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Minutes for SB40 - Committee on Taxation
Short Title
Permitting the carryforward of certain net operating losses for individuals for Kansas income tax purposes and excluding social security payments from household income and increasing the appraised value and household income thresholds for eligibility of seniors and disabled veterans related to increased property tax homestead claims.
Minutes Content for Tue, Jan 23, 2024
Chairperson Smith stated it is his intention to start going through some of the provisions in (2023) SB8 from the 2023 Legislative session. He noted there were many pieces that were placed into (2023) SB8 by a Conference Committee that the House has not had a chance to review. The House Taxation Committee will go through the provisions of (2023) SB8 which is part of SB40. Chairperson Smith stated next week there will be informational briefings on the provisions of (2023) SB8 noting the bill was vetoed with no opportunity to reconsider and the veto was sustained. The Committee cannot have a hearing on (2023) SB8 but will have multiple briefings that will have proponents and opponents on sections of the bill. There will be clarification on what pieces and the days of the briefings to move forward and is the impetus for SB40.
Adam Siebers, Assistant Revisor, provided an overview for SB40 that allows for certain net operating losses to be carried forward and makes changes to the Kansas Homestead Refund program (Attachment 1). Mr. Siebers stood for questions from Committee members.
Chairperson Smith noted there is no current fiscal note for SB40 due to the original bill having several provisions compiled into it.
Kathleen Smith, Director of Policy and Research, Kansas Department of Revenue, provided an update on the fiscal note for SB40 noting there are two provisions which is the Net Operating Losses (NOL) and the Homestead provision that has the new Senior or Disabled Veterans Program (SVR) if it is passed this session. The estimated fiscal effect for the NOL provision would reduce the State General Fund revenues by $8.4 million in both FY2024 and FY2025. The Homestead provision for the SVR program was previously estimated to reduce the State General Fund revenues for FY2024, $20.78 million; FY2025, $2.34 million; and FY2026, $29.1 million. If SB40 is moved forward, the fiscal effect would go back to FY2022 and there would be two different tax years; therefore, the projections for FY2025 would be $42.1 million; FY2026, $29.1 million; and FY2027, $37.2 million which is just for the Homestead portion. Ms. Smith stood for questions from Committee members.
Proponents:
Mike Kelly, State Legislative Chair, Military Officers Association of America, Kansas Council of Chapters, testified as a proponent for SB40 which will reduce the property tax burden for low income veterans drawing social security payments and for certain service-connected disabled veterans (Attachment 2). He noted regarding the Homestead Property Tax Refund Act there is a definition of disabled veteran which is flawed. Provision 79-45 states if you are rated 50.0 percent disabled or higher as granted by the Secretary of Veteran Affairs and meet the requirements of property value and income level, the disabled veteran is eligible for the refund. Mr. Kelly suggested the Committee consider adding language called Chapter 61 retirement of title 10 United States Code that governs disability retirement. He noted there is a discriminatory provision in Kansas law that inappropriately excludes a certain class of disabled veterans from the property tax benefit that are 30 to 40 percent disabled but meet the other requirements of the program for the tax refunds. Mr. Kelly stood for questions from Committee members.
In response to a question, Mr. Kelly stated there is a lack of a consistent definition of veteran and service connected disabled veteran in many Kansas statutes that does not match the Federal definition and would be a good move that Kansas statutes standardize the Federal definition. Mr. Kelly provided an explanation on how the evaluation and ratings for a service-connected disability is determined.
Written testimony was submitted by the following as proponents for SB40:
Dan Murray, Kansas State Director, National Federal of Independent Business, (Attachment 3)
Mark Tomb, Vice President of Governmental Affairs, Kansas Association of Realtors, (Attachment 4)
There were no opponents for SB40.
Chairperson Smith closed the hearing for SB40.
Chairperson Smith returned to the order of business for bill requests.
Representative Eplee requested a bill be introduced concerning income taxation relating to the determination of the Kansas adjusted gross income providing a subtraction modification for the sales of property subject to eminent domain (24-rs-2414). Without objection, the bill was accepted for introduction by the Committee.
There being no further business, Chairperson adjourned the meeting.
