitat management or construction
and maintenance of improvements on real property, claimed for deduc-
tion in determining federal adjusted gross income, to the extent the same
is claimed as the basis for any credit allowed pursuant to K.S.A. 79-32,203
and amendments thereto.

      (c) There shall be subtracted from federal adjusted gross income:

      (i) Interest or dividend income on obligations or securities of any
authority, commission or instrumentality of the United States and its pos-
sessions less any related expenses directly incurred in the purchase of
such obligations or securities, to the extent included in federal adjusted
gross income but exempt from state income taxes under the laws of the
United States.

      (ii) Any amounts received which are included in federal adjusted
gross income but which are specifically exempt from Kansas income tax-
ation under the laws of the state of Kansas.

      (iii) The portion of any gain or loss from the sale or other disposition
of property having a higher adjusted basis for Kansas income tax purposes
than for federal income tax purposes on the date such property was sold
or disposed of in a transaction in which gain or loss was recognized for
purposes of federal income tax that does not exceed such difference in
basis, but if a gain is considered a long-term capital gain for federal in-
come tax purposes, the modification shall be limited to that portion of
such gain which is included in federal adjusted gross income.

      (iv) The amount necessary to prevent the taxation under this act of
any annuity or other amount of income or gain which was properly in-
cluded in income or gain and was taxed under the laws of this state for a
taxable year prior to the effective date of this act, as amended, to the
taxpayer, or to a decedent by reason of whose death the taxpayer acquired
the right to receive the income or gain, or to a trust or estate from which
the taxpayer received the income or gain.

      (v) The amount of any refund or credit for overpayment of taxes on
or measured by income or fees or payments in lieu of income taxes im-
posed by this state, or any taxing jurisdiction, to the extent included in
gross income for federal income tax purposes.

      (vi) Accumulation distributions received by a taxpayer as a beneficiary
of a trust to the extent that the same are included in federal adjusted
gross income.

      (vii) Amounts received as annuities under the federal civil service
retirement system from the civil service retirement and disability fund
and other amounts received as retirement benefits in whatever form
which were earned for being employed by the federal government or for
service in the armed forces of the United States.

      (viii) Amounts received by retired railroad employees as a supple-
mental annuity under the provisions of 45 U.S.C. 228b (a) and 228c (a)(1)
et seq.

      (ix) Amounts received by retired employees of a city and by retired
employees of any board of such city as retirement allowances pursuant to
K.S.A. 13-14,106, and amendments thereto, or pursuant to any charter
ordinance exempting a city from the provisions of K.S.A. 13-14,106, and
amendments thereto.

      (x) For taxable years beginning after December 31, 1976, the amount
of the federal tentative jobs tax credit disallowance under the provisions
of 26 U.S.C. 280 C. For taxable years ending after December 31, 1978,
the amount of the targeted jobs tax credit and work incentive credit dis-
allowances under 26 U.S.C. 280 C.

      (xi) For taxable years beginning after December 31, 1986, dividend
income on stock issued by Kansas Venture Capital, Inc.

      (xii) For taxable years beginning after December 31, 1989, amounts
received by retired employees of a board of public utilities as pension and
retirement benefits pursuant to K.S.A. 13-1246, 13-1246a and 13-1249
and amendments thereto.

      (xiii) For taxable years beginning after December 31, 1993, the
amount of income earned on contributions deposited to an individual
development account under K.S.A. 79-32,117h, and amendments thereto.

      (xiv) For all taxable years commencing after December 31, 1996, that
portion of any income of a bank organized under the laws of this state or
any other state, a national banking association organized under the laws
of the United States, an association organized under the savings and loan
code of this state or any other state, or a federal savings association or-
ganized under the laws of the United States, for which an election as an
S corporation under subchapter S of the federal internal revenue code is
in effect, which accrues to the taxpayer who is a stockholder of such
corporation and which is not distributed to the stockholders as dividends
of the corporation.

      (xv) For all taxable years beginning after December 31, 1999,
amounts not exceeding $2,000 for each designated beneficiary which are
contributed to a family postsecondary education savings account estab-
lished under the Kansas postsecondary education savings program for the
purpose of paying the qualified higher education expenses of a designated
beneficiary at an institution of postsecondary education. The terms and
phrases used in this paragraph shall have the meaning respectively as-
cribed thereto by the provisions of section 14, and amendments thereto,
and the provisions of such section are hereby incorporated by reference
for all purposes thereof.

      (d) There shall be added to or subtracted from federal adjusted gross
income the taxpayer's share, as beneficiary of an estate or trust, of the
Kansas fiduciary adjustment determined under K.S.A. 79-32,135, and
amendments thereto.

      (e) The amount of modifications required to be made under this sec-
tion by a partner which relates to items of income, gain, loss, deduction
or credit of a partnership shall be determined under K.S.A. 79-32,131,
and amendments thereto, to the extent that such items affect federal
adjusted gross income of the partner.

      New Sec.  21. (a) Without adoption of a resolution or ordinance so
providing, the governing body of any taxing subdivision shall not approve
any appropriation or budget, as the case requires, which may be funded
by revenue produced from property taxes, and which provides for funding
with such revenue in an amount exceeding that of the next preceding
year, except with regard to revenue produced and attributable to the
taxation of: (1) New improvements to real property;

      (2) increased personal property valuation, other than increased val-
uation of oil and gas leaseholds and mobile homes;

      (3) property located within added jurisdictional territory; and

      (4) property which has changed in use.

      (b) The provisions of this section shall be applicable to all fiscal and
budget years commencing on and after the effective date of this act.

      (c) The provisions of this section shall not apply to community col-
leges or unified school districts.

      (d) The provisions of this section shall not apply to revenue received
from property tax levied for the sole purpose of repayment of the principal
of and interest upon bonded indebtedness, temporary notes and no-fund
warrants.

      New Sec.  22. The governing body of any city is hereby authorized
and empowered to levy taxes in each year for the general fund and other
city purposes.

      Sec.  23. K.S.A. 79-1945 is hereby amended to read as follows: 79-
1945. The board of county commissioners of any county is hereby au-
thorized and empowered to levy taxes in each year taxes for the several
county purposes, on the assessed tangible valuation of the respective
counties, not to exceed the tax levy rates and amounts specified in the
following sections of this act general fund and other county purposes.
Revenues derived from property taxes levied for mental health programs
or for programs for people with disabilities, whether deposited in special
funds or in the general funds of the several counties, shall be expended
exclusively for such purposes.

      Sec.  24. K.S.A. 79-1946 is hereby amended to read as follows: 79-
1946. The board of county commissioners of each of the several counties
is hereby authorized to fix a rate of levy annually to meet and defray the
for current general expenses of the county and to pay a portion of the
principal and interest on bonds issued under the authority of K.S.A. 12-
1774, and amendments thereto, by any city located in such county, subject
to limitations prescribed according to the assessed tangible valuation or
a total population as follows:

Less than $13,000,000 or having a population of less than 3,500	6.50 mills
$13,000,000 to $30,000,000	4.25 mills
Over $30,000,000 to $140,000,000	3.50 mills
Over $140,000,000	4.25 mills

Except that in any such county which adjoins a military reservation and
which has an assessed taxable tangible valuation of less than $100,000,000
such rate of levy may, except as hereinafter provided, be increased not
to exceed 11/2 mills. Before any county shall increase any levy under the
provisions of the foregoing proviso the board of county commissioners
shall publish a notice of its intention to make such increase in the levy.
Such notice shall be published once each week for two consecutive weeks
in the official county newspaper and if within 60 days next following the
last publication of such notice a petition signed by electors of the county
equal in number to not less than 5% of the total electors of such county
is filed in the office of the county election officer requesting an election
upon such proposition, no such increased levy shall be made without such
proposition having been submitted to and approved by a majority of the
electors of the county voting at an election called and held thereon. All
such elections shall be noticed, called and held in the manner prescribed
in K.S.A. 10-120, and amendments thereto.

      Sec.  25. K.S.A. 79-1962 is hereby amended to read as follows: 79-
1962. (a) The governing body of any township is hereby authorized and
empowered to levy taxes in each year for the general fund and other
township purposes, except that levies of taxes for road and noxious weed
purposes shall only be levied on all taxable tangible property located out-
side of incorporated cities. but the governing body shall not fix a rate of
levy in any one year on each dollar of assessed tangible valuation of such
township in excess of the following-named rates:

Ambulance service: As authorized by K.S.A. 80-1425	3 mills
General fund	.50 mill
Judgments	1.00 mill
Establishing and maintenance of free library and reading room	1.00 mill
Such one-mill levy is subject to increase as hereinafter provided.
Free band concerts	.25 mill
Free band concerts when authorized by an election	.50 mill
To acquire land for a cemetery or park	1.00 mill
Maintenance of a cemetery or park	1.00 mill
To acquire a site and build a cemetery chapel	2.00 mills
Fire protection, joint with cities or townships	1.00 mill
Extermination of prairie dogs	1.00 mill
Cemeteries: As authorized by K.S.A. 12-1403	1.00 mill
Cemeteries: As authorized by K.S.A. 12-1405	1.00 mill
Cemeteries: As authorized by K.S.A. 80-932	.10 mill
Fire department: As authorized by K.S.A. 80-1903	2.00 mills
Townships in counties between 150,000 and 250,000	4.00 mills
Fire department: As authorized by K.S.A. 80-1916	3.00 mills
Fire department: As authorized by K.S.A. 80-1921	3.00 mills
Fire department: As authorized by K.S.A. 80-1537	3.00 mills
Garbage and trash fund: As authorized by K.S.A. 80-2201:
First year of levy	1.00 mill
Second year and thereafter	.50 mill
Garbage and trash disposal: As authorized by K.S.A. 80-2204	.50 mill
Halls and buildings: As authorized by K.S.A. 80-115	2.00 mills
Noxious weeds: As authorized by K.S.A. 2-1318	1.00 mill
Deficiency levy for chemicals	.50 mill
Parks and cemeteries: Maintenance as authorized by K.S.A. 80-903	2.00 mills
Police protection by sheriff's deputies:
As authorized by K.S.A. 19-807d	1.00 mill
Roads: As authorized by 68-518c	5.00 mills
Townships in counties between 175,000 and 275,000	7.00 mills

Such rates are not intended to, and shall not be construed to apply to any
township not specifically authorized by law to make such levy.

      (b) The townships of Garfield and Pierceville in Finney county, Kan-
sas, are hereby authorized to levy an annual tax upon all taxable tangible
property in the respective townships of not to exceed three mills for the
purpose of paying for fire protection.

      (c) The levy for establishing and maintaining a free library and read-
ing room may be increased from one mill to not more than 2.50 mills.
Before any township increases this levy the township board shall publish
a notice of its intention to make such increase. Such notice shall be pub-
lished once each week for two consecutive weeks in the official county
newspaper and if within 60 days following the last publication of such
notice a petition signed by electors of the township equal in number to
not less than 5% of the total electors of such township is filed in the office
of the county election officer requesting an election upon such proposi-
tion, no such increased levy shall be made without such proposition hav-
ing been submitted to and approved by a majority of the electors of the
township voting at an election called and held thereon. All such elections
shall be noticed, called and held in the manner prescribed in K.S.A. 10-
120, and amendments thereto.

      Sec.  26. K.S.A. 2-610 is hereby amended to read as follows: 2-610.
(a) On or before July 15 each year, the executive board of the county
extension council shall file with the county commissioners in the office
of the county clerk:

      (1) A list of current members of the county extension council and its
executive board;

      (2) a certification of election of officers as provided in subsection (c)
of K.S.A. 2-611, and amendments thereto;

      (3) a certificate by the director of extension of Kansas state university
of agriculture and applied science that the county extension council is
properly functioning and entitled to receive the appropriations provided
by law; and

      (4) a proposed budget prepared in cooperation with the director of
extension of Kansas state university of agriculture and applied science for
the ensuing calendar year.

      (b) If the commission does not approve the proposed budget within
10 days after receipt thereof, it shall return the budget to the board. Upon
receipt of the returned budget, the board shall consider amendments or
modifications and may consult with the commission concerning the
budget. Within 10 days after receipt of the returned budget, the board
shall resubmit its proposed budget, with or without amendment or mod-
ification, to the commission. Within 10 days after resubmission of the
proposed budget, the commission shall approve, or amend or modify and
approve as amended or modified, such proposed budget. The commission
shall adopt the proposed budget as approved and shall make the same a
part of the regular county budget. The board of county commissioners
shall make an appropriation and certify to the county clerk the amount
of tax necessary to be levied on all tangible taxable property of the county
sufficient to provide a program of county extension work and to pay a
portion of the principal and interest on bonds issued under the authority
of K.S.A. 12-1774, and amendments thereto, by cities located in the
county, which levy shall not exceed the limitation prescribed by K.S.A.
79-1947, and amendments thereto.

      Sec.  27. K.S.A. 2-1318 is hereby amended to read as follows: 2-1318.
The county weed supervisor of each county is hereby directed and it shall
be the duty of the county weed supervisor to ascertain each year the
approximate amount of land and highways infested with each kind of
noxious weeds and its location in the county, and transmit such infor-
mation tabulated by cities and townships not later than June 1 of each
year, to the secretary of the state board of agriculture, board of county
commissioners, and to the governing body of each city and township in
the district pertaining to such noxious weed infestation in their respective
jurisdiction. On the basis of such information the tax levying body of each
county, township or incorporated city shall make a tax levy each year for
the purpose of paying their part of the cost of control and eradication
thereof as provided in this act and, in the case of cities and counties, to
pay a portion of the principal and interest on bonds issued under the
authority of K.S.A. 12-1774, and amendments thereto, by cities located
in the county. Each county, city, and township, separately, shall make a
levy each year in addition to all other levies now authorized by law, in
such amount as is deemed to be necessary but not to exceed the limitation
prescribed by K.S.A. 79-1947, 79-1948, 79-1949, 79-1950, 79-1951, 79-
1952, 79-1953 and 79-1962 and amendments thereto, in any one year for
such purpose. Any city may budget expenditures for weed control within
its general operating fund in lieu of levying a special tax therefor or main-
taining a separate noxious weed eradication fund. Moneys collected from
such levy, except for an amount to pay a portion of the principal and
interest on bonds issued under the authority of K.S.A. 12-1774, and
amendments thereto, by cities located in the county, shall be set apart as
a noxious weed eradication fund and warrants duly verified by the county
or city supervisor if such be employed or if no supervisor be employed,
then by county, township or city clerk, as the case may be, may be drawn
against this fund for all items of expense incident to control of noxious
weeds in such district respectively. Any moneys remaining in the noxious
weed eradication fund at the end of any year for which a levy is made
under this section may be transferred to the noxious weed capital outlay
fund for making of capital expenditures incident to the control of noxious
weeds. If moneys collected from such levy in the preceding year were
insufficient to purchase chemicals or chemical materials needed for the
purposes authorized in K.S.A. 2-1319 or 2-1322, and amendments
thereto, the tax levying body may levy an additional tax of not to exceed
the limitation prescribed by K.S.A. 79-1947, 79-1948, 79-1949, 79-1950,
79-1951, 79-1952, 79-1953 and 79-1962 and amendments thereto, but
the moneys collected from such levy shall not be used for any purpose
other than the purchase of such chemicals or chemical materials.

      Any tax levy authorized under the provisions of this section shall be in
addition to all other tax levies authorized by law.

      Sec.  28. K.S.A. 2-2007 is hereby amended to read as follows: 2-2007.
Each board of county commissioners is authorized to create a ``soil-drift-
ing fund''. They are authorized and empowered to make soil drifting fund
and levy a tax against all taxable tangible property of the county at a rate
not to exceed the limitation prescribed by K.S.A. 79-1947, to be collected
as other taxes, and when collected to be credited to the ``soil-drifting
fund'' to pay for the cost of work done, or hired to be done, by the board
of county commissioners and to pay a portion of the principal and interest
on bonds issued under the authority of K.S.A. 12-1774, and amendments
thereto, by cities located in the county. To pay persons employed by them
to do such work ordered to be done on any property the county shall
issue its warrants upon the ``soil-drifting fund,'' and such warrants shall
be paid from that fund. This shall be regarded as a special purpose for
incurring obligations and issuing and paying warrants and is not controlled
by any general statute relating thereto.

      Sec.  29. K.S.A. 2-1319 is hereby amended to read as follows: 2-1319.
(a) The cost of controlling and eradicating noxious weeds on all lands or
highways owned or supervised by a state agency, department or commis-
sion shall be paid by the state agency, department or commission super-
vising such lands or highways from funds appropriated to its use; on
county lands and county roads, on township lands and township roads, on
city lands, streets and alleys by the county, township or city in which such
lands, roads, streets and alleys are located, and from funds made available
for that purpose; on drainage districts, irrigation districts, cemetery as-
sociations and other political subdivisions of the state, the costs shall be
paid from their respective funds made available for the purpose. If the
governing body of any political subdivision owning or supervising lands
infested with noxious weeds within their jurisdiction fails to control such
noxious weeds after 15 days' notice directing any such body to do so, the
board of county commissioners shall proceed to have proper control and
eradication methods used upon such lands, and shall notify the governing
body of the political subdivision by certified mail of the costs of such
operations, with a demand for payment. The governing body of the po-
litical subdivision shall pay such costs from its noxious weed fund, or if
no such fund is available, from its general fund or from any other funds
available for such purpose. Copy of the statement, together with proof of
notification, shall at the same time be filed with the county clerk, and if
the amount is not paid within 30 days, such clerk shall spread the amount
upon the tax roll of the subdivision, and such amount shall become a lien
against the entire territory located within the particular political subdi-
vision, and shall be collected as other taxes are collected.

      (b) All moneys collected pursuant to this section shall be paid into
the county noxious weed eradication fund. Tax levies made pursuant to
this section shall be in addition to all other levies authorized by law, and
shall be in addition to any aggregate tax levy limits prescribed by law.

      (c) As used in this section, ``governing body'' means the board, body,
or persons in which the powers of a political subdivision as a body cor-
porate are vested; and ``political subdivision'' means any agency or unit
of the state authorized to levy taxes or empowered to cause taxes to be
levied.

      (d) On all other lands the owner thereof shall pay the cost of control
and eradication of noxious weeds. Except as provided in K.S.A. 2-1333
and amendments thereto, chemical materials for use on privately owned
lands may be purchased from the board of county commissioners at a
price fixed by the board of county commissioners which shall be in an
amount equal to not less than 50% nor more than 75% of the total cost
incurred by the county in purchasing, storing and handling such chemical
materials. However, once the tax levying body of a county, city or town-
ship has authorized the maximum a tax levy prescribed by K.S.A. 2-1318,
and amendments thereto of 1.5 mills or more, the board of county com-
missioners may collect from the owner of privately owned lands an
amount equal to 75% but not more than 100% of the total cost incurred
by the county in purchasing, storing and handling of chemical materials
used in the control and eradication of noxious weeds on such privately
owned lands. Whenever official methods of eradication, adopted by the
state board of agriculture, are not followed in applying the chemical ma-
terials so purchased, the board of county commissioners may collect the
remaining portion of the total cost thereof.

      Sec.  30. K.S.A. 2-1322 is hereby amended to read as follows: 2-1322.
(a) The board of county commissioners, or the governing body of incor-
porated cities, cooperating with the secretary of the state board of agri-
culture, shall purchase or provide for needed and necessary equipment
and necessary chemical material for the control and eradication of noxious
weeds. The board of county commissioners of any county or the governing
body of any city may use any equipment or materials purchased as pro-
vided for in this section, upon the highways, streets and alleys, for the
treatment and eradication of weeds which have not been declared noxious
by legislative action.

      (b) Except as provided in K.S.A. 2-1333 and amendments thereto, the
board of county commissioners shall sell chemical material to the land-
owners in their jurisdiction at a price fixed by the board of county com-
missioners which shall be in an amount equal to not less than 50% nor
more than 75% of the total cost incurred by the county in purchasing,
storing and handling such chemical materials used in the control and
eradication of noxious weeds, and may make such charge for the use of
machines or other equipment and operators as may be deemed by them
sufficient to cover the actual cost of operation. However, once the tax
levying body of a county, city or township has authorized the maximum
a tax levy prescribed by K.S.A. 2-1318, and amendments thereto of 1.5
mills or more, the board of county commissioners may collect from the
landowners in their jurisdiction an amount equal to 75% but not more
than 100% of the total cost incurred by the county in purchasing, storing
and handling of chemical materials used in the control and eradication of
noxious weeds.

      (c) Whenever official methods of eradication adopted by the state
board of agriculture are not used in applying the chemical material pur-
chased, the board of county commissioners may collect the remaining
portion of the total cost thereof from the landowner.

      (d) The board of county commissioners, township boards, and the
governing body of cities shall keep a record showing purchases of material
and equipment for control and eradication of noxious weeds. The board
of county commissioners and the governing body of cities shall also keep
a complete itemized record showing sales for cash or charge sales of
material and shall maintain a record of charges and receipts for use of
equipment owned by each county or city on public and private land. Such
records shall be open to inspection by citizens of Kansas at all times.

      Sec.  31. K.S.A. 3-121 is hereby amended to read as follows: 3-121.
Municipalities operating airports jointly may pay the expenses of pur-
chasing or acquiring such airports from the general funds of such munic-
ipalities or may issue general obligation bonds, as authorized by law, but
no such bonds shall be issued for the purchase or acquisition of airports
as provided hereunder, by any municipality unless and until the question
of issuing same shall have been submitted to the qualified electors of said
such municipality at any regular or special election and a majority of those
voting on the proposition in said such municipality shall have voted in
favor of the issuance of said bonds. In addition, any such governing body
may issue general obligation bonds of the county or city in an amount not
to exceed fifty thousand dollars ($50,000) $50,000 annually without an
election, for the purpose of providing improvements on runways of any
such airport. Any governing body proposing to issue such bonds shall
publish a resolution to that effect in a newspaper of general circulation
within the city or county, as applicable. Such resolution shall be published
once each week for three consecutive weeks. If, within sixty (60) 60 days
following the final such publication, a petition signed by not less than five
percent (5%) 5% of the qualified electors of such city or county, as ap-
plicable, is presented to the county election officer, no such bonds shall
be issued until approved by a majority of the qualified electors voting
thereon at the next county or city general election following the presen-
tation of the petition.

      In lieu of issuing such bonds for the purchase or acquisition of an
airport, the governing body of the municipality may levy an annual tax of
not to exceed one mill on the dollar on all the taxable tangible property
in such municipality for not to exceed three years for the purpose of
creating a special fund to be used to pay the expenses of purchasing or
acquiring such airports or flying fields and to pay a portion of the principal
and interest on bonds issued under the authority of K.S.A. 12-1774, and
amendments thereto, by cities located in the county. Any such governing
bodies are hereby further authorized to levy an annual tax not to exceed
the limitation prescribed by K.S.A. 79-1947, 79-1948, 79-1949, 79-1950,
79-1951, 79-1952 and 79-1953, and amendments thereto, per year, for
the support, maintenance and operation of such airports and to pay a
portion of the principal and interest on bonds issued under the authority
of K.S.A. 12-1774, and amendments thereto, by cities located in the
county. Such support, maintenance and operation expenses shall be borne
in the proportion agreed upon by the municipalities in case such airports
are not leased.

      Sec.  32. K.S.A. 12-1617h is hereby amended to read as follows: 12-
1617h. Cities are hereby authorized to levy annually upon all the taxable
tangible property within the city a tax not to exceed the limitation pre-
scribed by K.S.A. 79-1948, 79-1949, 79-1950, 79-1951, 79-1952 and 79-
1953, and amendments thereto, for the purpose of creating a fund to be
used in securing or retaining industries or manufacturing institutions for
such city or near its environs and to pay a portion of the principal and
interest on bonds issued by such city under the authority of K.S.A. 12-
1774, and amendments thereto. No such levy shall be made until the
governing body is instructed to do so by a majority of all the votes cast
on this proposition at an election held at any city or general election.

      Such election shall be held as provided by law for bond elections. If
any such city shall not make such tax levy in any year, after the third year
following the approval of such tax levy by the voters, then it shall be
necessary to resubmit the issue to the voters before any such tax levy shall
be imposed again. The tax levy herein authorized shall be in addition to
all other levies authorized by law and shall not be subject to any of the
limitations prescribed by article 19 of chapter 79 of the Kansas Statutes
Annotated or acts amendatory thereof and supplemental thereto.

      Nothing in this section shall be construed as restricting the authority
of cities to utilize the general fund or other revenue sources for the pur-
pose of promoting or securing the location or expansion of business and
industry.

      Sec.  33. K.S.A. 19-236 is hereby amended to read as follows: 19-236.
That in addition to the powers already given by law, the board of county
commissioners of each county shall have power at any meeting, in case
of great loss or damage to life or property, to assist in burying the dead,
caring for the wounded, rendering temporary aid to the distressed, pre-
venting disease and pestilence, and cleaning up debris, and to issue no-
fund warrants of the county therefor not exceeding one percent (1%) 1%
of the taxable property of the county, and to levy a tax at the first tax
levying period thereafter to pay such warrants. All such tax levies shall be
in addition to all other levies authorized or limited by law and shall not
be subject to the aggregate tax levy prescribed in article 19 of chapter 79
of the Kansas Statutes Annotated, and amendments thereto. Such war-
rants shall be issued, registered, redeemed and bear interest in the man-
ner and in the form prescribed by K.S.A. 79-2940 and amendments
thereto, except they shall not bear the notation required by said such
section and shall be issued without the approval of the state board of tax
appeals.

      Sec.  34. K.S.A. 19-2803 is hereby amended to read as follows: 19-
2803. The board of county commissioners is authorized to levy a tax not
to exceed the limitation prescribed by K.S.A. 79-1947, and amendments
thereto, for the creation of a fund to be used for the purposes set forth
in K.S.A. 19-2801 and amendments thereto and for the purpose of paying
a portion of the principal and interest on bonds issued under the authority
of K.S.A. 1979 Supp. 12-1774, and amendments thereto, by cities located
in the county.

      Sec.  35. K.S.A. 19-2803e is hereby amended to read as follows: 19-
2803e. Whenever a county lake and recreational grounds shall be estab-
lished under the authority of this act, the board of county commissioners
of such county shall make an annual tax levy in an amount not to exceed
the limitation prescribed by K.S.A. 1979 Supp. 79-1947, for the creation
of a lake and recreational grounds fund to be used for the supervision,
maintenance and improvement of said the lake and recreational grounds
and to pay a portion of the principal and interest on bonds issued under
the authority of K.S.A. 1979 Supp. 12-1774, and amendments thereto, by
cities located in the county. Said tax levy shall be in addition to all the tax
levies authorized or limited by law and shall not be subject to or within
any aggregate tax levy limit prescribed by K.S.A. 1979 Supp. 79-1947, or
acts amendatory thereof or supplemental thereto.

      Sec.  36. K.S.A. 19-3105 is hereby amended to read as follows: 19-
3105. The board of county commissioners is hereby authorized to make
an annual tax levy not to exceed the limitation prescribed by K.S.A. 1979
Supp. 79-1947 on all taxable tangible property of the county for the pur-
pose of providing a fund to be used for the maintenance and care of any
cemetery acquired under the provisions of this act and for the purpose
of obtaining additional land for any such cemetery and to pay a portion
of the principal and interest on bonds issued under the authority of K.S.A.
1979 Supp. 12-1774, and amendments thereto, by cities located in the
county. The tax levy authorized by this section shall be in addition to all
other county tax levies authorized by law and shall not be subject to any
aggregate tax levy limitation prescribed by law.

      Sec.  37. K.S.A. 19-3106 is hereby amended to read as follows: 19-
3106. In any county in this state in which there is located a cemetery or
other burial place in which three or more human bodies have been in-
terred, and which cemetery or burial place has been abandoned and not
cared for, for a period of at least five years, the board of county commis-
sioners of said the county is hereby authorized to provide for the care of
such cemetery or burial place. For the purpose of providing funds for
such care and to pay a portion of the principal and interest on bonds
issued under the authority of K.S.A. 1979 Supp. 12-1774, and amend-
ments thereto, by cities located in the county, the board of county com-
missioners is authorized to make an annual tax levy not to exceed the
limitation prescribed by K.S.A. 1979 Supp. 79-1947, on all taxable tan-
gible property of said the county. Said tax levy shall be in addition to all
other levies authorized or limited by law, and shall not be subject to or
within any aggregate tax levy limitation prescribed by article 19 of chapter
79 of the Kansas Statutes Annotated or acts amendatory thereof or sup-
plementary thereto.

      Sec.  38. K.S.A. 19-3305 is hereby amended to read as follows: 19-
3305. For the purpose of maintaining and operating such flood control
works as shall be constructed by the United States army corps of engi-
neers or other agency of the United States government, when the same
shall have been completed and turned over to the county and to pay a
portion of the principal and interest on bonds issued under the authority
of K.S.A. 1979 Supp. 12-1774, and amendments thereto, by cities located
in the county, the board of county commissioners of such county shall be
empowered to make an annual tax levy upon all of the taxable tangible
property within said the county, in an amount not to exceed the limitation
prescribed by K.S.A. 1979 Supp. 79-1947, and such levy shall be in ad-
dition to all other levies authorized or limited by law. It shall be the duty
of the board of county commissioners and the county engineer to keep
all such flood control works in serviceable condition and to make such
repairs as may, from time to time, may be necessary.

      Sec.  39. K.S.A. 19-4004 is hereby amended to read as follows: 19-
4004. In all counties wherein the board or boards of county commission-
ers in the event of a combination of counties has established a governing
board, the respective board or boards of county commissioners may levy
an annual tax upon all taxable tangible property in such county, which tax
shall not exceed the limitation prescribed by K.S.A. 1979 Supp. 79-1947,
for mental health services and to pay a portion of the principal and interest
on bonds issued under the authority of K.S.A. 1979 Supp. 12-1774, and
amendments thereto, by cities located in the county. The respective board
or boards of county commissioners may also levy an additional annual tax
upon all taxable tangible property in such county, which tax shall not
exceed the limitation prescribed by K.S.A. 1979 Supp. 79-1947, for men-
tal retardation services and to pay a portion of the principal and interest
on bonds issued under the authority of K.S.A. 1979 Supp. 12-1774, and
amendments thereto, by cities located in the county. The additional levy
authorized by this section for mental retardation services shall not be
made until a notice of intent to make such levy has been published in a
newspaper of general circulation in the county or counties involved by
the board or boards of county commissioners proposing to make such
levy, and such notice shall state that if a petition signed by five percent
(5%) 5% of the electors of the county shall file a protest petition within
sixty (60) 60 days of the date of such publication a proposition will be
submitted at an election called for the purpose in the county for approval
of the levy; if such proposition is approved or if no sufficient protest is
made, then the board or boards of county commissioners shall levy such
tax, but if a sufficient protest is made and such proposition is not ap-
proved, the levy will not be made. The proceeds thereof shall be placed
in the hands of the appropriate governing board to be administered as
provided by this act.

      In addition thereto, to provide for the purchase of or the construction
of facilities for the community mental health center, and/or facility for
the mentally retarded, the board or boards of county commissioners may,
upon petition of the governing board, levy an annual tax on all taxable
tangible property in their county, which tax shall not exceed the limitation
prescribed by K.S.A. 1979 Supp. 79-1947, and to issue and sell general
obligation bonds of such county, for the purpose of creating and providing
a special fund to be used in acquiring a site for, and the building, equip-
ping, repairing, remodeling and furnishing of a community mental health
center, and/or facilities for the mentally retarded, or for any one or more
of such purposes. The additional levy authorized by this section shall not
be made until a notice of intent to make such levy has been published in
a newspaper of general circulation in the county or counties involved by
the board or boards of county commissioners proposing to make such
levy, and such notice shall state that if a petition signed by five percent
(5%) 5% of the electors of the county shall file a protest petition within
sixty (60) 60 days of the date of such publication a proposition will be
submitted at an election called for the purpose in the county for approval
of the levy; if such proposition is approved or if no sufficient protest is
made, then the board of county commissioners will make the levy of such
tax, but if a sufficient protest is made and such proposition is not ap-
proved, the levy will not be made. The board of county commissioners
shall proceed in the manner prescribed to be followed in such notice.
Said The tax levy may be made annually until sufficient funds have been
created for said the purpose or purposes, or if the county has issued and
sold general obligation bonds, the proceeds raised by the annual tax levy
shall be used to retire the general obligation bonds and said the tax levy
shall continue until the general obligation bonds have been retired. Such
federal, state or private funds as may be available may be accepted by the
board of county commissioners to be placed in the fund for operation of
or construction of a community mental health center, and/or facility for
the mentally retarded, as the case may be. Title to the building or build-
ings of the community mental health center, and/or facility for the men-
tally retarded, shall vest in the governing board which is responsible for
the maintenance and operation of the facilities if a combination of coun-
ties has established the center, but, if only one county has established the
mental health center or facilities for the mentally retarded, title shall vest
in the board of county commissioners of such county. If the board of
county commissioners has contracted with a nonprofit corporation to pro-
vide mental health services under K.S.A. 19-4007 or any, and amend-
ments thereto, the title to said the building or buildings shall vest in the
board of county commissioners and they may allow the nonprofit cor-
poration to use the buildings without charge.

      Sec.  40. K.S.A. 19-4011 is hereby amended to read as follows: 19-
4011. The county commissioners of a county entering into such an agree-
ment with a community mental health center is hereby authorized to levy
an annual tax in an amount not to exceed the limitation prescribed by
K.S.A. 1979 Supp. 79-1947, upon all of the taxable tangible property in
such county for the purpose of providing revenue to pay for the mental
health services contracted for with the center and to pay a portion of the
principal and interest on bonds issued under the authority of K.S.A. 1979
Supp. 12-1774, and amendments thereto, by cities located in the county.
The county commissioners of a county entering into such an agreement
with a community facility for the mentally retarded is hereby authorized
to levy an annual tax in an amount not to exceed the limitation prescribed
by K.S.A. 1979 Supp. 79-1947, upon all of the taxable tangible property
in such county for the purpose of providing revenue to pay for the mental
retardation services contracted for with the facility and to pay a portion
of the principal and interest on bonds issued under the authority of K.S.A.
1979 Supp. 12-1774, and amendments thereto, by cities located in the
county. Upon receipt of such tax moneys, the county commissioners shall
pay the amount agreed upon to the governing body of the center and/or
community facilities for the mentally retarded and said the governing
body is authorized to receive and expend such moneys to provide com-
munity mental health services.

      Sec.  41. K.S.A. 19-4102 is hereby amended to read as follows: 19-
4102. The board of county commissioners of any such county may, by
resolution, provide for the establishment of a countywide economic de-
velopment program and may provide for the financing thereof from its
general operating fund, or may levy a tax annually upon all the taxable
tangible property of the county in an amount not exceeding the limitation
prescribed by K.S.A. 79-1947, and amendments thereto, for the purpose
of creating a fund therefor and to pay a portion of the principal and
interest on bonds issued under the authority of K.S.A. 12-1774, and
amendments thereto, by cities located in the county. The tax levy herein
authorized shall be in addition to all other levies authorized by law. In
any year in which the board of county commissioners of any county shall
elect to levy any tax under the authority of this section, such board shall
cause a notice of its intention to make such levy to be published in the
official newspaper of the county, and if within 30 days next following the
date of the publication of such notice a petition, signed by electors equal
in number to not less than 5% of the electors of the county, requesting
an election thereon, shall be filed in the office of county election officer,
no such levy shall be made without such proposition having first been
submitted to and having been approved by a majority of the electors of
the county voting at an election called and held thereon. Any election
held under provisions of this section shall be subject to election laws
applicable to elections for approval of bonds issued by such county.

      Sec.  42. K.S.A. 65-212 is hereby amended to read as follows: 65-212.
The board of county commissioners of any such county may, upon the
establishment of such mental health clinic, levy an annual tax in an
amount not exceeding the limitation prescribed by K.S.A. 79-1947, and
amendments thereto, upon all taxable tangible property in such county
for the operation of such mental health clinic, and in addition thereto to
provide for the construction of facilities for such mental health clinic and
to pay a portion of the principal of and interest on bonds issued under
the authority of K.S.A. 12-1774, and amendments thereto, by cities lo-
cated in the county. In addition to the levy authorized for the operation
of such mental health clinic, the board of county commissioners may levy
an annual tax in an amount not exceeding the limitation prescribed by
K.S.A. 79-1947, and amendments thereto, on all taxable tangible property
in their county and may issue and sell general obligation bonds of such
county, for the purpose of creating and providing a special fund to be
used in acquiring a site for, and the building, equipping, repairing, re-
modeling and furnishing of a mental health clinic or for any one or more
of such purposes. Such levy may also be used to pay a portion of the
principal of and interest on bonds issued under the authority of K.S.A.
12-1774, and amendments thereto, by cities located in the county. Such
additional tax levy may be made annually until sufficient funds have been
created for such purpose or purposes, or if the county has issued and sold
general obligation bonds, the proceeds raised by the annual tax levy shall
be used to retire the general obligation bonds and such tax levy shall
continue until the general obligation bonds have been retired. Such fed-
eral, state or private funds as may be available may be accepted by the
board of county commissioners to be placed in the fund for operation of
or construction of a mental health clinic as the case may be. Title to the
building or buildings of the mental health clinic shall vest in the board of
county commissioners and they may allow the mental health clinic which
is subject to the jurisdiction of the joint board of health pursuant to K.S.A.
65-211, and amendments thereto, to use the building without charge. The
proceeds thereof shall be placed in the hands of the treasurer of the joint
board of health, to be administered as provided by K.S.A. 65-206, and
amendments thereto. No levy shall be made under the provisions of this
act until a resolution authorizing the making of such levies is passed by
the board of county commissioners and published in three successive
issues in a newspaper of general circulation within the county, whereupon
such levies may be made unless a petition in opposition to the same,
signed by electors equal in number to not less than 10% of the qualified
electors of such county who voted for the office of secretary of state in
the last preceding election, is filed with the county clerk of such county
within 30 days following the last publication of such resolution.

      In the event such petition is filed it shall be the duty of the board of
county commissioners to submit the question to the voters at an election
called for such purpose or at the next general election. None of the debt
limitations prescribed by law for any such county shall apply to any bonds
issued under the authority conferred by this act. The provisions of this
act shall be supplemental to other existing health laws in the counties
affected thereby, but shall in no way abrogate or amend any such other
existing health laws.

      Sec.  43. K.S.A. 68-166 is hereby amended to read as follows: 68-166.
The board of county commissioners shall pay any expense incurred under
the authority conferred by this act from the general fund, road fund,
bridge fund or road and bridge fund of the county. If such board shall
deem it necessary, in order to provide sufficient revenue for the purpose
of installing, maintaining and operating any such lighting system, it is
hereby authorized to levy an annual tax in an amount not to exceed the
limitation prescribed by K.S.A. 79-1947, on all the taxable tangible prop-
erty in such county for the purpose of providing revenue for such pur-
poses and to pay a portion of the principal and interest on bonds issued
under the authority of K.S.A. 12-1774, and amendments thereto, by cities
located in the county. Such tax levy shall be in addition to all other tax
levies authorized or limited by law and shall not be subject to or within
the aggregate tax levy limitation prescribed by K.S.A. 79-1947 or acts
amendatory thereof. All moneys derived from such tax levy except an
amount to pay a portion of the principal and interest on bonds issued
under the authority of K.S.A. 12-1774, and amendments thereto, by cities
located in the county shall be placed in a special fund by the county
treasurer and shall only be used only for the purposes for which the tax
was levied.

      Sec.  44. K.S.A. 68-582 is hereby amended to read as follows: 68-582.
The board of any county and the governing body of any city may by
resolution propose the designation as a secondary arterial highway any
existing street (or a portion thereof), or a proposed new street within a
city in such county which is or would be a connecting link between county
roads and may enter into an agreement providing for the cooperative
financing of the construction, reconstruction, maintenance and repair of
such proposed secondary arterial highway under such terms as the board
and governing body shall agree upon. Such designation and agreement
shall set out the secondary arterial highway designation and its location,
a general description of the proposed improvement and an estimate of
the total cost thereof to each such city and county exclusive of any grants
from any other public agency, and shall become effective upon publica-
tion by the city in its official newspaper and by the county in its official
newspaper. Such agreement may be part of an agreement between the
secretary of transportation, the county and the city. Any such agreement
shall provide for sharing the costs of engineering and construction or
other improvement of the designated secondary arterial highway, and for
future maintenance by the city or by the county, upon such terms as the
board and governing body may agree. The board and governing body of
any county and city which have entered into such agreements may use
any public funds available to such county or city for the construction,
improvement or maintenance of such secondary arterial highway in like
manner as if it were a normal county road or a city street, may each issue
bonds as provided in K.S.A. 68-584, and amendments thereto and may
each levy an annual tax upon the assessed tangible valuation in such
county or city not to exceed the limitations prescribed by K.S.A. 79-1947,
79-1948, 79-1949, 79-1950, 79-1951, 79-1952 and 79-1953 for such pur-
pose and to pay a portion of the principal and interest on bonds issued
under the authority of K.S.A. 12-1774, and amendments thereto, by cities
located in the county.

      Sec.  45. K.S.A. 73-407 is hereby amended to read as follows: 73-407.
The management and control of a county building shall be vested in a
board of three trustees to be appointed by the county commissioners, and
if a city building, shall be appointed by the mayor of said the city. Such
trustees shall be residents of the county or city wherein the building is
located except that at least two of said the trustees shall have seen service
in the army, navy or marine corps of the United States in time of war.
One trustee shall be appointed for one year, one trustee for two years
and one trustee for three years, and thereafter each trustee shall be ap-
pointed for three years. Said trustee Trustees shall serve without com-
pensation and shall make annual reports and recommendations to the
proper county and the city officials.

      The expense of maintenance of said the memorial shall be paid out of
the general fund of the county or city, or in case the same shall not be
sufficient, shall be paid out of a special fund which shall be created, for
which the counties. Counties or cities are authorized to make a levy upon
all taxable tangible property in the county or city in an amount not ex-
ceeding the limitation prescribed by K.S.A. 79-1947, 79-1948, 79-1949,
79-1950, 79-1951, 79-1952 and 79-1953 for such purpose and to pay a
portion of the principal and interest on bonds issued under the authority
of K.S.A. 12-1774, and amendments thereto, by cities located in the
county; and in counties having a population of more than seventeen thou-
sand (17,000) and less than twenty-two thousand (22,000), which contain
a first-class city, tax levy shall be in addition to all other levies authorized
or limited by law and shall not be subject to nor within any aggregate levy
prescribed by article 19 of chapter 79 of the Kansas Statutes Annotated,
and any acts amendatory thereof. The board of trustees shall have full
authority to lease all or any part of said the building for hire to any person
or persons desiring to lease the same for a term not to exceed one year
at a time and fix the rate and terms upon which the charge shall be made
and collected therefor. The board of trustees of any such memorial in any
city of the second class located in a county with a population of not less
than twelve thousand (12,000) 12,000 and not more than fifteen thousand
(15,000) 15,000 and having an assessed tangible valuation of not less than
thirty-two million dollars ($32,000,000) $32,000,000 and not more than
thirty-five million dollars ($35,000,000) $35,000,000 is hereby authorized
to lease all or any part of said the memorial to the Kansas national guard
for a term of not to exceed ten (10) 10 years and to fix the rate and terms
upon which the charge shall be made and collected therefor. The board
of trustees of any such memorial in any city having a commission form of
government, and a population of more than one hundred fifty thousand
(150,000) 150,000, shall have full authority to lease any suitable portion
or portions of said the building to any concessionaire desiring to lease the
same, for a term of not to exceed ten (10) 10 years, and to fix the rate
and terms upon which the charge shall be made and collected therefor.

      Sec.  46. K.S.A. 76-326a is hereby amended to read as follows: 76-
326a. The boards of county commissioners of the several counties of this
state are hereby authorized to contribute in the aid of work authorized
by section 1 of chapter 48 of the 1919 Kansas Session Laws (now included
by reference in K.S.A. 76-326) K.S.A. 76-326, and amendments thereto,
under the directions direction of the state geologist, such amounts from
the general revenue fund of their counties as they may determine or from
the proceeds of a special tax levy in an amount not to exceed the limitation
prescribed by K.S.A. 79-1947, which said. Such boards are hereby au-
thorized to make a tax levy for said such purpose and to pay a portion of
the principal and interest on bonds issued under the authority of K.S.A.
12-1774, and amendments thereto, by cities located in the county in ad-
dition to all other tax levies provided by law and outside any aggregate
levy limit prescribed by article 19 of chapter 79 of the Kansas Statutes
Annotated. No such contribution shall be made by any county to said
work in any one year to an amount that will exceed one-tenth of one mill
upon the dollar of the assessed tangible valuation of such counties.

      Sec.  47. K.S.A. 82a-308 is hereby amended to read as follows: 82a-
308. Any expenses incurred in removing such obstructions as are men-
tioned in K.S.A. 82a-307 and amendments thereto, or damage to private
property, shall be paid out of the general fund of the respective counties
but if it shall appear that the obstructions were caused by owners of
adjoining property, the expenses shall be charged to the adjoining prop-
erty as a special tax to be levied and collected as other special taxes and
assessments. In the event that the general fund of any county shall not
be sufficient to bear the cost of the operations mentioned in this section,
including the maintenance of such streams or watercourses, then the
board of county commissioners of such county may levy an annual tax not
to exceed the limitation prescribed by K.S.A. 79-1947, upon all property
in said the county for the purpose of creating a fund known as ``stream
maintenance fund'' from which fund the costs and expenses of the op-
eration herein provided for shall be paid and for the purpose of paying a
portion of the principal and interest on bonds issued under the authority
of K.S.A. 12-1774, and amendments thereto, by cities located in the
county.

      Sec.  48. K.S.A. 12-1403 is hereby amended to read as follows: 12-
1403. For the purpose of providing a fund to obtain land for cemetery
purposes, the township trustees shall have authority to levy a tax not
exceeding the limitation prescribed by K.S.A. 79-1962, in any one year
upon all of the taxable tangible property in such township, to be levied
and collected as other taxes for township purposes are levied and col-
lected. The funds derived from such tax shall not be applied to any pur-
pose other than the object of the levy.

      Sec.  49. K.S.A. 12-1405 is hereby amended to read as follows: 12-
1405. All cities owning and controlling municipal cemeteries, are hereby
authorized to make an annual levy of a tax upon all taxable tangible prop-
erty in the city and townships, owning and controlling municipal or town-
ship cemeteries are hereby authorized to make an annual levy of a tax
upon all taxable tangible property in the city or township to be expended
in making permanent improvements in such cemeteries and upkeep of
the same and, in the case of cities, to pay a portion of the principal and
interest on bonds issued by such city under the authority of K.S.A. 12-
1774, and amendments thereto. The tax levies herein authorized for
townships shall not exceed the limitation prescribed by K.S.A. 79-1962
and shall be in addition to all other tax levies authorized or limited by law
and shall not be subject to or within any aggregate tax levy limit prescribed
by K.S.A. 79-1962 or any amendments thereto.

      Sec.  50. K.S.A. 19-807d is hereby amended to read as follows: 19-
807d. The township board in any township which is located in a county
in which is located a city having a population in excess of one hundred
thousand (100,000) 100,000 is hereby authorized to contribute funds to
the county for the purpose of providing sheriff's deputies in addition to
those otherwise provided, for the purpose of providing additional police
protection within such township and for the purpose of providing and
maintaining motorized equipment and radio equipment therefor. The
township board shall have power to determine the amount of such con-
tribution and the conditions under which such contributions shall be
made.

      When the township board informs the sheriff that such board intends
to make a contribution pursuant to this section, the sheriff and the town-
ship board shall enter into an agreement within twenty (20) 20 days there-
after, which agreement shall specify the additional police protection to
be provided and the funds to be contributed. Any and all such agreements
relating to contribution of funds shall be by and between the township
board and the sheriff with the approval of the board of county commis-
sioners. For the purpose of providing funds to make such contributions,
the township board is hereby authorized and empowered to levy annually
a an annual tax not to exceed the limitation prescribed by K.S.A. 79-1962,
upon all taxable tangible property in such township and such tax shall be
in addition to all other levies authorized or limited by law and shall not
be subject to, or within the aggregate tax levy limits prescribed by K.S.A.
79-1962 and acts amendatory thereto.

      Sec.  51. K.S.A. 68-518c is hereby amended to read as follows: 68-
518c. (a) The township board of any township located in a county not
operating under the county road unit system, is hereby authorized to
make an annual tax levy, in addition to all other tax levies now or otherwise
authorized by law, of not to exceed five mills for road purposes in an
amount which will be sufficient, when added to other revenues available
for such purposes, to finance the adopted budget of expenditures for road
purposes. Except as otherwise hereinafter provided, the annual tax levy
made under the authority conferred by this section shall not exceed the
limitation prescribed by K.S.A. 79-1962.

      (b) The township board of any such township desiring to levy an an-
nual tax for road purposes in an amount exceeding the limitation pre-
scribed by K.S.A. 79-1962, but in an amount not exceeding eight mills,
increase the authorized limit existing on the effective date of this act may
adopt a resolution authorizing such levy and shall publish the same once
each week for three consecutive weeks in a newspaper of general circu-
lation in the township. If within thirty 30 days after the date of the last
publication of such resolution a petition, signed by electors of the town-
ship equal in number to not less than ten percent 10% of the qualified
electors of the township who voted for the office of governor at the last
general election for such office, is filed in the office of the county election
officer no such increased levy shall be made without having been ap-
proved by a majority of the electors of the township voting at an election
called and held thereon. All elections held under the provisions of this
section shall be called and held in the manner prescribed by K.S.A. 10-
120, and amendments thereto.

      Such additional tax levy (c) Taxes imposed under this section shall be
levied on all the taxable tangible property in the township outside of
incorporated cities, and such tax levy shall not be subject to or within any
aggregate tax levy limit prescribed by K.S.A. 79-1962, or acts amendatory
thereof or supplemental thereto, and the moneys derived therefrom shall
be used for the construction, reconstruction, improvement, repair and
maintenance of township roads and culverts.

      Sec.  52. K.S.A. 80-115 is hereby amended to read as follows: 80-115.
The township board of any township which has a township hall, or which
uses part of a township water department building or township fire de-
partment building as its township hall, is hereby authorized and empow-
ered to levy an annual tax in an amount not to exceed the limitation
prescribed by K.S.A. 79-1962, and amendments thereto, on the taxable
tangible property in such township, to provide a special fund for the
purpose of acquiring, repairing, equipping and maintaining such town-
ship hall, or to be used in purchasing and moving, or constructing a build-
ing and acquiring a site for, and the furnishing and equipping of any such
building, or a part of any site or building in conjunction with a site or
building for other township uses. No levy shall exceed a rate, which mul-
tiplied by the total assessed tangible valuation of the township will result
in producing more than the amount prescribed by K.S.A. 79-1962, and
amendments thereto, in any one year. Any unexpended balance remain-
ing in such special fund at the end of any fiscal year of the township may
be retained in such special fund and be expended in future years for any
of the purposes herein enumerated.

      Sec.  53. K.S.A. 80-119 is hereby amended to read as follows: 80-119.
Whenever no-fund warrants are issued under the authority of this act the
township board shall make a tax levy or levies sufficient to pay such war-
rants and the interest thereon. Such warrants may mature serially at such
yearly dates as to be payable by not more than five (5) tax levies. All such
tax levies shall be in addition to all other levies authorized or limited by
law and shall not be subject to the aggregate tax levy limitation prescribed
in article 19 of chapter 79 of the Kansas Statutes Annotated and amend-
ments thereto. Such warrants shall be issued, registered, redeemed and
bear interest in the manner and be in the form prescribed by K.S.A. 79-
2940, or any and amendments thereto, except they shall not bear the
notation required by said such section and may be issued without the
approval of the state board of tax appeals.

      Sec.  54. K.S.A. 80-808 is hereby amended to read as follows: 80-808.
The township board of any township which maintains and operates a
township library which is known as a Carnegie library is hereby authorized
and empowered to issue no-fund warrants in an amount not exceeding
four thousand dollars ($4,000) $4,000 for the purpose of providing funds
for the repair and reconstruction of the Carnegie library building of such
township. Whenever any township board shall issue warrants under the
provisions of this section said, such board shall make a tax levy at the first
tax levying period after such warrants are issued sufficient to pay the same
and the interest thereon: Provided, That. If the township board shall
deem deems it advisable not to make all of such levy in any one year, then
said such township board may make an annual tax levy at not more than
the next three (3) tax levying periods occurring after the issuance of such
warrants, the total of which levies shall be sufficient to pay said such
warrants and the interest thereon. The warrants shall be issued, regis-
tered, redeemed and bear interest in the manner and be in the form
prescribed by K.S.A. 79-2940, and amendments thereto, except that such
warrants shall not bear the notation required by said section K.S.A. 79-
2940, and amendments thereto, and may be issued without the approval
of the state board of tax appeals, and any surplus existing after the issuance
of said such warrants shall be handled in the manner prescribed by said
section K.S.A. 79-2940, and amendments thereto. Such township board
is hereby authorized and empowered to expend all moneys raised by no-
fund warrants issued under the provisions of this section although such
expenditures were not included in the budget for the year in which such
warrants were issued. The tax levy herein authorized shall be in addition
to all other tax levies authorized or limited by law and shall not be subject
to or within the aggregate tax levy limit prescribed by K.S.A. 79-1962.

      Sec.  55. K.S.A. 80-903 is hereby amended to read as follows: 80-903.
Any township issuing bonds under this act shall annually levy a tax suffi-
cient to pay the interest thereon, and after five (5) years an amount suf-
ficient to create a sinking fund to pay the principal at maturity; and any
township purchasing or acquiring or acting as trustee for grounds for a
park or parks, or cemetery or cemeteries is empowered and authorized
to annually levy and collect a tax, not exceeding the limitation prescribed
by K.S.A. 79-1962, in any one (1) year to provide a fund for the purpose
of meeting the annual expense of such grounds, and such other improve-
ments as the township board may deem deems necessary.

      Sec.  56. K.S.A. 80-932 is hereby amended to read as follows: 80-932.
The township board of any township is hereby authorized and empowered
to levy an annual tax in an amount not to exceed the limitation prescribed
by K.S.A. 79-1962, on all taxable tangible property in such townships,
including such property of cities of the third class, for the purpose of
providing funds to be used for the care and maintenance of cemeteries
in such townships for which no provision is made by law for the levying
of taxes for such care and maintenance, or said township board may ex-
pend a sum not to exceed fifty dollars ($50) per year from the general
fund of the township in lieu of said levy. The tax levy herein authorized
shall be in addition to all other tax levies authorized by law and shall not
be subject to the aggregate tax levy limit prescribed by K.S.A. 79-1962 or
any amendments thereto.

      Sec.  57. K.S.A. 80-1417 is hereby amended to read as follows: 80-
1417. The governing body of any city of the third class having a population
of not to exceed three hundred (300) 300, located within a township
having a township hall and in a county with a population of not less than
forty-five hundred (4,500) 4,500 nor more than fifty-five hundred (5,500)
5,500 is hereby authorized and empowered to enter into a contract with
the township board of said the township for the joint ownership, main-
tenance, repair, remodeling, and equipping of said the township hall: Pro-
vided, That, but before such an agreement may be entered into, a petition
signed by at least fifty percent (50%) 50% of the residents of said such
city as determined by the total vote cast for secretary of state at the last
preceding election, shall be submitted to the governing body of said such
city requesting that such a contract be entered into. When the governing
body determines that such petition is proper, they the governing body
shall then adopt a resolution authorizing the city to enter into such a
contract.

      The township board, upon receipt of such resolution, shall meet and
if they determine determined that a contract should be entered into, the
board shall adopt a resolution authorizing such contract. Thereafter, the
governing body of the city and the township board are authorized to enter
into a contract, which contract shall provide that the township hall shall
be under the joint ownership of the city and township and shall be main-
tained, remodeled, equipped and kept in repair jointly by said such town-
ship and city. Said The contract shall be approved by a majority of the
governing body of the city and of the township board.

      After said the contract has been entered into, the township board is
authorized and empowered to levy an annual tax for the years 1951 and
1952 of not to exceed five (5) mills, and thereafter, an annual tax of not
to exceed two (2) mills on the dollar on all of the taxable tangible property
of said such cities of the third class for the purpose of providing funds to
be used for the maintenance, equipping, remodeling and repair of said
the township hall. Said tax levies shall be in addition to all other tax levies
authorized or limited by law and shall not be subject to any aggregate tax
levy limits prescribed by article 19 of chapter 79 of the General Statutes
of 1949.

      Sec.  58. K.S.A. 80-1503 is hereby amended to read as follows: 80-
1503. (a) Townships are hereby authorized and empowered to levy a
special tax not to exceed one mill on all tangible property in the township
not including a corporate city in a sufficient amount to join with a mu-
nicipality or township for the purposes as provided in K.S.A. 80-1501, and
amendments thereto, or to pay the compensation agreed upon by contract
under authority of K.S.A. 80-1502, and amendments thereto.

      (b) The township board, by adopting the appropriate resolution, may
levy a tax of more than one mill for the purposes authorized by subsection
(a). Any resolution increasing the amount of the tax currently levied by
the township board and any subsequent increase thereof shall be pub-
lished once each week for two consecutive weeks in a paper of general
circulation within the township. The township board may make such levy
unless, within 30 days following final publication of the resolution, a pro-
test petition signed by 10% of the qualified voters of the township is filed
with the township clerk. If a sufficient petition is filed, such additional
tax shall not be levied until approved by a majority of the voters voting
at an election thereon. Such election shall be called and held in the man-
ner provided by the general bond law. If a levy is imposed pursuant to
this subsection, no other levies for the purposes authorized by subsection
(a) shall be made on such property.

      (c) Counties are hereby authorized and empowered to levy an annual
tax of not to exceed 1/2 mill on the dollar on all the taxable tangible prop-
erty in such county for the purposes as provided in K.S.A. 80-1501, and
amendments thereto, or to pay the compensation agreed upon by contract
under authority of K.S.A. 80-1502, and amendments thereto, and to pay
a portion of the principal and interest on bonds issued under the authority
of K.S.A. 12-1774, and amendments thereto, by cities located in the
county.

      Such tax levy shall be in addition to all other tax levies authorized or
limited by law and shall not be subject to the aggregate tax levy limit
prescribed by K.S.A. 79-1947, and amendments thereto.

      Sec.  59. K.S.A. 80-1509 is hereby amended to read as follows: 80-
1509. The township board shall annually provide for the levying of a tax
of not to exceed .50 mills levy a tax upon the tangible taxable property
in said such benefit district and within the township sufficient to pay the
compensation agreed upon in the contract with the municipality. Such
tax levy shall be in addition to all other tax levies authorized or limited by
law and shall not be subject to any of the limitations prescribed by K.S.A.
79-1962 or acts amendatory thereof or supplemental thereto.

      Sec.  60. K.S.A. 80-1537 is hereby amended to read as follows: 80-
1537. Annual tax levies may be made by such township in an amount not
to exceed the limitation prescribed by K.S.A. 79-1962, on all the taxable
tangible property of the township, including such property of the city
which is a party to such agreement. Such levy shall be in addition to all
other levies authorized by law and shall be outside the aggregate levy
limitations provided in K.S.A. 79-1962, and acts amendatory thereof or
supplemental thereto.

      Sec.  61. K.S.A. 80-1806 is hereby amended to read as follows: 80-
1806. Any township or townships of the urban class in the state of Kansas
is hereby authorized and empowered to make a tax levy in such amount
as may be necessary in order to provide the necessary funds for the pay-
ment of the township share of registration and election expenses. Such
tax levy shall be in addition to all other tax levies authorized or limited by
law and the provisions of K.S.A. 79-1962 and 79-1962a, or any amend-
ments thereto, shall not be applicable to such tax levy. All money raised
by such tax levy shall be credited by the county treasurer to a special fund
and the county shall be reimbursed from such fund for the registration
and election expenses which it has paid on behalf of such township, but
if there be an insufficient amount in such fund to pay the cost chargeable
to such township, the county shall be reimbursed for the remainder from
the township general fund. If the township does not make the levy au-
thorized by this act, then the county shall be reimbursed for registration
and election expenses paid on behalf of such township from the township
general fund. No money raised under the tax levy authorized by this act
shall be withdrawn from the county treasury by the township and if there
be a balance existing therein after the payment of registration and election
expenses for any year, the same shall be held in the county treasury to
the credit of such township and used to pay registration and election
expenses incurred in subsequent years.

      Sec.  62. K.S.A. 80-1903 is hereby amended to read as follows: 80-
1903. The township board of any such township shall have power to levy
a tax not exceeding the limitation prescribed by K.S.A. 79-1962, and
amendments thereto, upon all taxable tangible property within such town-
ship, for the purpose of paying the expense of providing rescue service
and equipping, operating and maintaining such fire department or con-
tracting with another fire department for the furnishing of rescue service
or fire protection. Such tax levy shall be in addition to all other tax levies
authorized or limited by law. In any county having a population of more
than 150,000 and less than 250,000 the township levy herein authorized
shall not exceed the limitation prescribed therefor by K.S.A. 79-1962, and
amendments thereto, on all taxable tangible property of the township, for
the purposes specified in this section. The tax levy shall be in addition to
all other tax levies authorized or limited by law.

      Sec.  63. K.S.A. 80-1909 is hereby amended to read as follows: 80-
1909. In any township where a township fire department has been created
under the provisions of this act, the township board shall have authority,
subject to an election as hereinafter provided, to issue bonds for the
purpose of purchasing land, constructing or purchasing buildings to be
used as fire stations, constructing or purchasing fire equipment and sup-
plies and for the payment of other necessary expenses incident thereto.
Before any such bonds are issued, the question of their issuance shall be
submitted to the voters of such township at a general or special election
to be called by the township board by resolution and to be held under
the provisions of article 1, chapter 10 of the Kansas Statutes Annotated,
and the affirmative vote of a majority of the votes cast at such election
shall be sufficient to authorize the issuance of such bonds.

      The township board may also submit, at such election, the question
whether the tax levy provided in K.S.A. 80-1903 hereof, and amendments
thereto, shall be in excess of the aggregate tax limitations provided for
townships by K.S.A. 79-1962 and any other limitations provided by law
two mills, or four mills for townships in counties having a population of
more than 150,000 and less than 250,000, and if a majority of the votes
cast at such election shall be in the affirmative, the township board shall
thereafter be authorized to make such levy without regard to such limi-
tations. The expense of any special election called under the provisions
hereof may be paid out of the proceeds of the bond issue, if such bonds
shall be authorized at such election, otherwise from the general fund of
the township: Provided, however, That. Only a single election board shall
serve in any precinct at any such special election.

      Sec.  64. K.S.A. 80-1916 is hereby amended to read as follows: 80-
1916. Any such township may create a township fire department to fur-
nish fire protection within such township and such fire department shall
be operated under the direction of the township board and said such
board shall have power to levy an annual tax not to exceed the limitation
prescribed by K.S.A. 79-1962, on all the taxable tangible property in such
township, for the purpose of paying the expenses of equipping, operating
and maintaining such fire department. Said tax levy shall be in addition
to all other tax levies authorized or limited by law and shall not be subject
to the aggregate tax levy limit prescribed by K.S.A. 79-1962, or acts amen-
datory thereof.

      Sec.  65. K.S.A. 80-1920 is hereby amended to read as follows: 80-
1920. Subject to the provisions of K.S.A. 1986 Supp. 19-270, and amend-
ments thereto, and upon the presentation of such petition, the township
board of any such township shall create a township fire department. Such
township board is hereby authorized and empowered to purchase fire-
fighting equipment for the use of the fire department and to provide
buildings for the housing and storage of the same. For the purpose of
raising funds to pay the cost of such equipment and housing facilities, the
township board is hereby empowered to issue no-fund warrants in an
amount not exceeding $12,000. After the issuance of such no-fund war-
rants, the township board shall make a tax levy at the first tax-levying
period after such warrants are issued, sufficient to pay such warrants and
the interest thereon. In lieu of making only one tax levy, such board, if it
deems it advisable, may make a tax levy each year for not to exceed five
years in approximately equal installments for the purpose of paying the
warrants and the interest thereon.

      All such tax levies shall be in addition to all other levies authorized or
limited by law and shall not be subject to the aggregate tax levy limitation
prescribed by K.S.A. 79-1962, and amendments thereto. Such warrants
shall be issued, registered, redeemed and bear interest in the manner and
be in the form prescribed by K.S.A. 79-2940, and amendments thereto,
except they shall not bear the notation required therein and may be issued
without the approval of the board of tax appeals. Any surplus existing
after the redemption of the warrants shall be handled in the manner
prescribed by K.S.A. 79-2940, and amendments thereto. None of the
provisions of the cash-basis and budget laws of this state shall apply to
any expenditures made, the payment of which has been provided for by
the issuance of such no-fund warrants.

      Sec.  66. K.S.A. 80-1921 is hereby amended to read as follows: 80-
1921. The township board of any such township shall have full direction
and control over the operation of such township fire department and shall
provide for the organization of volunteer members of such department,
to be compensated at a specified rate when attending fires, and may
provide special clothing and equipment for such volunteers, and may
insure such volunteers against accidental death and injury in the perform-
ance of their duties, and may do all other things necessary or desirable
to maintain and operate such department so as to furnish fire protection
to the inhabitants of such township. Such township board may levy an
annual tax of not to exceed the limitation prescribed by K.S.A. 79-1962,
and amendments thereto, on all the taxable tangible property in such
township for the purpose of paying the expenses of equipping, operating
and maintaining such fire department. Any tax levy authorized by this
section shall be in addition to all other tax levies authorized or limited by
law and shall not be subject to the aggregate tax levy limit prescribed by
K.S.A. 79-1962, and amendments thereto, and shall be in addition to the
tax levy made to pay for no-fund warrants issued pursuant to K.S.A. 80-
1920, and amendments thereto. Except as otherwise specifically provided
in this act, the provisions of K.S.A. 80-1906 and 80-1907, and amend-
ments thereto, shall apply to townships adopting the provisions of this
act.

      In addition to the tax levy herein authorized, the township board of
Kickapoo, Tonganoxie, Easton, Fairmount, Sherman and Delaware town-
ships located in Leavenworth county may levy an annual tax of not to
exceed two mills on all the taxable tangible property in such township for
the purpose of purchasing additional equipment for such fire department.
If a petition in opposition to the tax levy authorized herein, signed by not
less than 5% of the qualified electors of such township is filed with the
township board of such township, within 40 days after the effective date
of this act, the tax levy shall not be made unless first approved as a ques-
tion submitted at the next general election or at a special election called
for the purpose of submitting the question. If such a petition is filed, the
township board may cause to be placed on the ballot at the next general
election the question of whether such tax shall be levied. If a majority of
the votes cast and counted at such election are in favor of the resolution,
such governing body may levy the tax authorized herein. Upon this act
taking effect it shall be published once each week for two consecutive
weeks in a newspaper having general circulation in the township.

      Sec.  67. K.S.A. 80-1924 is hereby amended to read as follows: 80-
1924. The governing body of the benefit district shall annually provide
for the levying of a tax of not to exceed one-half (1/2) mill upon the taxable
tangible property in such benefit district and within the township suffi-
cient to pay the compensation agreed upon in the contract with the town-
ship maintaining the fire department. Such tax levy shall be in addition
to all other tax levies authorized or limited by law and shall not be subject
to the aggregate tax levy limitation prescribed by K.S.A. 79-1962 or acts
amendatory thereof or supplemental thereto.

      Sec.  68. K.S.A. 80-2006 is hereby amended to read as follows: 80-
2006. (a) Whenever authorized by an election as herein provided, the
costs and expenses of constructing such main, intercepting and outfall
sewers and appurtenances, with or without sewage-disposal plant, as
above provided, together with the cost of acquiring land, engineering,
appraisers, legal and other incidental expense, excepting only such part
of the cost as may be borne by grant from the federal government, shall
be assessed against the lots and pieces of ground contained within the
sewage district, and shall be levied and collected as one tax, in addition
to the other taxes and assessments, and shall be certified by the governing
body of such sewage district to the county clerk, and be placed by him
or her such clerk upon the tax roll for collection, subject to the same
penalties, entitled to the same rebates, and collected in the same manner
as other taxes: Provided, That. The governing body may, in its discretion,
provide for the payment of the cost thereof by installments instead of
levying the entire tax or special assessment for such cost at one time; and
for such installments, they may issue bonds of the sewage district, which
bonds may mature serially or otherwise during a period of not more than
twenty-five 25 years from the date of issuance, and, except as herein
provided, shall be subject to all of the provisions of article 1, chapter 10,
of the Kansas Statutes Annotated. Any bonds issued for such purposes
shall be in addition to and may exceed the limits of bonds for any other
purposes as provided by law.

      (b) That If the county planning board and the board of county com-
missioners of any county in which a township sewage district has been
created pursuant to the act of which this section is amendatory, each shall
declare by resolution that a main, intercepting, or outfall sewer system
or systems of such district, the plans and specifications of which have
been finally approved, as provided in K.S.A. 80-2004, and amendments
thereto, to be of public utility and necessary for the growth and needs of
said county and necessary for the protection of the public health, the
bonds issued under the authority of subsection (a) of this section shall be,
in addition to being obligations of the township sewage district, general
obligations of the county. In case of default in the payment of such bonds
or the interest thereon by the sewage district, the board of county com-
missioners of the county in which such sewage district is located shall levy
a tax on the tangible property in such county sufficient to pay such bonds
and interest, which tax levy shall be in addition to all other tax levies
authorized or limited by law and shall not be subject to or within the
aggregate tax levy limit prescribed by K.S.A. 79-1947 or acts amendatory
thereof or supplemental thereto.

      No statute limiting the amount of bonded indebtedness of any county
shall apply to any bonds issued under the authority of this section and
such bonds shall not be considered in applying any statute limiting
bonded indebtedness.

      Sec.  69. K.S.A. 80-2021 is hereby amended to read as follows: 80-
2021. The governing body of such sewage district shall have authority to
and shall levy an annual tax which shall not exceed ten mills upon the
dollar of assessed valuation of all real property upon taxable tangible prop-
erty within such sewage district, for the purpose of paying the expense
of operation and maintenance of the sewage system within such district;
and may use the proceeds of such tax for the maintenance of all sewers
in such district, including lateral sewers, however constructed, for the
operation of sewage disposal plant, and for the payment to any adjoining
city or township, with which such sewage district may have contracted
for the disposal of sewage, of the contract price therefor, and for all other
expense incident to the operation and maintenance of such sewage sys-
tem.

      Whenever a sewage district has made tax levies as authorized by this
act and has accumulated a fund for the operation and maintenance of the
sewage system and has contracted with an adjacent city or township for
the disposal of sewage and other expenses incidental to the operation and
maintenance of such sewage system and when such district has accu-
mulated unexpended funds which are no longer necessary for the oper-
ation and maintenance of such system, the governing board of the sewage
district may transfer the whole or any portion of such accumulated and
unexpended funds to the township road fund or the fire department fund
or to the general fund of the township in which the sewage district was
established. All levies of taxes authorized in this act shall be in addition
to all other levies authorized or limited by law, and the provisions of
K.S.A. 79-1962, and any other limitations provided for township tax levies,
shall not be applicable thereto.

      Sec.  70. K.S.A. 80-2201 is hereby amended to read as follows: 80-
2201. The township board of any township, having a population of more
than seven thousand five hundred (7,500) 7,500 and located in a county
adjoining two cities either within or without the state each of which has
a population in excess of one hundred twenty thousand (120,000) 120,000,
if by resolution they deem the township board deems it necessary to pro-
tect the public health and welfare of the inhabitants of such township,
may acquire land by lease, purchase, or under the provisions of K.S.A.
26-501 to 26-516, inclusive, and amendments thereto, by condemnation,
within or without such township, to be used for the disposal of trash and
garbage collected from the inhabitants of such township. For the purpose
of acquiring such land and maintenance thereof, a tax levy in an amount
not to exceed the limitation prescribed by K.S.A. 79-1962, on all taxable
tangible property may be made for the first year, and thereafter a levy
not to exceed the limitation prescribed therefor by K.S.A. 79-1962, on all
taxable tangible property may be made annually, which said levies and
each of them shall be in addition to and outside of any other limit or
aggregate limit fixed by law for such township. The funds derived from
such levies shall be placed in a fund known as the ``garbage and trash
fund'' and be used only for the purpose of this act the garbage and trash
fund.

      Sec.  71. K.S.A. 80-2204 is hereby amended to read as follows: 80-
2204. Whenever the township board of any township located in a county
having a population of more than fifty-five thousand (55,000) 55,000 and
less than one hundred thousand (100,000) 100,000 finds and determines
by resolution that it is necessary to acquire a site or sites for the disposal
of garbage, rubbish and trash within or without the township, it the town-
ship board may acquire such site or sites by gift, purchase or condem-
nation and may construct necessary facilities thereon and purchase nec-
essary equipment for the disposal of such garbage, rubbish and trash. In
the event the township board of any such township finds that it is nec-
essary to acquire such site or sites by condemnation the governing body
of the county shall proceed under the provisions of chapter 26 of the
Kansas Statutes Annotated, and all acts amendatory thereof and supple-
mental thereto, or in substitution thereof. Whenever any such township
shall so condemn such a site or sites, such township shall acquire a fee
simple title thereto.

      In order to pay for such site or sites and the construction of all necessary
facilities and equipment to be used in the disposal of garbage, rubbish
and trash, the township board of such township is authorized to issue
general obligation bonds of the township in the manner provided by the
general bond law. Whenever such a site has been acquired, the township
board may pay the cost of the operation and maintenance of the same
from the general fund of the township or it may levy a special tax therefor
at a rate not to exceed the limitation prescribed by K.S.A. 79-1962, on all
taxable tangible property of the township. Any two (2) or more of such
townships may join in the acquisition of a site or sites for the disposal of
garbage, rubbish and trash and the operation and maintenance of said
such sites as heretofore provided in this section; and the township boards
of such townships are hereby authorized and empowered to enter into
agreements for such purposes.

      New Sec.  72. In 1999, and in each year thereafter, all existing stat-
utory fund mill levy rate and aggregate levy rate limitations on taxing
subdivisions are hereby suspended.

      Sec.  73. K.S.A. 1998 Supp. 79-201a is hereby amended to read as
follows: 79-201a. The following described property, to the extent herein
specified, shall be exempt from all property or ad valorem taxes levied
under the laws of the state of Kansas:

      First. All property belonging exclusively to the United States, except
property which congress has expressly declared to be subject to state and
local taxation.

      Second. All property used exclusively by the state or any municipality
or political subdivision of the state. All property owned, being acquired
pursuant to a lease-purchase agreement or operated by the state or any
municipality or political subdivision of the state, including property which
is vacant or lying dormant, which is used or is to be used for any govern-
mental or proprietary function and for which bonds may be issued or
taxes levied to finance the same, shall be considered to be used exclusively
by the state, municipality or political subdivision for the purposes of this
section. The lease by a municipality or political subdivision of the state
of any real property owned or being acquired pursuant to a lease-purchase
agreement for the purpose of providing office space necessary for the
performance of medical services by a person licensed to practice medicine
and surgery or osteopathic medicine by the board of healing arts pursuant
to K.S.A. 65-2801 et seq., and amendments thereto, dentistry services by
a person licensed by the Kansas dental board pursuant to K.S.A. 65-1401
et seq., and amendments thereto, optometry services by a person licensed
by the board of examiners in optometry pursuant to K.S.A. 65-1501 et
seq., and amendments thereto, or K.S.A. 74-1501 et seq., and amend-
ments thereto, podiatry services by a person licensed by the board of
healing arts pursuant to K.S.A. 65-2001 et seq., and amendments thereto,
or the practice of psychology by a person licensed by the behavioral sci-
ences regulatory board pursuant to K.S.A. 74-5301 et seq., and amend-
ments thereto, shall be construed to be a governmental function, and
such property actually and regularly used for such purpose shall be
deemed to be used exclusively for the purposes of this paragraph. The
lease by a municipality or political subdivision of the state of any real
property, or portion thereof, owned or being acquired pursuant to a lease-
purchase agreement to any entity for the exclusive use by it for an exempt
purpose, including the purpose of displaying or exhibiting personal prop-
erty by a museum or historical society, if no portion of the lease payments
include compensation for return on the investment in such leased prop-
erty shall be deemed to be used exclusively for the purposes of this par-
agraph. All property leased, other than property being acquired pursuant
to a lease-purchase agreement, to the state or any municipality or political
subdivision of the state by any private entity shall not be considered to
be used exclusively by the state or any municipality or political subdivision
of the state for the purposes of this section except that the provisions of
this sentence shall not apply to any such property subject to lease on the
effective date of this act until the term of such lease expires but property
taxes levied upon any such property prior to tax year 1989, shall not be
abated or refunded. Any property constructed or purchased with the pro-
ceeds of industrial revenue bonds issued prior to July 1, 1963, as author-
ized by K.S.A. 12-1740 to 12-1749, or purchased with proceeds of im-
provement district bonds issued prior to July 1, 1963, as authorized by
K.S.A. 19-2776, or with proceeds of bonds issued prior to July 1, 1963,
as authorized by K.S.A. 19-3815a and 19-3815b, or any property im-
proved, purchased, constructed, reconstructed or repaired with the pro-
ceeds of revenue bonds issued prior to July 1, 1963, as authorized by
K.S.A. 13-1238 to 13-1245, inclusive, or any property improved, reim-
proved, reconstructed or repaired with the proceeds of revenue bonds
issued after July 1, 1963, under the authority of K.S.A. 13-1238 to 13-
1245, inclusive, which had previously been improved, reconstructed or
repaired with the proceeds of revenue bonds issued under such act on or
before July 1, 1963, shall be exempt from taxation for so long as any of
the revenue bonds issued to finance such construction, reconstruction,
improvement, repair or purchase shall be outstanding and unpaid. Any
property constructed or purchased with the proceeds of any revenue
bonds authorized by K.S.A. 13-1238 to 13-1245, inclusive, 19-2776, 19-
3815a and 19-3815b, and amendments thereto, issued on or after July 1,
1963, shall be exempt from taxation only for a period of 10 calendar years
after the calendar year in which the bonds were issued. Any property, all
or any portion of which is constructed or purchased with the proceeds of
revenue bonds authorized by K.S.A. 12-1740 to 12-1749, inclusive, and
amendments thereto, issued on or after July 1, 1963 and prior to July 1,
1981, shall be exempt from taxation only for a period of 10 calendar years
after the calendar year in which the bonds were issued. Except as here-
inafter provided, any property constructed or purchased wholly with the
proceeds of revenue bonds issued on or after July 1, 1981, under the
authority of K.S.A. 12-1740 to 12-1749, inclusive, and amendments
thereto, shall be exempt from taxation only for a period of 10 calendar
years after the calendar year in which the bonds were issued. Except as
hereinafter provided, any property constructed or purchased in part with
the proceeds of revenue bonds issued on or after July 1, 1981, under the
authority of K.S.A. 12-1740 to 12-1749, inclusive, and amendments
thereto, shall be exempt from taxation to the extent of the value of that
portion of the property financed by the revenue bonds and only for a
period of 10 calendar years after the calendar year in which the bonds
were issued. The exemption of that portion of the property constructed
or purchased with the proceeds of revenue bonds shall terminate upon
the failure to pay all taxes levied on that portion of the property which is
not exempt and the entire property shall be subject to sale in the manner
prescribed by K.S.A. 79-2301 et seq., and amendments thereto. Property
constructed or purchased in whole or in part with the proceeds of revenue
bonds issued on or after January 1, 1995, under the authority of K.S.A.
12-1740 to 12-1749, inclusive, and amendments thereto, and used in any
retail enterprise identified under the standard industrial classification
codes, major groups 52 through 59, inclusive, except facilities used exclu-
sively to house the headquarters or back office operations of such retail
enterprises identified thereunder, shall not be exempt from taxation. For
the purposes of the preceding provision ``standard industrial classification
code'' means a standard industrial classification code published in the
Standard Industrial Classification manual, 1987, as prepared by the sta-
tistical policy division of the office of management and budget of the
office of the president of the United States. ``Headquarters or back office
operations'' means a facility from which the enterprise is provided direc-
tion, management, administrative services, or distribution or warehousing
functions in support of transactions made by the enterprise. Property
purchased, constructed, reconstructed, equipped, maintained or repaired
with the proceeds of industrial revenue bonds issued under the authority
of K.S.A. 12-1740 et seq., and amendments thereto, which is located in a
redevelopment project area established under the authority of K.S.A. 12-
1770 et seq. shall not be exempt from taxation. Property purchased, ac-
quired, constructed, reconstructed, improved, equipped, furnished, re-
paired, enlarged or remodeled with all or any part of the proceeds of
revenue bonds issued under authority of K.S.A. 12-1740 to 12-1749a,
inclusive, and amendments thereto for any poultry confinement facility
on agricultural land which is owned, acquired, obtained or leased by a
corporation, as such terms are defined by K.S.A. 17-5903 and amend-
ments thereto, shall not be exempt from such taxation. Property pur-
chased, acquired, constructed, reconstructed, improved, equipped, fur-
nished, repaired, enlarged or remodeled with all or any part of the
proceeds of revenue bonds issued under the authority of K.S.A. 12-1740
to 12-1749a, inclusive, and amendments thereto, for a rabbit confinement
facility on agricultural land which is owned, acquired, obtained or leased
by a corporation, as such terms are defined by K.S.A. 17-5903 and amend-
ments thereto, shall not be exempt from such taxation.

      Third. All works, machinery and fixtures used exclusively by any rural
water district or township water district for conveying or production of
potable water in such rural water district or township water district, and
all works, machinery and fixtures used exclusively by any entity which
performed the functions of a rural water district on and after January 1,
1990, and the works, machinery and equipment of which were exempted
hereunder on March 13, 1995.

      Fourth. All fire engines and other implements used for the extinguish-
ment of fires, with the buildings used exclusively for the safekeeping
thereof, and for the meeting of fire companies, whether belonging to any
rural fire district, township fire district, town, city or village, or to any fire
company organized therein or therefor.

      Fifth. All property, real and personal, owned by county fair associations
organized and operating under the provisions of K.S.A. 2-125 et seq. and
amendments thereto.

      Sixth. Property acquired and held by any municipality under the mu-
nicipal housing law (K.S.A. 17-2337 et seq.) and amendments thereto,
except that such exemption shall not apply to any portion of the project
used by a nondwelling facility for profit making enterprise.

      Seventh. All property of a municipality, acquired or held under and for
the purposes of the urban renewal law (K.S.A. 17-4742 et seq.) and
amendments thereto except that such tax exemption shall terminate when
the municipality sells, leases or otherwise disposes of such property in an
urban renewal area to a purchaser or lessee which is not a public body
entitled to tax exemption with respect to such property.

      Eighth. All property acquired and held by the Kansas armory board for
armory purposes under the provisions of K.S.A. 48-317, and amendments
thereto.

      Ninth. All property acquired and used by the Kansas turnpike authority
under the authority of K.S.A. 68-2001 et seq., and amendments thereto,
K.S.A. 68-2030 et seq., and amendments thereto, K.S.A. 68-2051 et seq.,
and amendments thereto, and K.S.A. 68-2070 et seq., and amendments
thereto.

      Tenth. All property acquired and used for state park purposes by the
Kansas department of wildlife and parks.

      Eleventh. The state office building constructed under authority of
K.S.A. 75-3607 et seq., and amendments thereto, and the site upon which
such building is located.

      Twelfth. All buildings erected under the authority of K.S.A. 76-6a01 et
seq., and amendments thereto, and all other student union buildings and
student dormitories erected upon the campus of any institution men-
tioned in K.S.A. 76-6a01, and amendments thereto, by any other non-
profit corporation.

      Thirteenth. All buildings, as the same is defined in subsection (c) of
K.S.A. 76-6a13, and amendments thereto, which are erected, constructed
or acquired under the authority of K.S.A. 76-6a13 et seq., and amend-
ments thereto, and building sites acquired therefor.

      Fourteenth. All that portion of the waterworks plant and system of the
city of Kansas City, Missouri, now or hereafter located within the territory
of the state of Kansas pursuant to the compact and agreement adopted
by chapter 304 of the 1921 Session Laws of the state of Kansas. [See
K.S.A. 79-205].

      Fifteenth. All property, real and personal, owned by a groundwater
management district organized and operating pursuant to K.S.A. 82a-
1020, and amendments thereto.

      Sixteenth. All property, real and personal, owned by the joint water
district organized and operating pursuant to K.S.A. 80-1616 et seq., and
amendments thereto.

      Seventeenth. All property, including interests less than fee ownership,
acquired for the state of Kansas by the secretary of transportation or a
predecessor in interest which is used in the administration, construction,
maintenance or operation of the state system of highways, regardless of
how or when acquired.

      Eighteenth. Any building used primarily as an industrial training center
for academic or vocational education programs designed for and operated
under contract with private industry, and located upon a site owned,
leased or being acquired by or for an area vocational school, an area
vocational-technical school, a technical college, or a community college,
as defined by K.S.A. 72-4412, and amendments thereto, and the site upon
which any such building is located.

      Nineteenth. For all taxable years commencing after December 31, 1997,
all buildings of an area vocational school, an area vocational-technical
school, a technical college or a community college, as defined by K.S.A.
72-4412, and amendments thereto, which are owned and operated by any
such school or college as a student union or dormitory, and the site upon
which any such building is located.

      Except as otherwise specifically provided, the provisions of this section
shall apply to all taxable years commencing after December 31, 1997
1998.

      Sec.  74. K.S.A. 1998 Supp. 79-201b is hereby amended to read as
follows: 79-201b. The following described property, to the extent herein
specified, shall be and is hereby exempt from all property or ad valorem
taxes levied under the laws of the state of Kansas:

      First. All real property, and tangible personal property, actually and
regularly used exclusively for hospital purposes by a hospital as the same
is defined by K.S.A. 65-425, and amendments thereto, or a psychiatric
hospital as the same was defined by K.S.A. 59-2902, and amendments
thereto, as in effect on January 1, 1976, which hospital or psychiatric
hospital is operated by a corporation organized not for profit under the
laws of the state of Kansas or by a corporation organized not for profit
under the laws of another state and duly admitted to engage in business
in this state as a foreign, not-for-profit corporation, or a public hospital
authority; and all intangible property including moneys, notes and other
evidences of debt, and the income therefrom, belonging exclusively to
such a corporation and used exclusively for hospital, psychiatric hospital
or public hospital authority purposes. This exemption shall not be deemed
inapplicable to property which would otherwise be exempt pursuant to
this paragraph because any such hospital, psychiatric hospital or public
hospital authority: (a) Uses such property for a nonexempt purpose which
is minimal in scope and insubstantial in nature if such use is incidental to
the exempt purpose enumerated in this paragraph; or (b) is reimbursed
for the actual expense of using such property for the exempt purposes
enumerated in this paragraph or paragraph second of K.S.A. 79-201, and
amendments thereto; or (c) permits the use of such property for the
exempt purposes enumerated in this paragraph or paragraph second of
K.S.A. 79-201, and amendments thereto, by more than one agency or
organization for one or more of such purposes.

      Second. All real property, and tangible personal property, actually and
regularly used exclusively for adult care home purposes by an adult care
home as the same is defined by K.S.A. 39-923, and amendments thereto,
which is operated by a corporation organized not for profit under the laws
of the state of Kansas or by a corporation organized not for profit under
the laws of another state and duly admitted to engage in business in this
state as a foreign, not-for-profit corporation, charges to residents for serv-
ices of which produce an amount which in the aggregate is less than the
actual cost of operation of the home or the services of which are provided
to residents at the lowest feasible cost, taking into consideration such
items as reasonable depreciation, interest on indebtedness, acquisition
costs, interest and other expenses of financing acquisition costs, lease
expenses and costs of services provided by a parent corporation at its
costs,  and contributions to which are deductible under the Kansas in-
come tax act; and all intangible property including moneys, notes and
other evidences of debt, and the income therefrom, belonging exclusively
to such corporation and used exclusively for adult care home purposes.
For purposes of this paragraph and for all taxable years commencing after
December 31, 1976, an adult care home which uses its property in a
manner which is consistent with the federal internal revenue service rul-
ing 72-124 issued pursuant to section 501(c)(3) of the federal internal
revenue code, shall be deemed to be operating at the lowest feasible cost.
The fact that real property or real or tangible personal property may be
leased from a not-for-profit corporation, which is exempt from federal
income taxation pursuant to section 501(c)(3) of the internal revenue code
of 1986, and amendments thereto, and which is the parent corporation
to the not-for-profit operator of an adult care home, shall not be grounds
to deny exemption or deny that such property is actually and regularly
used exclusively for adult care home purposes by an adult care home, nor
shall the terms of any such lease be grounds for any such denial. For all
taxable years commencing after December 31, 1995, such property shall
be deemed to be used exclusively for adult care home purposes when used
as a not-for-profit day care center for children which is licensed pursuant
to K.S.A. 65-501 et seq., and amendments thereto.

      Third. All real property, and tangible personal property, actually and
regularly used exclusively for private children's home purposes by a pri-
vate children's home as the same is defined by K.S.A. 75-3329, and
amendments thereto, which is operated by a corporation organized not
for profit under the laws of the state of Kansas or by a corporation or-
ganized not for profit under the laws of another state and duly admitted
to engage in business in this state as a foreign, not-for-profit corporation,
charges to residents for services of which produce an amount which in
the aggregate is less than the actual cost of operation of the home or the
services of which are provided to residents at the lowest feasible cost,
taking into consideration such items as reasonable depreciation and in-
terest on indebtedness, and contributions to which are deductible under
the Kansas income tax act; and all intangible property including moneys,
notes and other evidences of debt, and the income therefrom, belonging
exclusively to such a corporation and used exclusively for children's home
purposes.

      Fourth. All real property and tangible personal property, actually and
regularly used exclusively for housing for elderly and handicapped per-
sons having a limited or lower income, or used exclusively for cooperative
housing for persons having a limited or low income, assistance for the
financing of which was received under 12 U.S.C.A. 1701 et seq., or under
42 U.S.C.A. 1437 et seq., which is operated by a corporation organized
not for profit under the laws of the state of Kansas or by a corporation
organized not for profit under the laws of another state and duly admitted
to engage in business in this state as a foreign, not-for-profit corporation;
and all intangible property including moneys, notes and other evidences
of debt, and the income therefrom, belonging exclusively to such a cor-
poration and used exclusively for the purposes of such housing. For the
purposes of this subsection, cooperative housing shall mean those not-
for-profit cooperative housing projects operating pursuant to sections 236
or 221(d)(3), or both, of the national housing act and which have been
approved as a cooperative housing project pursuant to applicable federal
housing administration and U.S. Department of Housing and Urban De-
velopment statutes, and rules and regulations, during such time as the
use of such properties are restricted pursuant to such act, statutes or rules
and regulations.

      Fifth. All real property and tangible personal property, actually and
regularly used exclusively for housing for elderly persons, which is oper-
ated by a corporation organized not for profit under the laws of the state
of Kansas or by a corporation organized not for profit under the laws of
another state and duly admitted to engage in business in this state as a
foreign, not-for-profit corporation, in which charges to residents produce
an amount which in the aggregate is less than the actual cost of operation
of the housing facility or the services of which are provided to residents
at the lowest feasible cost, taking into consideration such items as rea-
sonable depreciation and interest on indebtedness and contributions to
which are deductible under the Kansas income tax act; and all intangible
property including moneys, notes and other evidences of debt, and the
income therefrom, belonging exclusively to such corporation and used
exclusively for the purpose of such housing. For purposes of this para-
graph and for all taxable years commencing after December 31, 1976, an
adult care home which uses its property in a manner which is consistent
with the federal internal revenue service ruling 72-124 issued pursuant
to section 501(c)(3) of the federal internal revenue code, shall be deemed
to be operating at the lowest feasible cost. For all taxable years com-
mencing after December 31, 1995, such property shall be deemed to be
used exclusively for housing for elderly persons purposes when used as a
not-for-profit day care center for children which is licensed pursuant to
K.S.A. 65-501 et seq., and amendments thereto.

      Sixth. All real property and tangible personal property actually and
regularly used exclusively for the purpose of group housing of mentally
ill or retarded and other handicapped persons which is operated by a
corporation organized not for profit under the laws of the state of Kansas
or by a corporation organized not for profit under the laws of another
state and duly admitted to engage in business in this state as a foreign,
not-for-profit corporation, in which charges to residents produce an
amount which in the aggregate is less than the actual cost of operation of
the housing facility or the services of which are provided to residents at
the lowest feasible cost, taking into consideration such items as reasonable
depreciation and interest on indebtedness and contributions to which are
deductible under the Kansas income tax act, and which is licensed as a
facility for the housing of mentally ill or retarded and other handicapped
persons under the provisions of K.S.A. 75-3307b, and amendments
thereto, or as a rooming or boarding house used as a facility for the
housing of mentally retarded and other handicapped persons which is
licensed as a lodging establishment under the provisions of K.S.A. 36-501
et seq., and amendments thereto.

      The provisions of this section, except as otherwise specifically provided,
shall apply to all taxable years commencing after December 31, 1995
1998.

      Sec.  75. From and after April 1, 2000, K.S.A. 1998 Supp. 79-3606,
as amended by section 6 of this act, is hereby amended to read as follows:
79-3606. The following shall be exempt from the tax imposed by this act:

      (a) All sales of motor-vehicle fuel or other articles upon which a sales
or excise tax has been paid, not subject to refund, under the laws of this
state except cigarettes as defined by K.S.A. 79-3301 and amendments
thereto, cereal malt beverages and malt products as defined by K.S.A. 79-
3817 and amendments thereto, including wort, liquid malt, malt syrup
and malt extract, which is not subject to taxation under the provisions of
K.S.A. 79-41a02 and amendments thereto, motor vehicles taxed pursuant
to K.S.A. 79-5117, and amendments thereto, tires taxed pursuant to
K.S.A. 1998 Supp. 65-3424d, and amendments thereto, and drycleaning
and laundry services taxed pursuant to K.S.A. 1998 Supp. 65-34,150, and
amendments thereto;

      (b) all sales of tangible personal property or service, including the
renting and leasing of tangible personal property, purchased directly by
the state of Kansas, a political subdivision thereof, other than a school or
educational institution, or purchased by a public or private nonprofit hos-
pital or public hospital authority or nonprofit blood, tissue or organ bank
and used exclusively for state, political subdivision, hospital or public hos-
pital authority or nonprofit blood, tissue or organ bank purposes, except
when: (1) Such state, hospital or public hospital authority is engaged or
proposes to engage in any business specifically taxable under the provi-
sions of this act and such items of tangible personal property or service
are used or proposed to be used in such business, or (2) such political
subdivision is engaged or proposes to engage in the business of furnishing
gas, water, electricity or heat to others and such items of personal prop-
erty or service are used or proposed to be used in such business;

      (c) all sales of tangible personal property or services, including the
renting and leasing of tangible personal property, purchased directly by
a public or private elementary or secondary school or public or private
nonprofit educational institution and used primarily by such school or
institution for nonsectarian programs and activities provided or sponsored
by such school or institution or in the erection, repair or enlargement of
buildings to be used for such purposes. The exemption herein provided
shall not apply to erection, construction, repair, enlargement or equip-
ment of buildings used primarily for human habitation;

      (d) all sales of tangible personal property or services purchased by a
contractor for the purpose of constructing, equipping, reconstructing,
maintaining, repairing, enlarging, furnishing or remodeling facilities for
any public or private nonprofit hospital or public hospital authority, public
or private elementary or secondary school or a public or private nonprofit
educational institution, which would be exempt from taxation under the
provisions of this act if purchased directly by such hospital or public hos-
pital authority, school or educational institution; and all sales of tangible
personal property or services purchased by a contractor for the purpose
of constructing, equipping, reconstructing, maintaining, repairing, en-
larging, furnishing or remodeling facilities for any political subdivision of
the state, the total cost of which is paid from funds of such political
subdivision and which would be exempt from taxation under the provi-
sions of this act if purchased directly by such political subdivision. Nothing
in this subsection or in the provisions of K.S.A. 12-3418 and amendments
thereto, shall be deemed to exempt the purchase of any construction
machinery, equipment or tools used in the constructing, equipping, re-
constructing, maintaining, repairing, enlarging, furnishing or remodeling
facilities for any political subdivision of the state. As used in this subsec-
tion, K.S.A. 12-3418 and 79-3640, and amendments thereto, ``funds of a
political subdivision'' shall mean general tax revenues, the proceeds of
any bonds and gifts or grants-in-aid. Gifts shall not mean funds used for
the purpose of constructing, equipping, reconstructing, repairing, enlarg-
ing, furnishing or remodeling facilities which are to be leased to the do-
nor. When any political subdivision of the state, public or private non-
profit hospital or public hospital authority, public or private elementary
or secondary school or public or private nonprofit educational institution
shall contract for the purpose of constructing, equipping, reconstructing,
maintaining, repairing, enlarging, furnishing or remodeling facilities, it
shall obtain from the state and furnish to the contractor an exemption
certificate for the project involved, and the contractor may purchase ma-
terials for incorporation in such project. The contractor shall furnish the
number of such certificate to all suppliers from whom such purchases are
made, and such suppliers shall execute invoices covering the same bearing
the number of such certificate. Upon completion of the project the con-
tractor shall furnish to the political subdivision, hospital or public hospital
authority, school or educational institution concerned a sworn statement,
on a form to be provided by the director of taxation, that all purchases so
made were entitled to exemption under this subsection. As an alternative
to the foregoing procedure, any such contracting entity may apply to the
secretary of revenue for agent status for the sole purpose of issuing and
furnishing project exemption certificates to contractors pursuant to rules
and regulations adopted by the secretary establishing conditions and stan-
dards for the granting and maintaining of such status. All invoices shall
be held by the contractor for a period of five years and shall be subject
to audit by the director of taxation. If any materials purchased under such
a certificate are found not to have been incorporated in the building or
other project or not to have been returned for credit or the sales or
compensating tax otherwise imposed upon such materials which will not
be so incorporated in the building or other project reported and paid by
such contractor to the director of taxation not later than the 20th day of
the month following the close of the month in which it shall be deter-
mined that such materials will not be used for the purpose for which such
certificate was issued, the political subdivision, hospital or public hospital
authority, school or educational institution concerned shall be liable for
tax on all materials purchased for the project, and upon payment thereof
it may recover the same from the contractor together with reasonable
attorney fees. Any contractor or any agent, employee or subcontractor
thereof, who shall use or otherwise dispose of any materials purchased
under such a certificate for any purpose other than that for which such a
certificate is issued without the payment of the sales or compensating tax
otherwise imposed upon such materials, shall be guilty of a misdemeanor
and, upon conviction therefor, shall be subject to the penalties provided
for in subsection (g) of K.S.A. 79-3615, and amendments thereto;

      (e) all sales of tangible personal property or services purchased by a
contractor for the erection, repair or enlargement of buildings or other
projects for the government of the United States, its agencies or instru-
mentalities, which would be exempt from taxation if purchased directly
by the government of the United States, its agencies or instrumentalities.
When the government of the United States, its agencies or instrumen-
talities shall contract for the erection, repair, or enlargement of any build-
ing or other project, it shall obtain from the state and furnish to the
contractor an exemption certificate for the project involved, and the con-
tractor may purchase materials for incorporation in such project. The
contractor shall furnish the number of such certificates to all suppliers
from whom such purchases are made, and such suppliers shall execute
invoices covering the same bearing the number of such certificate. Upon
completion of the project the contractor shall furnish to the government
of the United States, its agencies or instrumentalities concerned a sworn
statement, on a form to be provided by the director of taxation, that all
purchases so made were entitled to exemption under this subsection. As
an alternative to the foregoing procedure, any such contracting entity may
apply to the secretary of revenue for agent status for the sole purpose of
issuing and furnishing project exemption certificates to contractors pur-
suant to rules and regulations adopted by the secretary establishing con-
ditions and standards for the granting and maintaining of such status. All
invoices shall be held by the contractor for a period of five years and shall
be subject to audit by the director of taxation. Any contractor or any agent,
employee or subcontractor thereof, who shall use or otherwise dispose of
any materials purchased under such a certificate for any purpose other
than that for which such a certificate is issued without the payment of
the sales or compensating tax otherwise imposed upon such materials,
shall be guilty of a misdemeanor and, upon conviction therefor, shall be
subject to the penalties provided for in subsection (g) of K.S.A. 79-3615
and amendments thereto;

      (f) tangible personal property purchased by a railroad or public utility
for consumption or movement directly and immediately in interstate
commerce;

      (g) sales of aircraft including remanufactured and modified aircraft,
sales of aircraft repair, modification and replacement parts and sales of
services employed in the remanufacture, modification and repair of air-
craft sold to persons using directly or through an authorized agent such
aircraft and aircraft repair, modification and replacement parts as certified
or licensed carriers of persons or property in interstate or foreign com-
merce under authority of the laws of the United States or any foreign
government or sold to any foreign government or agency or instrumen-
tality of such foreign government and all sales of aircraft, aircraft parts,
replacement parts and services employed in the remanufacture, modifi-
cation and repair of aircraft for use outside of the United States;

      (h) all rentals of nonsectarian textbooks by public or private elemen-
tary or secondary schools;

      (i) the lease or rental of all films, records, tapes, or any type of sound
or picture transcriptions used by motion picture exhibitors;

      (j) meals served without charge or food used in the preparation of
such meals to employees of any restaurant, eating house, dining car, hotel,
drugstore or other place where meals or drinks are regularly sold to the
public if such employees' duties are related to the furnishing or sale of
such meals or drinks;

      (k) any motor vehicle, semitrailer or pole trailer, as such terms are
defined by K.S.A. 8-126 and amendments thereto, or aircraft sold and
delivered in this state to a bona fide resident of another state, which motor
vehicle, semitrailer, pole trailer or aircraft is not to be registered or based
in this state and which vehicle, semitrailer, pole trailer or aircraft will not
remain in this state more than 10 days;

      (l) all isolated or occasional sales of tangible personal property, serv-
ices, substances or things, except isolated or occasional sale of motor
vehicles specifically taxed under the provisions of subsection (o) of K.S.A.
79-3603 and amendments thereto;

      (m) all sales of tangible personal property which become an ingre-
dient or component part of tangible personal property or services pro-
duced, manufactured or compounded for ultimate sale at retail within or
without the state of Kansas; and any such producer, manufacturer or
compounder may obtain from the director of taxation and furnish to the
supplier an exemption certificate number for tangible personal property
for use as an ingredient or component part of the property or services
produced, manufactured or compounded;

      (n) all sales of tangible personal property which is consumed in the
production, manufacture, processing, mining, drilling, refining or com-
pounding of tangible personal property, the treating of by-products or
wastes derived from any such production process, the providing of serv-
ices or the irrigation of crops for ultimate sale at retail within or without
the state of Kansas; and any purchaser of such property may obtain from
the director of taxation and furnish to the supplier an exemption certifi-
cate number for tangible personal property for consumption in such pro-
duction, manufacture, processing, mining, drilling, refining, compound-
ing, treating, irrigation and in providing such services;

      (o) all sales of animals, fowl and aquatic plants and animals, the pri-
mary purpose of which is use in agriculture or aquaculture, as defined in
K.S.A. 47-1901, and amendments thereto, the production of food for
human consumption, the production of animal, dairy, poultry or aquatic
plant and animal products, fiber or fur, or the production of offspring for
use for any such purpose or purposes;

      (p) all sales of drugs, as defined by K.S.A. 65-1626 and amendments
thereto, dispensed pursuant to a prescription order, as defined by K.S.A.
65-1626 and amendments thereto, by a licensed practitioner or a mid-
level practitioner as defined by K.S.A. 65-1626, and amendments thereto;

      (q) all sales of insulin dispensed by a person licensed by the state
board of pharmacy to a person for treatment of diabetes at the direction
of a person licensed to practice medicine by the board of healing arts;

      (r) all sales of prosthetic and orthopedic appliances prescribed in
writing by a person licensed to practice the healing arts, dentistry or
optometry. For the purposes of this subsection, the term prosthetic and
orthopedic appliances means any apparatus, instrument, device, or equip-
ment used to replace or substitute for any missing part of the body; used
to alleviate the malfunction of any part of the body; or used to assist any
disabled person in leading a normal life by facilitating such person's mo-
bility; such term shall include accessories attached or to be attached to
motor vehicles, but such term shall not include motor vehicles or personal
property which when installed becomes a fixture to real property;

      (s) all sales of tangible personal property or services purchased di-
rectly by a groundwater management district organized or operating un-
der the authority of K.S.A. 82a-1020 et seq. and amendments thereto,
which property or services are used in the operation or maintenance of
the district;

      (t) all sales of farm machinery and equipment or aquaculture ma-
chinery and equipment, repair and replacement parts therefor and serv-
ices performed in the repair and maintenance of such machinery and
equipment. For the purposes of this subsection the term ``farm machinery
and equipment or aquaculture machinery and equipment'' shall include
machinery and equipment used in the operation of Christmas tree farm-
ing but shall not include any passenger vehicle, truck, truck tractor, trailer,
semitrailer or pole trailer, other than a farm trailer, as such terms are
defined by K.S.A. 8-126 and amendments thereto. Each purchaser of
farm machinery and equipment or aquaculture machinery and equipment
exempted herein must certify in writing on the copy of the invoice or
sales ticket to be retained by the seller that the farm machinery and
equipment or aquaculture machinery and equipment purchased will be
used only in farming, ranching or aquaculture production. Farming or
ranching shall include the operation of a feedlot and farm and ranch work
for hire and the operation of a nursery;

      (u) all leases or rentals of tangible personal property used as a dwell-
ing if such tangible personal property is leased or rented for a period of
more than 28 consecutive days;

      (v) all sales of food products to any contractor for use in preparing
meals for delivery to homebound elderly persons over 60 years of age and
to homebound disabled persons or to be served at a group-sitting at a
location outside of the home to otherwise homebound elderly persons
over 60 years of age and to otherwise homebound disabled persons, as
all or part of any food service project funded in whole or in part by
government or as part of a private nonprofit food service project available
to all such elderly or disabled persons residing within an area of service
designated by the private nonprofit organization, and all sales of food
products for use in preparing meals for consumption by indigent or home-
less individuals whether or not such meals are consumed at a place des-
ignated for such purpose;

      (w) all sales of natural gas, electricity, heat and water delivered
through mains, lines or pipes: (1) To residential premises for noncom-
mercial use by the occupant of such premises; (2) for agricultural use and
also, for such use, all sales of propane gas; (3) for use in the severing of
oil; and (4) to any property which is exempt from property taxation pur-
suant to K.S.A. 79-201b Second through Sixth. As used in this paragraph,
``severing'' shall have the meaning ascribed thereto by subsection (k) of
K.S.A. 79-4216, and amendments thereto;

      (x) all sales of propane gas, LP-gas, coal, wood and other fuel sources
for the production of heat or lighting for noncommercial use of an oc-
cupant of residential premises;

      (y) all sales of materials and services used in the repairing, servicing,
altering, maintaining, manufacturing, remanufacturing, or modification of
railroad rolling stock for use in interstate or foreign commerce under
authority of the laws of the United States;

      (z) all sales of tangible personal property and services purchased di-
rectly by a port authority or by a contractor therefor as provided by the
provisions of K.S.A. 12-3418 and amendments thereto;

      (aa) all sales of materials and services applied to equipment which is
transported into the state from without the state for repair, service, al-
teration, maintenance, remanufacture or modification and which is sub-
sequently transported outside the state for use in the transmission of
liquids or natural gas by means of pipeline in interstate or foreign com-
merce under authority of the laws of the United States;

      (bb) all sales of used mobile homes or manufactured homes. As used
in this subsection: (1) ``Mobile homes'' and ``manufactured homes'' shall
have the meanings ascribed thereto by K.S.A. 58-4202 and amendments
thereto; and (2) ``sales of used mobile homes or manufactured homes''
means sales other than the original retail sale thereof;

      (cc) all sales of tangible personal property or services purchased for
the purpose of and in conjunction with constructing, reconstructing, en-
larging or remodeling a business or retail business which meets the
requirements established in K.S.A. 74-50,115 and amendments thereto,
and the sale and installation of machinery and equipment purchased for
installation at any such business or retail business. When a person shall
contract for the construction, reconstruction, enlargement or remodeling
of any such business or retail business, such person shall obtain from the
state and furnish to the contractor an exemption certificate for the project
involved, and the contractor may purchase materials, machinery and
equipment for incorporation in such project. The contractor shall furnish
the number of such certificates to all suppliers from whom such purchases
are made, and such suppliers shall execute invoices covering the same
bearing the number of such certificate. Upon completion of the project
the contractor shall furnish to the owner of the business or retail business
a sworn statement, on a form to be provided by the director of taxation,
that all purchases so made were entitled to exemption under this subsec-
tion. All invoices shall be held by the contractor for a period of five years
and shall be subject to audit by the director of taxation. Any contractor
or any agent, employee or subcontractor thereof, who shall use or oth-
erwise dispose of any materials, machinery or equipment purchased un-
der such a certificate for any purpose other than that for which such a
certificate is issued without the payment of the sales or compensating tax
otherwise imposed thereon, shall be guilty of a misdemeanor and, upon
conviction therefor, shall be subject to the penalties provided for in sub-
section (g) of K.S.A. 79-3615 and amendments thereto. As used in this
subsection, ``business'' and ``retail business'' have the meanings respec-
tively ascribed thereto by K.S.A. 74-50,114 and amendments thereto;

      (dd) all sales of tangible personal property purchased with food
stamps issued by the United States department of agriculture;

      (ee) all sales of lottery tickets and shares made as part of a lottery
operated by the state of Kansas;

      (ff) on and after July 1, 1988, all sales of new mobile homes or man-
ufactured homes to the extent of 40% of the gross receipts, determined
without regard to any trade-in allowance, received from such sale. As used
in this subsection, ``mobile homes'' and ``manufactured homes'' shall have
the meanings ascribed thereto by K.S.A. 58-4202 and amendments
thereto;

      (gg) all sales of tangible personal property purchased in accordance
with vouchers issued pursuant to the federal special supplemental food
program for women, infants and children;

      (hh) all sales of medical supplies and equipment purchased directly
by a nonprofit skilled nursing home or nonprofit intermediate nursing
care home, as defined by K.S.A. 39-923, and amendments thereto, for
the purpose of providing medical services to residents thereof. This ex-
emption shall not apply to tangible personal property customarily used
for human habitation purposes;

      (ii) all sales of tangible personal property purchased directly by a non-
profit organization for nonsectarian comprehensive multidiscipline youth
development programs and activities provided or sponsored by such or-
ganization, and all sales of tangible personal property by or on behalf of
any such organization. This exemption shall not apply to tangible personal
property customarily used for human habitation purposes;

      (jj) all sales of tangible personal property or services, including the
renting and leasing of tangible personal property, purchased directly on
behalf of a community-based mental retardation facility or mental health
center organized pursuant to K.S.A. 19-4001 et seq., and amendments
thereto, and licensed in accordance with the provisions of K.S.A. 75-
3307b and amendments thereto. This exemption shall not apply to tan-
gible personal property customarily used for human habitation purposes;

      (kk) on and after January 1, 1989, all sales of machinery and equip-
ment used directly and primarily for the purposes of manufacturing, as-
sembling, processing, finishing, storing, warehousing or distributing ar-
ticles of tangible personal property in this state intended for resale by a
manufacturing or processing plant or facility or a storage, warehousing or
distribution facility, and all sales of repair and replacement parts and
accessories purchased for such machinery and equipment:

      (1) For purposes of this subsection, machinery and equipment shall
be deemed to be used directly and primarily in the manufacture, assem-
blage, processing, finishing, storing, warehousing or distributing of tan-
gible personal property where such machinery and equipment is used
during a manufacturing, assembling, processing or finishing, storing,
warehousing or distributing operation:

      (A) To effect a direct and immediate physical change upon the tan-
gible personal property;

      (B) to guide or measure a direct and immediate physical change upon
such property where such function is an integral and essential part of
tuning, verifying or aligning the component parts of such property;

      (C) to test or measure such property where such function is an in-
tegral part of the production flow or function;

      (D) to transport, convey or handle such property during the manu-
facturing, processing, storing, warehousing or distribution operation at
the plant or facility; or

      (E) to place such property in the container, package or wrapping in
which such property is normally sold or transported.

      (2)  For purposes of this subsection ``machinery and equipment used
directly and primarily'' shall include, but not be limited to:

      (A) Mechanical machines or components thereof contributing to a
manufacturing, assembling or finishing process;

      (B) molds and dies that determine the physical characteristics of the
finished product or its packaging material;

      (C) testing equipment to determine the quality of the finished prod-
uct;

      (D) computers and related peripheral equipment that directly control
or measure the manufacturing process or which are utilized for engi-
neering of the finished product; and

      (E) computers and related peripheral equipment utilized for research
and development and product design.

      (3) ``Machinery and equipment used directly and primarily'' shall not
include:

      (A) Hand tools;

      (B) machinery, equipment and tools used in maintaining and repair-
ing any type of machinery and equipment;

      (C) transportation equipment not used in the manufacturing, assem-
bling, processing, furnishing, storing, warehousing or distributing process
at the plant or facility;

      (D) office machines and equipment including computers and related
peripheral equipment not directly and primarily used in controlling or
measuring the manufacturing process;

      (E) furniture and buildings; and

      (F) machinery and equipment used in administrative, accounting,
sales or other such activities of the business;

      (4) for purposes of this subsection, ``repair and replacement parts and
accessories'' means all parts and accessories for exempt machinery and
equipment, including but not limited to dies, jigs, molds, and patterns
which are attached to exempt machinery or which are otherwise used in
production, short-lived replaceable parts that can be readily detached
from exempt machinery or equipment, such as belts, drill bits, grinding
wheels, cutting bars and saws, and other replacement parts for production
equipment, including refractory brick and other refractory items for kiln
equipment used in production operations;

      (ll) all sales of educational materials purchased for distribution to the
public at no charge by a nonprofit corporation organized for the purpose
of encouraging, fostering and conducting programs for the improvement
of public health;

      (mm) all sales of seeds and tree seedlings; fertilizers, insecticides,
herbicides, germicides, pesticides and fungicides; and services, purchased
and used for the purpose of producing plants in order to prevent soil
erosion on land devoted to agricultural use;

      (nn) except as otherwise provided in this act, all sales of services ren-
dered by an advertising agency or licensed broadcast station or any mem-
ber, agent or employee thereof;

      (oo) all sales of tangible personal property purchased by a community
action group or agency for the exclusive purpose of repairing or weath-
erizing housing occupied by low income individuals;

      (pp) all sales of drill bits and explosives actually utilized in the explo-
ration and production of oil or gas;

      (qq) all sales of tangible personal property and services purchased by
a nonprofit museum or historical society or any combination thereof, in-
cluding a nonprofit organization which is organized for the purpose of
stimulating public interest in the exploration of space by providing edu-
cational information, exhibits and experiences, which is exempt from fed-
eral income taxation pursuant to section 501(c)(3) of the federal internal
revenue code of 1986;

      (rr) all sales of tangible personal property which will admit the pur-
chaser thereof to any annual event sponsored by a nonprofit organization
which is exempt from federal income taxation pursuant to section
501(c)(3) of the federal internal revenue code of 1986;

      (ss) all sales of tangible personal property and services purchased by
a public broadcasting station licensed by the federal communications
commission as a noncommercial educational television or radio station;

      (tt) all sales of tangible personal property and services purchased by
or on behalf of a not-for-profit corporation which is exempt from federal
income taxation pursuant to section 501(c)(3) of the federal internal rev-
enue code of 1986, for the sole purpose of constructing a Kansas Korean
War memorial;

      (uu) all sales of tangible personal property and services purchased by
or on behalf of any rural volunteer fire-fighting organization for use ex-
clusively in the performance of its duties and functions;

      (vv) all sales of tangible personal property purchased by any of the
following organizations which are exempt from federal income taxation
pursuant to section 501 (c)(3) of the federal internal revenue code of
1986, for the following purposes, and all sales of any such property by or
on behalf of any such organization for any such purpose:

      (1) The American Heart Association, Kansas Affiliate, Inc. for the
purposes of providing education, training, certification in emergency car-
diac care, research and other related services to reduce disability and
death from cardiovascular diseases and stroke;

      (2) the Kansas Alliance for the Mentally Ill, Inc. for the purpose of
advocacy for persons with mental illness and to education, research and
support for their families;

      (3) the Kansas Mental Illness Awareness Council for the purposes of
advocacy for persons who are mentally ill and to education, research and
support for them and their families;

      (4) the American Diabetes Association Kansas Affiliate, Inc. for the
purpose of eliminating diabetes through medical research, public edu-
cation focusing on disease prevention and education, patient education
including information on coping with diabetes, and professional education
and training;

      (5) the American Lung Association of Kansas, Inc. for the purpose of
eliminating all lung diseases through medical research, public education
including information on coping with lung diseases, professional educa-
tion and training related to lung disease and other related services to
reduce the incidence of disability and death due to lung disease;

      (6) the Kansas chapters of the Alzheimer's Disease and Related Dis-
orders Association, Inc. for the purpose of providing assistance and sup-
port to persons in Kansas with Alzheimer's disease, and their families and
caregivers; and

      (ww) all sales of tangible personal property purchased by the Habitat
for Humanity for the exclusive use of being incorporated within a housing
project constructed by such organization.

      (xx) all sales of tangible personal property and services purchased by
a nonprofit zoo which is exempt from federal income taxation pursuant
to section 501 (c)(3) of the federal internal revenue code of 1986, or on
behalf of such zoo by an entity itself exempt from federal income taxation
pursuant to section 501(c)(3) of the federal internal revenue code of 1986
contracted with to operate such zoo and all sales of tangible personal
property or services purchased by a contractor for the purpose of con-
structing, equipping, reconstructing, maintaining, repairing, enlarging,
furnishing or remodeling facilities for any nonprofit zoo which would be
exempt from taxation under the provisions of this section if purchased
directly by such nonprofit zoo or the entity operating such zoo. Nothing
in this subsection shall be deemed to exempt the purchase of any con-
struction machinery, equipment or tools used in the constructing, equip-
ping, reconstructing, maintaining, repairing, enlarging, furnishing or re-
modeling facilities for any nonprofit zoo. When any nonprofit zoo shall
contract for the purpose of constructing, equipping, reconstructing, main-
taining, repairing, enlarging, furnishing or remodeling facilities, it shall
obtain from the state and furnish to the contractor an exemption certifi-
cate for the project involved, and the contractor may purchase materials
for incorporation in such project. The contractor shall furnish the number
of such certificate to all suppliers from whom such purchases are made,
and such suppliers shall execute invoices covering the same bearing the
number of such certificate. Upon completion of the project the contractor
shall furnish to the nonprofit zoo concerned a sworn statement, on a form
to be provided by the director of taxation, that all purchases so made were
entitled to exemption under this subsection. All invoices shall be held by
the contractor for a period of five years and shall be subject to audit by
the director of taxation. If any materials purchased under such a certifi-
cate are found not to have been incorporated in the building or other
project or not to have been returned for credit or the sales or compen-
sating tax otherwise imposed upon such materials which will not be so
incorporated in the building or other project reported and paid by such
contractor to the director of taxation not later than the 20th day of the
month following the close of the month in which it shall be determined
that such materials will not be used for the purpose for which such cer-
tificate was issued, the nonprofit zoo concerned shall be liable for tax on
all materials purchased for the project, and upon payment thereof it may
recover the same from the contractor together with reasonable attorney
fees. Any contractor or any agent, employee or subcontractor thereof,
who shall use or otherwise dispose of any materials purchased under such
a certificate for any purpose other than that for which such a certificate
is issued without the payment of the sales or compensating tax otherwise
imposed upon such materials, shall be guilty of a misdemeanor and, upon
conviction therefor, shall be subject to the penalties provided for in sub-
section (g) of K.S.A. 79-3615, and amendments thereto;

      (yy) all sales of tangible personal property and services purchased by
a parent-teacher association or organization, and all sales of tangible per-
sonal property by or on behalf of such association or organization;

      (zz) all sales of machinery and equipment purchased by over-the-air,
free access radio or television station which is used directly and primarily
for the purpose of producing a broadcast signal or is such that the failure
of the machinery or equipment to operate would cause broadcasting to
cease. For purposes of this subsection, machinery and equipment shall
include, but not be limited to, that required by rules and regulations of
the federal communications commission, and all sales of electricity which
are essential or necessary for the purpose of producing a broadcast signal
or is such that the failure of the electricity would cause broadcasting to
cease;

      (aaa) all sales of tangible personal property and services purchased
by a religious organization which is exempt from federal income taxation
pursuant to section 501(c)(3) of the federal internal revenue code, and
used exclusively for religious purposes, and all sales of tangible personal
property or services purchased by a contractor for the purpose of con-
structing, equipping, reconstructing, maintaining, repairing, enlarging,
furnishing or remodeling facilities for any such organization which would
be exempt from taxation under the provisions of this section if purchased
directly by such organization. Nothing in this subsection shall be deemed
to exempt the purchase of any construction machinery, equipment or
tools used in the constructing, equipping, reconstructing, maintaining,
repairing, enlarging, furnishing or remodeling facilities for any such or-
ganization. When any such organization shall contract for the purpose of
constructing, equipping, reconstructing, maintaining, repairing, enlarg-
ing, furnishing or remodeling facilities, it shall obtain from the state and
furnish to the contractor an exemption certificate for the project involved,
and the contractor may purchase materials for incorporation in such pro-
ject. The contractor shall furnish the number of such certificate to all
suppliers from whom such purchases are made, and such suppliers shall
execute invoices covering the same bearing the number of such certifi-
cate. Upon completion of the project the contractor shall furnish to such
organization concerned a sworn statement, on a form to be provided by
the director of taxation, that all purchases so made were entitled to ex-
emption under this subsection. All invoices shall be held by the contractor
for a period of five years and shall be subject to audit by the director of
taxation. If any materials purchased under such a certificate are found
not to have been incorporated in the building or other project or not to
have been returned for credit or the sales or compensating tax otherwise
imposed upon such materials which will not be so incorporated in the
building or other project reported and paid by such contractor to the
director of taxation not later than the 20th day of the month following
the close of the month in which it shall be determined that such materials
will not be used for the purpose for which such certificate was issued,
such organization concerned shall be liable for tax on all materials pur-
chased for the project, and upon payment thereof it may recover the same
from the contractor together with reasonable attorney fees. Any contrac-
tor or any agent, employee or subcontractor thereof, who shall use or
otherwise dispose of any materials purchased under such a certificate for
any purpose other than that for which such a certificate is issued without
the payment of the sales or compensating tax otherwise imposed upon
such materials, shall be guilty of a misdemeanor and, upon conviction
therefor, shall be subject to the penalties provided for in subsection (g)
of K.S.A. 79-3615, and amendments thereto. Sales tax paid on and after
July 1, 1998, but prior to the effective date of this act upon the gross
receipts received from any sale exempted by the amendatory provisions
of this subsection shall be refunded. Each claim for a sales tax refund
shall be verified and submitted to the director of taxation upon forms
furnished by the director and shall be accompanied by any additional
documentation required by the director. The director shall review each
claim and shall refund that amount of sales tax paid as determined under
the provisions of this subsection. All refunds shall be paid from the sales
tax refund fund upon warrants of the director of accounts and reports
pursuant to vouchers approved by the director or the director's designee;

      (bbb) all sales of food for human consumption by an organization
which is exempt from federal income taxation pursuant to section 501
(c)(3) of the federal internal revenue code of 1986, pursuant to a food
distribution program which offers such food at a price below cost in
exchange for the performance of community service by the purchaser
thereof;

      (ccc) on and after July 1, 1999, all sales of tangible personal property
and services purchased by a primary care clinic or health center the pri-
mary purpose of which is to provide services to medically underserved
individuals and families, and which is exempt from federal income taxa-
tion pursuant to section 501 (c)(3) of the federal internal revenue code,
and all sales of tangible personal property or services purchased by a
contractor for the purpose of constructing, equipping, reconstructing,
maintaining, repairing, enlarging, furnishing or remodeling facilities for
any such clinic or center which would be exempt from taxation under the
provisions of this section if purchased directly by such clinic or center.
Nothing in this subsection shall be deemed to exempt the purchase of
any construction machinery, equipment or tools used in the constructing,
equipping, reconstructing, maintaining, repairing, enlarging, furnishing
or remodeling facilities for any such clinic or center. When any such clinic
or center shall contract for the purpose of constructing, equipping, re-
constructing, maintaining, repairing, enlarging, furnishing or remodeling
facilities, it shall obtain from the state and furnish to the contractor an
exemption certificate for the project involved, and the contractor may
purchase materials for incorporation in such project. The contractor shall
furnish the number of such certificate to all suppliers from whom such
purchases are made, and such suppliers shall execute invoices covering
the same bearing the number of such certificate. Upon completion of the
project the contractor shall furnish to such clinic or center concerned a
sworn statement, on a form to be provided by the director of taxation,
that all purchases so made were entitled to exemption under this subsec-
tion. All invoices shall be held by the contractor for a period of five years
and shall be subject to audit by the director of taxation. If any materials
purchased under such a certificate are found not to have been incorpo-
rated in the building or other project or not to have been returned for
credit or the sales or compensating tax otherwise imposed upon such
materials which will not be so incorporated in the building or other pro-
ject reported and paid by such contractor to the director of taxation not
later than the 20th day of the month following the close of the month in
which it shall be determined that such materials will not be used for the
purpose for which such certificate was issued, such clinic or center con-
cerned shall be liable for tax on all materials purchased for the project,
and upon payment thereof it may recover the same from the contractor
together with reasonable attorney fees. Any contractor or any agent, em-
ployee or subcontractor thereof, who shall use or otherwise dispose of
any materials purchased under such a certificate for any purpose other
than that for which such a certificate is issued without the payment of
the sales or compensating tax otherwise imposed upon such materials,
shall be guilty of a misdemeanor and, upon conviction therefor, shall be
subject to the penalties provided for in subsection (g) of K.S.A. 79-3615,
and amendments thereto;

      (ddd) on and after January 1, 1999, and before January 1, 2000, all
sales of materials and services purchased by any class II or III railroad as
classified by the federal surface transportation board for the construction,
renovation, repair or replacement of class II or III railroad track and
facilities used directly in interstate commerce. In the event any such track
or facility for which materials and services were purchased sales tax ex-
empt is not operational for five years succeeding the allowance of such
exemption, the total amount of sales tax which would have been payable
except for the operation of this subsection shall be recouped in accord-
ance with rules and regulations adopted for such purpose by the secretary
of revenue; and

      (eee) on and after January 1, 1999, and before January 1, 2000, all
sales of materials and services purchased for the original construction,
reconstruction, repair or replacement of grain storage facilities, including
railroad sidings providing access thereto.

      Sec.  76. From and after April 1, 2000, K.S.A. 1998 Supp. 79-3606,
as amended by section 6 of this act, and K.S.A. 1998 Supp. 79-3606, as
amended by section 18 of House Bill No. 2168, are hereby repealed.

      Sec.  77. From and after July 1, 1999, K.S.A. 1998 Supp. 79-3602 is
hereby repealed.

      Sec.  78. K.S.A. 2-610, 2-1318, 2-1319, 2-1322, 2-2007, 3-121, 12-
1403, 12-1405, 12-1617h, 19-236, 19-807d, 19-2803, 19-2803e, 19-3105,
19-3106, 19-3305, 19-4004, 19-4011, 19-4102, 65-212, 68-166, 68-518c,
68-582, 73-407, 76-326a, 79-201, 79-5a01, 79-1945, 79-1946, 79-1947, 79-
1947b, 79-1948, 79-1949, 79-1950, 79-1951, 79-1952, 79-1953, 79-1962,
79-32,197, 79-32,201, 80-115, 80-119, 80-808, 80-903, 80-932, 80-1417,
80-1503, 80-1509, 80-1537, 80-1806, 80-1903, 80-1909, 80-1916, 80-
1920, 80-1921, 80-1924, 80-2006, 80-2021, 80-2201, 80-2204 and 82a-
308 and K.S.A. 1998 Supp. 79-201a, 79-201b, 79-32,117, 79-32,195 and
79-3606 are hereby repealed.

      Sec.  79. This act shall take effect and be in force from and after its
publication in the Kansas register.

Approved May 12, 1999.
 Published in the Kansas Register May 27, 1999.
__________