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Minutes for HB2318 - Committee on Taxation
Short Title
Decreasing the state rate for sales and compensating use tax to 6.15%.
Minutes Content for Tue, Mar 7, 2023
Chairperson Smith opened the hearing for HB2318.
Adam Siebers provided an overview for HB2318 that decreases the rate of sales and compensating use tax from 6.5 percent to 6.15 percent on July 1, 2023. (Attachment 6)
Kathleen Smith, Kansas Department of Revenue, indicated HB2318 would decrease state revenues by $399.0 million in FY 2024. Of that total, the State General Fund is estimated to decrease by $333.1 million in FY 2024, while the State Highway Fund is estimated to decrease by $65.9 million in FY 2024. Ms. Smith stood for questions from Committee members.
In response to a question, Mr. Penner, stated 2.0 percent is normal inflation and for the Midwest Regions the actual average inflation for CY 2022 was 8.0 percent and the margin between the normal 2.0 percent and the actual 8.0 percent is 6.0 percent. The amount of sales tax generated at 108 on 6.15 percent is approximately an equal amount of sales tax generated at 102 at 6.5 percent which is the genesis of 6.15 percent.
Proponents:
Eric Stafford, Kansas Chamber, testified as a proponent for HB2318 that lessens the tax burden on all Kansans, especially on sales tax that ranks in the top ten highest in the nation when considering the combined state and local tax burden.(Attachment 7) Mr. Stafford stood for questions from Committee members.
Written testimony was submitted by Ganon Evans, Kansas Policy Institute, as a proponent for HB2318. (Attachment 8)
Opponents:
Written testimony was submitted by the following as opponents for HB2318:
Lizeth Ortega, Kansas Department of Transportation, (Attachment 9)
Andy Sanchez, Kansas AFL-CIO, (Attachment 10)
Neutral:
Michael White, Kansas Contractors Association, testified as neutral for HB2318. The current percentage of the sales tax designated for the State Highway Fund is 17.0 percent of the 6.5 percent state rate. Under the existing grocery sales tax reduction plan, that percentage is set to go to 18.0 percent to offset a reduction to the Highway Fund. If the sales tax is reduced across the board as proposed in HB2318, the State Highway Fund would take a considerable hit. Mr. White proposed an amendment in Section 1 (lines 10-17) to adjust to a rate and implementation date that would help compensate for the lost revenue and keep the Eisenhower Legacy (IKE) Transportation Plan whole. (Attachment 11) Mr. White stood for questions from Committee members.
In response to a question, Representative Francis stated for the Department of Transportation, in CY 2020 the index of common bid items was $464 and in 2022 it is $664 noting it is close to 40.0 percent for inflation or 20.0 percent a year.
Written testimony was submitted by the following as neutral for HB2318:
Travis Lowe, Economic Lifeline, (Attachment 12)
Scott Heidner, American Council of Engineering Companies, (Attachment 13)
Chairperson Smith closed the hearing for HB2318.
