Brief(1)
S.B. 179 would expand the types of businesses that may qualify for tax incentives associated with the High Performance Firms Incentives Program (HPIP), which is administered by the Kansas Department of Commerce and Housing. Such businesses would include distributors of durable goods (categorized as Standard Industrial Classification (SIC) code 50 in the bill), and distributors of nondurable goods (categorized as SIC code 51 in the bill). The bill also would clarify that a business may be assigned a SIC code according to the primary business activity at a single physical location in Kansas.
Background
S.B. 179 was introduced in response to a recommendation by Kansas, Inc. staff in their report evaluating HPIP. Proponents of the bill included: Mikel Miller, Senior Policy Analyst, Kansas, Inc.; Alan Alderson, Legislative Counsel, Western Retail Implement and Hardware Association and Mid-America Lumbermen's Association; Robert Marcuse, Kansas City Development Council; and Steve Kelly, Director, Business Development Division, Kansas Department of Commerce and Housing. Mr. Kelly explained that distributors of durable and nondurable goods are specifically targeted by the Kansas Department of Commerce and Housing as part of the agency's recruitment and retention strategy; S.B. 179 would support the agency's efforts to that end. Mr. Kelly also recommended an amendment, subsequently adopted by the Senate Committee, to assign a business a SIC code according to the primary business activity at a single physical location in Kansas. The amendment is intended to ensure that a regional or national business with several operations is assigned a SIC code for purposes of the HPIP program that most appropriately captures that business' primary operations in Kansas.
To be eligible for HPIP incentives under existing law, a business must be engaged in: manufacturing (SIC codes 20-39); transportation, communications, utilities (SIC codes 40-49); finance, insurance, real estate (SIC codes 60-67); services (SIC codes 70-89); or corporate or regional headquarters or ancillary support. In addition to qualifying under an appropriate SIC code, a business must meet statutory requirements demonstrating commitment to workforce training and above average wage rates. Additional criteria govern eligibility of businesses for HPIP incentives in SIC codes 40-89. HPIP tax incentives include: Kansas income tax credit equal to10 percent of capital investment that exceeds $50,000; sales tax exemption on purchases of all materials and labor related to a capital investment; and workforce training income tax credit of up to $50,000 for investment in employee training and education that exceeds 2 percent of payroll costs. To qualify for these incentives, the business must be certified by the Kansas Department of Commerce and Housing.
The Division of Budget's fiscal note reported that, according to the Kansas Department of Commerce and Housing, the bill would have no fiscal impact.
1. *Supplemental notes are prepared by the Legislative Research Department and do not express legislative intent. The supplemental note and fiscal note for this bill may be accessed on the Internet at http://www.ink.org/public/legislative/bill_search.html.