Kansas would fund older development districts to replace food-tax revenue

The state treasurer would transfer money from the state's main fund to a dedicated fund and pay city or county bond accounts. Payments would cover districts established before December 31, 2022. STAR bonds are borrowing repaid with tax revenue to fund development projects. Payments would equal the state sales and use taxes that food sales would have generated at a 6.5% rate. Spending would require authorization through legislative spending laws. Payments would stop when collected revenues, including these transfers, could cover all principal and interest through the final repayment dates for bonds issued before December 31, 2022. Monthly transfers would start August 1, 2025. Initial calculations would cover January 2024 through May 2025. Later monthly calculations would cover the month two months earlier.

Kansas would account for food-tax amounts when calculating tax revenue available for STAR bond projects. These rules concern tax revenue above a district's baseline, which generally measures collections during the 12 months before the district was established. Districts with a baseline year established before December 31, 2022, would add the state sales and use taxes that food sales would have generated. Districts established on or after December 31, 2022, would exclude state taxes on food sales from their baseline revenue. If enacted, the proposal would take effect after publication in the statute book.