Managing Fiscal Analyst
Assistant Director for Fiscal Affairs
The transfers below continue to exist in statute and are suspended via appropriations bills at various intervals depending on the duration of each suspension.
Local Ad Valorem Tax Reduction Fund
What is now the Local Ad Valorem Tax Reduction Fund (LAVTRF) dates back to 1937, when the state sales and use taxes first were imposed at a 2 percent rate. At that time it was provided that, after demands were met for public welfare and elementary school aid, the balance in the Retail Sales Tax Fund on June 2 of each year shall be distributed to counties for the purpose of reducing property tax levies of counties and other local units. This so-called “residue” amounted to $4.7 million in FY 1938, almost half of the sales tax collections that year.
Under current law, two transfers are made each calendar year from the State General Fund (SGF) to the LAVTRF, on January 15 and July 15. No moneys have been transferred to the LAVTRF since July 15, 2002, except a singular payment to the fund of $20,250,000 in FY 2014. No moneys shall be transferred for FY 2021, FY 2022 and FY 2023. Starting in FY 2024 and every year thereafter, the amount of each semi-annual transfer shall be $27.0 million, for a total yearly transfer of $54.0 million.
Money in the LAVTRF is now allocated among the 105 counties on the basis of population (65 percent) and assessed tangible property valuation (35 percent). Each county’s share is divided among all property tax levying subdivisions (including the county but excluding unified school districts) proportionately based on their property tax levies in the preceding year. The money so received must be credited to one or more tax levy funds of general application in the county or subdivision, except bond and interest funds. Those community colleges and municipal universities that received a distribution in 1983 can receive funds from the LAVTRF. No taxing entity may receive funds unless it budgets for those funds in a future fiscal year in a fund that has a tax levy and that tax levy would generate more income than would come from LAVTRF. KSA 19-2694 establishes a formula designed to prevent counties from receiving less money distributed on the basis of population due to changing from state census data to federal census data, effective July 1, 1979.
County and City Revenue Sharing Fund: History
The County and City Revenue Sharing Fund (CCRSF) was created by 1978 legislation to replace other tax sources that had been shared with local units, namely, the cigarette tax, liquor enforcement tax, and domestic insurance company privilege tax.
Under current law, two transfers are made each calendar year from the SGF to the CCRSF, on July 15 and December 10, totaling 2.823 percent of sales and use tax revenue credited to the SGF in the preceding calendar year. The last transfer to the CCRSF was the July 15, 2002 distribution. All subsequent transfers have been suspended either via allotment or legislative action.
Money in the CCRSF is now allocated among the 105 counties on the basis of population (65 percent) and assessed tangible property valuation (35 percent). Within county areas the money is distributed 50 percent to the county general fund and 50 percent to general funds of cities, based on the population of the cities.
Tax Increment Financing Revenue Replacement Fund
KSA 12-1775a, passed by the 1996 legislature, created a method for cities with redevelopment districts established prior to July 1, 1996, to certify the amount realized from ad valorem taxes imposed in those districts due to legislative changes in the school finance formula in that year.
Once a year prior to February, each city with an affected redevelopment district would certify to the director of accounts and reports an amount equal to the amount of tax reduction. Subsequently, the director of accounts and reports would certify to the State Treasurer each amount certified and shall transfer from the SGF to the Tax Increment Financing Revenue Replacement Fund (TIF Fund) the aggregate of all amounts so certified. The treasurer, prior to April 15 of each year, shall pay each city their certified amount. In FY 1998, the first year for this distribution, 8 cities with 15 redevelopment districts received payments. In FY 2017, there were four cities and six redevelopment districts remaining. The statute does not have a sunset.
The Department of Administration administers and certifies the distributions, and has interpreted the statute as expiring when the TIF districts expire or when any bonds sold to finance the TIF are paid off.
It is unclear whether amendments to the TIF plan that extend the districts beyond the 20 year statutory limit maintain the TIF district’s right to receive funds from the TIF Revenue Replacement Fund. The Revenue Replacement Fund was supported by a $1.0 million transfer from the SGF annually.
The Legislature suspended transfers from the fund in FY 2018, and no subsequent transfers have occurred.