Brief ⁽¹⁾

HB 2037, as amended by the Senate Committee of the Whole, would enact a number of sales tax provisions.

Bi-State Compact Provisions

One portion of the bill would amend the Kansas and Missouri Metropolitan Culture District Compact to redefine cultural activities to include sports which "contribute or enhance the aesthetic, artistic, historical, intellectual or social development or appreciation of members of the general public."

Additional language would be added to the compact, however, which would prohibit revenues from a future sales tax which has been adopted by voters from being used exclusively for sports or sports facilities.

Another section specifies that no election for a new sales tax could be held prior to 2002.

Finally, the composition of the Metropolitan Culture Commission would be changed to add two members of the consolidated Wyandotte County and Kansas City, Kansas governing body, who would be appointed pursuant to a majority vote of such governing body.

Local Sales Tax Provisions

The bill also would make a number of changes to local sales tax authorization statutes. Neosho, Wilson, Osage, and Wabaunsee counties would be added to a list of 15 other counties with special authority to retain all revenue from countywide sales taxes (and not be required to share such revenues with cities), provided the tax is imposed for financing the construction or remodeling of a courthouse, jail, law enforcement facility, or other county administrative facility. All such taxes are required to sunset when the Secretary of Revenue determines the cost incurred in the financing of such facilities has been collected by retailers. Wabaunsee County also would be granted an additional 0.25 percent rate authority for such purpose and Osage County would be granted either an additional 0.25 percent or 0.5 percent for such purpose.

Miami County would be granted special authority to retain all revenue from a countywide sales tax, and would be given an additional 1.0 percent authority, to finance road construction. Clay County would be given similar additional authority of 0.5 percent. Any such tax imposed would be required to sunset after five years.

Woodson County would be granted special authority to retain all revenue from a countywide sales tax imposed for the purpose of financing economic development initiatives or public infrastructure projects. The tax would have to be at the rate of 0.5 percent and would be required to sunset after five years.

Franklin County would be granted special authority to retain all revenue from a countywide sales tax, and would be given an additional 0.25 percent authority, to finance recreational facilities. Any such tax would be required to sunset upon payment of all financing costs associated with the facilities.

All cities in Harper and Woodson counties would be added to the list of Class D cities with up to 1.0 percent of additional rate authority for funding economic development initiatives, strategic planning initiatives, or public infrastructure projects. Any taxes so imposed after the effective date of the act by Class D cities would be required to sunset after ten years. Current law requires such taxes to sunset after five years.

Sales Tax Exemption for Grain Storage

The bill would extend for one year the sunset on a sales tax exemption enacted originally in 1999 for materials and services purchased for the original construction, reconstruction, repair, or replacement of grain storage facilities, including railroad sidings providing access to such facilities. That exemption sunset on January 1, 2000, and the bill would restore it retroactively to that date and further extend it to January 1, 2001.

Background

The Metropolitan Culture District Compact authorizes local sales taxes of up to 0.25 percent in Johnson County, Kansas, Jackson County, Missouri, and other counties in both states within 60 miles of those two jurisdictions. A tax of 0.125 percent is currently being levied in Johnson County and in three Missouri counties (Jackson, Clay, and Platte). Conferees said that tax is expected to sunset in March of 2002.

The compact is an interstate compact which has been ratified by Congress. Article VIII of the compact provides that amendments to the compact become effective only after identical legislative enactments in both states. Proponents of the bill said that identical language is under consideration by the Missouri Legislature.

The original bill would have provided a sales tax exemption for certain materials and services purchased for the original construction, reconstruction, repair, or replacement of grain storage facilities, including railroad sidings providing access thereto. An additional exemption in the original bill would have been provided for certain materials and services purchased by shortline railroads for construction, renovation, repair, or replacement of track and facilities used directly in interstate commerce. (Both of these exemptions were enacted in 1999 in another bill.) The Senate Assessment and Taxation Committee struck the original provisions and inserted the substance of SB 643 relating to the proposed amendments to the bi-state compact.

The Senate Committee of the Whole added the provisions contained in the House Taxation Committee version of SB 545 relating to local sales taxes and the provision extending the grain sales tax exemption for one year.

Fiscal information from the Department of Revenue on the grain storage language indicated that the bill would be expected to reduce sales tax receipts by the following amounts:

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