Is cutting the food sales tax still on the table for Kansas families?
Emily Fetsch
February 24, 2022
This year, Kansas is in a strong revenue position, with an estimated budget surplus of $2.9 billion. This is due to a variety of factors, including the federal stimulus money sent to the state and to individual Kansans. With this surplus, Kansas could make long-term changes that would strengthen the state’s fiscal health, while also making changes that would benefit Kansans after two long, difficult years.
One change Kansas Action for Children called on lawmakers to consider at the beginning of the legislative session was the elimination of the state-level food sales tax. In our testimony, we stated "the elimination of the food sales tax, on its own, does not appear to put Kansas in a bad fiscal position in the coming years," due to the budget surplus.
Since we testified on several food sales tax bills, the Legislature passed SB 347, a significant (over $1 billion cost over several years) tax incentive bill (also known as the Attracting Powerful Economic Expansion, or APEX, bill) to attract an undisclosed company to Kansas. We have monitored this bill and are waiting to see if the company comes to Kansas (there is an expected decision in March).
We are crunching the numbers on this legislation and what it means for the budget surplus, future budget years and their ending balances, and KAC’s policy priorities like the food sales tax elimination.
KAC is concerned SB 347 has made it more difficult to pass the full elimination of the state-level sales tax on food without jeopardizing the state budget in the next few years. There are currently at least seven food sales tax bills in play with a range of fiscal notes and a variety of budget profiles showing how these bills could affect future budget years.
While we wait to see if the undisclosed company chooses Kansas and continue to evaluate the proposal, we know a bill like SB 339, which was passed out of the Senate Committee on Assessment and Taxation, has a much higher cost than other proposals. Its high cost is due to the original bill including prepared foods in the elimination, as well as amendments that added the contents of three other bills —SB 359, SB 327, and SB 228. These amendments add millions of dollars to the fiscal note, which is concerning for the bill's long-term fiscal impact and sustainability. Unfortunately, with SB 339 being tied to these three additional bills as it moved out of committee, in addition to the significant cost of SB 347, the current form of SB 339 is too expensive and should be rejected as the bill to support when considering eliminating or reducing the state sales tax on food.
We will continue to monitor legislative activity and evaluate how proposals to eliminate the state-level sales tax on food can help Kansans pay for groceries while ensuring the state maintains its fiscal health in the long term.
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