Chairperson Smith opened the hearing for HB2162.

Adam Siebers, Office of Revisor of Statutes, provided an overview for HB2162 that would exempt from sales taxation for the service of installing or applying tangible personal property in connection with reconstruction, restoration, remodeling, renovation, repair or replacement of a building or facility. (Attachment 1)

Mr. Siebers stood for questions from Committee members.

Kathleen Smith, Kansas Department of Revenue, provided an overview on the fiscal note for HB2162 stating the bill is a carryover from 2025.  The fiscal note provided at that time was estimated to decrease state revenues by approximately $77.0 million in FY2026.  Of this amount, State General Fund revenues are estimated to decrease by $63.1 million, while State Highway Fund revenues are estimated to decrease by $13.9 million. The fiscal effect to state revenues for FY2027 is $86.6 million, FY2028 $89.3 million, FY2029 $92.1 million, and FY2030 $95.0 million.Ms. Smith noted to formulate the estimate, the Department reviewed collections, gross sales and deductions that were reported by those retailers that are in the construction industry (NAICS Code 23). 

Ms. Smith stood for questions from Committee members.

Proponents: (Speaking before the Committee)

Eric Stafford, VP of Government Affairs, Kansas Chamber, testified as a proponent for HB2162 that would bring equity between commercial and residential properties, as well as not taxing professional services. (Attachment 2)

Jason Watkins, Wichita Regional Chamber of Commerce, testified as a proponent for HB2162 that encourages reinvestment in existing buildings.  The bill eliminates sales tax on commercial renovation labor and contractor services, levels the playing field for small businesses, promotes job creation, encourages reinvestment and strengthens local property values and community tax bases. (Attachment 3)

Gus Rau Meyer, RAU Construction Company, testified as a proponent for HB2162  noting approximately 2.56 percent to 3.0 percent of total costs for a project goes to the Remodel Tax.  When clients are comparing equal designs, the two major items which will determine the ultimate location of projects are based on the economics of construction costs which may cause the clients to choose Missouri over Kansas which is an economic disadvantage.  (Attachment 4)  

Jeff Hohnbaum, Associated General Contractors through Hutton Corporation, testified as a proponent for HB2162 stating the bill fixes an inconsistency, levels the playing field and supports reinvestment in Kansas communities. (Attachment 7), (Attachment 8)

Mike Gibson, Executive Vice President, Associated General Contractors of Kansas, testified as a proponent for HB2162 that represents a simple, fair, and much-needed reform by eliminating the Remodel Sales Tax on commercial renovation labor and services. (Attachment 9)

Kevin Walker, Vice President & Chief Policy Officer, Overland Park Chamber of Commerce, testified as a proponent for HB2162 that provides tax parity and helps businesses to invest in Kansas.(Attachment 10)

The conferees stood for questions from Committee members.

Written only proponent testimony for HB2162 was submitted by Allen Dillingham, The Builders, Chapter of AGC. (Attachment 11)

Chairperson Smith closed the hearing for HB2162.