[As Amended by Senate Committee of the Whole]

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          As Amended by Senate Committee

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          As Amended by House Committee          

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Session of 1999
          HOUSE BILL No. 2037           By Committee on Taxation           1-14          

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12             AN  ACT relating to sales taxation; exempting certain sales of materials
13             and services relating to rehabilitation of railroad track and facilities and
14             to grain storage facilities; amending K.S.A. 1998 Supp. 79-3606 and
15             repealing the existing section. [relating to sales taxation;] amending
16             and supplementing the Kansas and Missouri metropolitan culture
17             district compact; [authorizing the imposition thereof by certain
18             cities and counties; exempting therefrom grain storage construc-
19             tion materials and services;] amending K.S.A. 1999 Supp. [12-
20             187, 12-188, 12-189 and] 12-2536 [and 79-3606] and repealing
21             the existing section [sections; also repealing K.S.A. 1999 Supp.
22             12-189c].
23      
24       Be it enacted by the Legislature of the State of Kansas:
25             Section  1. K.S.A. 1998 Supp. 79-3606 is hereby amended to read as
26       follows: 79-3606. The following shall be exempt from the tax imposed by
27       this act:
28             (a) All sales of motor-vehicle fuel or other articles upon which a sales
29       or excise tax has been paid, not subject to refund, under the laws of this
30       state except cigarettes as defined by K.S.A. 79-3301 and amendments
31       thereto, cereal malt beverages and malt products as defined by K.S.A. 79-
32       3817 and amendments thereto, including wort, liquid malt, malt syrup
33       and malt extract, which is not subject to taxation under the provisions of
34       K.S.A. 79-41a02 and amendments thereto, motor vehicles taxed pursuant
35       to K.S.A. 79-5117, and amendments thereto, tires taxed pursuant to
36       K.S.A. 1998 Supp. 65-3424d, and amendments thereto, and drycleaning
37       and laundry services taxed pursuant to K.S.A. 1998 Supp. 65-34,150, and
38       amendments thereto;
39             (b) all sales of tangible personal property or service, including the
40       renting and leasing of tangible personal property, purchased directly by
41       the state of Kansas, a political subdivision thereof, other than a school or

2
  1       educational institution, or purchased by a public or private nonprofit hos-
  2       pital or public hospital authority or nonprofit blood, tissue or organ bank
  3       and used exclusively for state, political subdivision, hospital or public hos-
  4       pital authority or nonprofit blood, tissue or organ bank purposes, except
  5       when: (1) Such state, hospital or public hospital authority is engaged or
  6       proposes to engage in any business specifically taxable under the provi-
  7       sions of this act and such items of tangible personal property or service
  8       are used or proposed to be used in such business, or (2) such political
  9       subdivision is engaged or proposes to engage in the business of furnishing
10       gas, water, electricity or heat to others and such items of personal prop-
11       erty or service are used or proposed to be used in such business;
12             (c) all sales of tangible personal property or services, including the
13       renting and leasing of tangible personal property, purchased directly by
14       a public or private elementary or secondary school or public or private
15       nonprofit educational institution and used primarily by such school or
16       institution for nonsectarian programs and activities provided or sponsored
17       by such school or institution or in the erection, repair or enlargement of
18       buildings to be used for such purposes. The exemption herein provided
19       shall not apply to erection, construction, repair, enlargement or equip-
20       ment of buildings used primarily for human habitation;
21             (d) all sales of tangible personal property or services purchased by a
22       contractor for the purpose of constructing, equipping, reconstructing,
23       maintaining, repairing, enlarging, furnishing or remodeling facilities for
24       any public or private nonprofit hospital or public hospital authority, public
25       or private elementary or secondary school or a public or private nonprofit
26       educational institution, which would be exempt from taxation under the
27       provisions of this act if purchased directly by such hospital or public hos-
28       pital authority, school or educational institution; and all sales of tangible
29       personal property or services purchased by a contractor for the purpose
30       of constructing, equipping, reconstructing, maintaining, repairing, en-
31       larging, furnishing or remodeling facilities for any political subdivision of
32       the state, the total cost of which is paid from funds of such political
33       subdivision and which would be exempt from taxation under the provi-
34       sions of this act if purchased directly by such political subdivision. Nothing
35       in this subsection or in the provisions of K.S.A. 12-3418 and amendments
36       thereto, shall be deemed to exempt the purchase of any construction
37       machinery, equipment or tools used in the constructing, equipping, re-
38       constructing, maintaining, repairing, enlarging, furnishing or remodeling
39       facilities for any political subdivision of the state. As used in this subsec-
40       tion, K.S.A. 12-3418 and 79-3640, and amendments thereto, ``funds of a
41       political subdivision'' shall mean general tax revenues, the proceeds of
42       any bonds and gifts or grants-in-aid. Gifts shall not mean funds used for
43       the purpose of constructing, equipping, reconstructing, repairing, enlarg-

3
  1       ing, furnishing or remodeling facilities which are to be leased to the do-
  2       nor. When any political subdivision of the state, public or private non-
  3       profit hospital or public hospital authority, public or private elementary
  4       or secondary school or public or private nonprofit educational institution
  5       shall contract for the purpose of constructing, equipping, reconstructing,
  6       maintaining, repairing, enlarging, furnishing or remodeling facilities, it
  7       shall obtain from the state and furnish to the contractor an exemption
  8       certificate for the project involved, and the contractor may purchase ma-
  9       terials for incorporation in such project. The contractor shall furnish the
10       number of such certificate to all suppliers from whom such purchases are
11       made, and such suppliers shall execute invoices covering the same bearing
12       the number of such certificate. Upon completion of the project the con-
13       tractor shall furnish to the political subdivision, hospital or public hospital
14       authority, school or educational institution concerned a sworn statement,
15       on a form to be provided by the director of taxation, that all purchases so
16       made were entitled to exemption under this subsection. As an alternative
17       to the foregoing procedure, any such contracting entity may apply to the
18       secretary of revenue for agent status for the sole purpose of issuing and
19       furnishing project exemption certificates to contractors pursuant to rules
20       and regulations adopted by the secretary establishing conditions and stan-
21       dards for the granting and maintaining of such status. All invoices shall
22       be held by the contractor for a period of five years and shall be subject
23       to audit by the director of taxation. If any materials purchased under such
24       a certificate are found not to have been incorporated in the building or
25       other project or not to have been returned for credit or the sales or
26       compensating tax otherwise imposed upon such materials which will not
27       be so incorporated in the building or other project reported and paid by
28       such contractor to the director of taxation not later than the 20th day of
29       the month following the close of the month in which it shall be deter-
30       mined that such materials will not be used for the purpose for which such
31       certificate was issued, the political subdivision, hospital or public hospital
32       authority, school or educational institution concerned shall be liable for
33       tax on all materials purchased for the project, and upon payment thereof
34       it may recover the same from the contractor together with reasonable
35       attorney fees. Any contractor or any agent, employee or subcontractor
36       thereof, who shall use or otherwise dispose of any materials purchased
37       under such a certificate for any purpose other than that for which such a
38       certificate is issued without the payment of the sales or compensating tax
39       otherwise imposed upon such materials, shall be guilty of a misdemeanor
40       and, upon conviction therefor, shall be subject to the penalties provided
41       for in subsection (g) of K.S.A. 79-3615, and amendments thereto;
42             (e) all sales of tangible personal property or services purchased by a
43       contractor for the erection, repair or enlargement of buildings or other

4
  1       projects for the government of the United States, its agencies or instru-
  2       mentalities, which would be exempt from taxation if purchased directly
  3       by the government of the United States, its agencies or instrumentalities.
  4       When the government of the United States, its agencies or instrumen-
  5       talities shall contract for the erection, repair, or enlargement of any build-
  6       ing or other project, it shall obtain from the state and furnish to the
  7       contractor an exemption certificate for the project involved, and the con-
  8       tractor may purchase materials for incorporation in such project. The
  9       contractor shall furnish the number of such certificates to all suppliers
10       from whom such purchases are made, and such suppliers shall execute
11       invoices covering the same bearing the number of such certificate. Upon
12       completion of the project the contractor shall furnish to the government
13       of the United States, its agencies or instrumentalities concerned a sworn
14       statement, on a form to be provided by the director of taxation, that all
15       purchases so made were entitled to exemption under this subsection. As
16       an alternative to the foregoing procedure, any such contracting entity may
17       apply to the secretary of revenue for agent status for the sole purpose of
18       issuing and furnishing project exemption certificates to contractors pur-
19       suant to rules and regulations adopted by the secretary establishing con-
20       ditions and standards for the granting and maintaining of such status. All
21       invoices shall be held by the contractor for a period of five years and shall
22       be subject to audit by the director of taxation. Any contractor or any agent,
23       employee or subcontractor thereof, who shall use or otherwise dispose of
24       any materials purchased under such a certificate for any purpose other
25       than that for which such a certificate is issued without the payment of
26       the sales or compensating tax otherwise imposed upon such materials,
27       shall be guilty of a misdemeanor and, upon conviction therefor, shall be
28       subject to the penalties provided for in subsection (g) of K.S.A. 79-3615
29       and amendments thereto;
30             (f) tangible personal property purchased by a railroad or public utility
31       for consumption or movement directly and immediately in interstate
32       commerce;
33             (g) sales of aircraft including remanufactured and modified aircraft,
34       sales of aircraft repair, modification and replacement parts and sales of
35       services employed in the remanufacture, modification and repair of air-
36       craft sold to persons using directly or through an authorized agent such
37       aircraft and aircraft repair, modification and replacement parts as certified
38       or licensed carriers of persons or property in interstate or foreign com-
39       merce under authority of the laws of the United States or any foreign
40       government or sold to any foreign government or agency or instrumen-
41       tality of such foreign government and all sales of aircraft, aircraft parts,
42       replacement parts and services employed in the remanufacture, modifi-
43       cation and repair of aircraft for use outside of the United States;

5
  1             (h) all rentals of nonsectarian textbooks by public or private elemen-
  2       tary or secondary schools;
  3             (i) the lease or rental of all films, records, tapes, or any type of sound
  4       or picture transcriptions used by motion picture exhibitors;
  5             (j) meals served without charge or food used in the preparation of
  6       such meals to employees of any restaurant, eating house, dining car, hotel,
  7       drugstore or other place where meals or drinks are regularly sold to the
  8       public if such employees' duties are related to the furnishing or sale of
  9       such meals or drinks;
10             (k) any motor vehicle, semitrailer or pole trailer, as such terms are
11       defined by K.S.A. 8-126 and amendments thereto, or aircraft sold and
12       delivered in this state to a bona fide resident of another state, which motor
13       vehicle, semitrailer, pole trailer or aircraft is not to be registered or based
14       in this state and which vehicle, semitrailer, pole trailer or aircraft will not
15       remain in this state more than 10 days;
16             (l) all isolated or occasional sales of tangible personal property, serv-
17       ices, substances or things, except isolated or occasional sale of motor
18       vehicles specifically taxed under the provisions of subsection (o) of K.S.A.
19       79-3603 and amendments thereto;
20             (m) all sales of tangible personal property which become an ingre-
21       dient or component part of tangible personal property or services pro-
22       duced, manufactured or compounded for ultimate sale at retail within or
23       without the state of Kansas; and any such producer, manufacturer or
24       compounder may obtain from the director of taxation and furnish to the
25       supplier an exemption certificate number for tangible personal property
26       for use as an ingredient or component part of the property or services
27       produced, manufactured or compounded;
28             (n) all sales of tangible personal property which is consumed in the
29       production, manufacture, processing, mining, drilling, refining or com-
30       pounding of tangible personal property, the treating of by-products or
31       wastes derived from any such production process, the providing of serv-
32       ices or the irrigation of crops for ultimate sale at retail within or without
33       the state of Kansas; and any purchaser of such property may obtain from
34       the director of taxation and furnish to the supplier an exemption certifi-
35       cate number for tangible personal property for consumption in such pro-
36       duction, manufacture, processing, mining, drilling, refining, compound-
37       ing, treating, irrigation and in providing such services;
38             (o) all sales of animals, fowl and aquatic plants and animals, the pri-
39       mary purpose of which is use in agriculture or aquaculture, as defined in
40       K.S.A. 47-1901, and amendments thereto, the production of food for
41       human consumption, the production of animal, dairy, poultry or aquatic
42       plant and animal products, fiber or fur, or the production of offspring for
43       use for any such purpose or purposes;

6
  1             (p) all sales of drugs, as defined by K.S.A. 65-1626 and amendments
  2       thereto, dispensed pursuant to a prescription order, as defined by K.S.A.
  3       65-1626 and amendments thereto, by a licensed practitioner;
  4             (q) all sales of insulin dispensed by a person licensed by the state
  5       board of pharmacy to a person for treatment of diabetes at the direction
  6       of a person licensed to practice medicine by the board of healing arts;
  7             (r) all sales of prosthetic and orthopedic appliances prescribed in
  8       writing by a person licensed to practice the healing arts, dentistry or
  9       optometry. For the purposes of this subsection, the term prosthetic and
10       orthopedic appliances means any apparatus, instrument, device, or equip-
11       ment used to replace or substitute for any missing part of the body; used
12       to alleviate the malfunction of any part of the body; or used to assist any
13       disabled person in leading a normal life by facilitating such person's mo-
14       bility; such term shall include accessories attached or to be attached to
15       motor vehicles, but such term shall not include motor vehicles or personal
16       property which when installed becomes a fixture to real property;
17             (s) all sales of tangible personal property or services purchased di-
18       rectly by a groundwater management district organized or operating un-
19       der the authority of K.S.A. 82a-1020 et seq. and amendments thereto,
20       which property or services are used in the operation or maintenance of
21       the district;
22             (t) all sales of farm machinery and equipment or aquaculture ma-
23       chinery and equipment, repair and replacement parts therefor and serv-
24       ices performed in the repair and maintenance of such machinery and
25       equipment. For the purposes of this subsection the term ``farm machinery
26       and equipment or aquaculture machinery and equipment'' shall include
27       machinery and equipment used in the operation of Christmas tree farm-
28       ing but shall not include any passenger vehicle, truck, truck tractor, trailer,
29       semitrailer or pole trailer, other than a farm trailer, as such terms are
30       defined by K.S.A. 8-126 and amendments thereto. Each purchaser of
31       farm machinery and equipment or aquaculture machinery and equipment
32       exempted herein must certify in writing on the copy of the invoice or
33       sales ticket to be retained by the seller that the farm machinery and
34       equipment or aquaculture machinery and equipment purchased will be
35       used only in farming, ranching or aquaculture production. Farming or
36       ranching shall include the operation of a feedlot and farm and ranch work
37       for hire and the operation of a nursery;
38             (u) all leases or rentals of tangible personal property used as a dwell-
39       ing if such tangible personal property is leased or rented for a period of
40       more than 28 consecutive days;
41             (v) all sales of food products to any contractor for use in preparing
42       meals for delivery to homebound elderly persons over 60 years of age and
43       to homebound disabled persons or to be served at a group-sitting at a

7
  1       location outside of the home to otherwise homebound elderly persons
  2       over 60 years of age and to otherwise homebound disabled persons, as
  3       all or part of any food service project funded in whole or in part by
  4       government or as part of a private nonprofit food service project available
  5       to all such elderly or disabled persons residing within an area of service
  6       designated by the private nonprofit organization, and all sales of food
  7       products for use in preparing meals for consumption by indigent or home-
  8       less individuals whether or not such meals are consumed at a place des-
  9       ignated for such purpose;
10             (w) all sales of natural gas, electricity, heat and water delivered
11       through mains, lines or pipes: (1) To residential premises for noncom-
12       mercial use by the occupant of such premises; (2) for agricultural use and
13       also, for such use, all sales of propane gas; (3) for use in the severing of
14       oil; and (4) to any property which is exempt from property taxation pur-
15       suant to K.S.A. 79-201b Second through Sixth. As used in this paragraph,
16       ``severing'' shall have the meaning ascribed thereto by subsection (k) of
17       K.S.A. 79-4216, and amendments thereto;
18             (x) all sales of propane gas, LP-gas, coal, wood and other fuel sources
19       for the production of heat or lighting for noncommercial use of an oc-
20       cupant of residential premises;
21             (y) all sales of materials and services used in the repairing, servicing,
22       altering, maintaining, manufacturing, remanufacturing, or modification of
23       railroad rolling stock for use in interstate or foreign commerce under
24       authority of the laws of the United States;
25             (z) all sales of tangible personal property and services purchased
26       directly by a port authority or by a contractor therefor as provided by the
27       provisions of K.S.A. 12-3418 and amendments thereto;
28             (aa) all sales of materials and services applied to equipment which is
29       transported into the state from without the state for repair, service, al-
30       teration, maintenance, remanufacture or modification and which is sub-
31       sequently transported outside the state for use in the transmission of
32       liquids or natural gas by means of pipeline in interstate or foreign com-
33       merce under authority of the laws of the United States;
34             (bb) all sales of used mobile homes or manufactured homes. As used
35       in this subsection: (1) ``Mobile homes'' and ``manufactured homes'' shall
36       have the meanings ascribed thereto by K.S.A. 58-4202 and amendments
37       thereto; and (2) ``sales of used mobile homes or manufactured homes''
38       means sales other than the original retail sale thereof;
39             (cc) all sales of tangible personal property or services purchased for
40       the purpose of and in conjunction with constructing, reconstructing, en-
41       larging or remodeling a business or retail business which meets the
42       requirements established in K.S.A. 74-50,115 and amendments thereto,
43       and the sale and installation of machinery and equipment purchased for

8
  1       installation at any such business or retail business. When a person shall
  2       contract for the construction, reconstruction, enlargement or remodeling
  3       of any such business or retail business, such person shall obtain from the
  4       state and furnish to the contractor an exemption certificate for the project
  5       involved, and the contractor may purchase materials, machinery and
  6       equipment for incorporation in such project. The contractor shall furnish
  7       the number of such certificates to all suppliers from whom such purchases
  8       are made, and such suppliers shall execute invoices covering the same
  9       bearing the number of such certificate. Upon completion of the project
10       the contractor shall furnish to the owner of the business or retail business
11       a sworn statement, on a form to be provided by the director of taxation,
12       that all purchases so made were entitled to exemption under this subsec-
13       tion. All invoices shall be held by the contractor for a period of five years
14       and shall be subject to audit by the director of taxation. Any contractor
15       or any agent, employee or subcontractor thereof, who shall use or oth-
16       erwise dispose of any materials, machinery or equipment purchased un-
17       der such a certificate for any purpose other than that for which such a
18       certificate is issued without the payment of the sales or compensating tax
19       otherwise imposed thereon, shall be guilty of a misdemeanor and, upon
20       conviction therefor, shall be subject to the penalties provided for in sub-
21       section (g) of K.S.A. 79-3615 and amendments thereto. As used in this
22       subsection, ``business'' and ``retail business'' have the meanings respec-
23       tively ascribed thereto by K.S.A. 74-50,114 and amendments thereto;
24             (dd) all sales of tangible personal property purchased with food
25       stamps issued by the United States department of agriculture;
26             (ee) all sales of lottery tickets and shares made as part of a lottery
27       operated by the state of Kansas;
28             (ff) on and after July 1, 1988, all sales of new mobile homes or man-
29       ufactured homes to the extent of 40% of the gross receipts, determined
30       without regard to any trade-in allowance, received from such sale. As used
31       in this subsection, ``mobile homes'' and ``manufactured homes'' shall have
32       the meanings ascribed thereto by K.S.A. 58-4202 and amendments
33       thereto;
34             (gg) all sales of tangible personal property purchased in accordance
35       with vouchers issued pursuant to the federal special supplemental food
36       program for women, infants and children;
37             (hh) all sales of medical supplies and equipment purchased directly
38       by a nonprofit skilled nursing home or nonprofit intermediate nursing
39       care home, as defined by K.S.A. 39-923, and amendments thereto, for
40       the purpose of providing medical services to residents thereof. This ex-
41       emption shall not apply to tangible personal property customarily used
42       for human habitation purposes;
43             (ii) all sales of tangible personal property purchased directly by a non-

9
  1       profit organization for nonsectarian comprehensive multidiscipline youth
  2       development programs and activities provided or sponsored by such or-
  3       ganization, and all sales of tangible personal property by or on behalf of
  4       any such organization. This exemption shall not apply to tangible personal
  5       property customarily used for human habitation purposes;
  6             (jj) all sales of tangible personal property or services, including the
  7       renting and leasing of tangible personal property, purchased directly on
  8       behalf of a community-based mental retardation facility or mental health
  9       center organized pursuant to K.S.A. 19-4001 et seq., and amendments
10       thereto, and licensed in accordance with the provisions of K.S.A. 75-
11       3307b and amendments thereto. This exemption shall not apply to tan-
12       gible personal property customarily used for human habitation purposes;
13             (kk) on and after January 1, 1989, all sales of machinery and equip-
14       ment used directly and primarily for the purposes of manufacturing, as-
15       sembling, processing, finishing, storing, warehousing or distributing ar-
16       ticles of tangible personal property in this state intended for resale by a
17       manufacturing or processing plant or facility or a storage, warehousing or
18       distribution facility, and all sales of repair and replacement parts and
19       accessories purchased for such machinery and equipment:
20             (1) For purposes of this subsection, machinery and equipment shall
21       be deemed to be used directly and primarily in the manufacture, assem-
22       blage, processing, finishing, storing, warehousing or distributing of tan-
23       gible personal property where such machinery and equipment is used
24       during a manufacturing, assembling, processing or finishing, storing,
25       warehousing or distributing operation:
26             (A) To effect a direct and immediate physical change upon the tan-
27       gible personal property;
28             (B) to guide or measure a direct and immediate physical change upon
29       such property where such function is an integral and essential part of
30       tuning, verifying or aligning the component parts of such property;
31             (C) to test or measure such property where such function is an in-
32       tegral part of the production flow or function;
33             (D) to transport, convey or handle such property during the manu-
34       facturing, processing, storing, warehousing or distribution operation at
35       the plant or facility; or
36             (E) to place such property in the container, package or wrapping in
37       which such property is normally sold or transported.
38             (2)  For purposes of this subsection ``machinery and equipment used
39       directly and primarily'' shall include, but not be limited to:
40             (A) Mechanical machines or components thereof contributing to a
41       manufacturing, assembling or finishing process;
42             (B) molds and dies that determine the physical characteristics of the
43       finished product or its packaging material;

10
  1             (C) testing equipment to determine the quality of the finished
  2       product;
  3             (D) computers and related peripheral equipment that directly control
  4       or measure the manufacturing process or which are utilized for engi-
  5       neering of the finished product; and
  6             (E) computers and related peripheral equipment utilized for research
  7       and development and product design.
  8             (3) ``Machinery and equipment used directly and primarily'' shall not
  9       include:
10             (A) Hand tools;
11             (B) machinery, equipment and tools used in maintaining and repair-
12       ing any type of machinery and equipment;
13             (C) transportation equipment not used in the manufacturing, assem-
14       bling, processing, furnishing, storing, warehousing or distributing process
15       at the plant or facility;
16             (D) office machines and equipment including computers and related
17       peripheral equipment not directly and primarily used in controlling or
18       measuring the manufacturing process;
19             (E) furniture and buildings; and
20             (F) machinery and equipment used in administrative, accounting,
21       sales or other such activities of the business;
22             (4) for purposes of this subsection, ``repair and replacement parts and
23       accessories'' means all parts and accessories for exempt machinery and
24       equipment, including but not limited to dies, jigs, molds, and patterns
25       which are attached to exempt machinery or which are otherwise used in
26       production, short-lived replaceable parts that can be readily detached
27       from exempt machinery or equipment, such as belts, drill bits, grinding
28       wheels, cutting bars and saws, and other replacement parts for production
29       equipment, including refractory brick and other refractory items for kiln
30       equipment used in production operations;
31             (ll) all sales of educational materials purchased for distribution to the
32       public at no charge by a nonprofit corporation organized for the purpose
33       of encouraging, fostering and conducting programs for the improvement
34       of public health;
35             (mm) all sales of seeds and tree seedlings; fertilizers, insecticides,
36       herbicides, germicides, pesticides and fungicides; and services, purchased
37       and used for the purpose of producing plants in order to prevent soil
38       erosion on land devoted to agricultural use;
39             (nn) except as otherwise provided in this act, all sales of services ren-
40       dered by an advertising agency or licensed broadcast station or any mem-
41       ber, agent or employee thereof;
42             (oo) all sales of tangible personal property purchased by a community
43       action group or agency for the exclusive purpose of repairing or weath-

11
  1       erizing housing occupied by low income individuals;
  2             (pp) all sales of drill bits and explosives actually utilized in the explo-
  3       ration and production of oil or gas;
  4             (qq) all sales of tangible personal property and services purchased by
  5       a nonprofit museum or historical society or any combination thereof, in-
  6       cluding a nonprofit organization which is organized for the purpose of
  7       stimulating public interest in the exploration of space by providing edu-
  8       cational information, exhibits and experiences, which is exempt from fed-
  9       eral income taxation pursuant to section 501(c)(3) of the federal internal
10       revenue code of 1986;
11             (rr) all sales of tangible personal property which will admit the pur-
12       chaser thereof to any annual event sponsored by a nonprofit organization
13       which is exempt from federal income taxation pursuant to section
14       501(c)(3) of the federal internal revenue code of 1986;
15             (ss) all sales of tangible personal property and services purchased by
16       a public broadcasting station licensed by the federal communications
17       commission as a noncommercial educational television or radio station;
18             (tt) all sales of tangible personal property and services purchased by
19       or on behalf of a not-for-profit corporation which is exempt from federal
20       income taxation pursuant to section 501(c)(3) of the federal internal rev-
21       enue code of 1986, for the sole purpose of constructing a Kansas Korean
22       War memorial;
23             (uu) all sales of tangible personal property and services purchased by
24       or on behalf of any rural volunteer fire-fighting organization for use ex-
25       clusively in the performance of its duties and functions;
26             (vv) all sales of tangible personal property purchased by any of the
27       following organizations which are exempt from federal income taxation
28       pursuant to section 501 (c)(3) of the federal internal revenue code of
29       1986, for the following purposes, and all sales of any such property by or
30       on behalf of any such organization for any such purpose:
31             (1) The American Heart Association, Kansas Affiliate, Inc. for the
32       purposes of providing education, training, certification in emergency car-
33       diac care, research and other related services to reduce disability and
34       death from cardiovascular diseases and stroke;
35             (2) the Kansas Alliance for the Mentally Ill, Inc. for the purpose of
36       advocacy for persons with mental illness and to education, research and
37       support for their families;
38             (3) the Kansas Mental Illness Awareness Council for the purposes of
39       advocacy for persons who are mentally ill and to education, research and
40       support for them and their families;
41             (4) the American Diabetes Association Kansas Affiliate, Inc. for the
42       purpose of eliminating diabetes through medical research, public edu-
43       cation focusing on disease prevention and education, patient education

12
  1       including information on coping with diabetes, and professional education
  2       and training;
  3             (5) the American Lung Association of Kansas, Inc. for the purpose of
  4       eliminating all lung diseases through medical research, public education
  5       including information on coping with lung diseases, professional educa-
  6       tion and training related to lung disease and other related services to
  7       reduce the incidence of disability and death due to lung disease;
  8             (6) the Kansas chapters of the Alzheimer's Disease and Related Dis-
  9       orders Association, Inc. for the purpose of providing assistance and sup-
10       port to persons in Kansas with Alzheimer's disease, and their families and
11       caregivers; and
12             (ww) all sales of tangible personal property purchased by the Habitat
13       for Humanity for the exclusive use of being incorporated within a housing
14       project constructed by such organization.
15             (xx) all sales of tangible personal property and services purchased by
16       a nonprofit zoo which is exempt from federal income taxation pursuant
17       to section 501 (c)(3) of the federal internal revenue code of 1986, or on
18       behalf of such zoo by an entity itself exempt from federal income taxation
19       pursuant to section 50[501] (c)(3) of the federal internal revenue code of
20       1986 contracted with to operate such zoo and all sales of tangible personal
21       property or services purchased by a contractor for the purpose of con-
22       structing, equipping, reconstructing, maintaining, repairing, enlarging,
23       furnishing or remodeling facilities for any nonprofit zoo which would be
24       exempt from taxation under the provisions of this section if purchased
25       directly by such nonprofit zoo or the entity operating such zoo. Nothing
26       in this subsection shall be deemed to exempt the purchase of any con-
27       struction machinery, equipment or tools used in the constructing, equip-
28       ping, reconstructing, maintaining, repairing, enlarging, furnishing or re-
29       modeling facilities for any nonprofit zoo. When any nonprofit zoo shall
30       contract for the purpose of constructing, equipping, reconstructing, main-
31       taining, repairing, enlarging, furnishing or remodeling facilities, it shall
32       obtain from the state and furnish to the contractor an exemption certifi-
33       cate for the project involved, and the contractor may purchase materials
34       for incorporation in such project. The contractor shall furnish the number
35       of such certificate to all suppliers from whom such purchases are made,
36       and such suppliers shall execute invoices covering the same bearing the
37       number of such certificate. Upon completion of the project the contractor
38       shall furnish to the nonprofit zoo concerned a sworn statement, on a form
39       to be provided by the director of taxation, that all purchases so made were
40       entitled to exemption under this subsection. All invoices shall be held by
41       the contractor for a period of five years and shall be subject to audit by
42       the director of taxation. If any materials purchased under such a certifi-
43       cate are found not to have been incorporated in the building or other

13
  1       project or not to have been returned for credit or the sales or compen-
  2       sating tax otherwise imposed upon such materials which will not be so
  3       incorporated in the building or other project reported and paid by such
  4       contractor to the director of taxation not later than the 20th day of the
  5       month following the close of the month in which it shall be determined
  6       that such materials will not be used for the purpose for which such cer-
  7       tificate was issued, the nonprofit zoo concerned shall be liable for tax on
  8       all materials purchased for the project, and upon payment thereof it may
  9       recover the same from the contractor together with reasonable attorney
10       fees. Any contractor or any agent, employee or subcontractor thereof,
11       who shall use or otherwise dispose of any materials purchased under such
12       a certificate for any purpose other than that for which such a certificate
13       is issued without the payment of the sales or compensating tax otherwise
14       imposed upon such materials, shall be guilty of a misdemeanor and, upon
15       conviction therefor, shall be subject to the penalties provided for in sub-
16       section (g) of K.S.A. 79-3615, and amendments thereto;
17             (yy) all sales of tangible personal property and services purchased by
18       a parent-teacher association or organization, and all sales of tangible per-
19       sonal property by or on behalf of such association or organization;
20             (zz) all sales of machinery and equipment purchased by over-the-air,
21       free access radio or television station which is used directly and primarily
22       for the purpose of producing a broadcast signal or is such that the failure
23       of the machinery or equipment to operate would cause broadcasting to
24       cease. For purposes of this subsection, machinery and equipment shall
25       include, but not be limited to, that required by rules and regulations of
26       the federal communications commission, and all sales of electricity which
27       are essential or necessary for the purpose of producing a broadcast signal
28       or is such that the failure of the electricity would cause broadcasting to
29       cease;
30             (aaa) all sales of tangible personal property and services purchased
31       by a religious organization which is exempt from federal income taxation
32       pursuant to section 501 (c)(3) of the federal internal revenue code, and
33       used exclusively for religious purposes; and
34             (bbb) all sales of food for human consumption by an organization
35       which is exempt from federal income taxation pursuant to section 501
36       (c)(3) of the federal internal revenue code of 1986, pursuant to a food
37       distribution program which offers such food at a price below cost in
38       exchange for the performance of community service by the purchaser
39       thereof.;
40             (ccc) all sales of materials and services purchased by any class II or
41       III railroad as classified by the federal interstate commerce commission
42       surface transportation board for the construction, renovation, repair
43       or replacement of class II or III railroad track and facilities used directly

14
  1       in interstate commerce. In the event any such track or facility for which
  2       materials and services were purchased sales tax exempt is not operational
  3       for five years succeeding the allowance of such exemption, the total
  4       amount of sales tax which would have been payable except for the oper-
  5       ation of this subsection shall be recouped in accordance with rules and
  6       regulations adopted for such purpose by the secretary of revenue; and
  7             (ddd) all sales of materials and services purchased for the original
  8       construction, reconstruction, repair or replacement of commercial grain
  9       storage facilities, including railroad sidings providing access thereto. 
10       Sec.  2. K.S.A. 1998 Supp. 79-3606 is hereby repealed.
11        Section  1. K.S.A. 1999 Supp. 12-2536 is hereby amended to
12       read as follows: 12-2536. The Kansas and Missouri metropolitan
13       culture district compact is hereby enacted into law and entered into
14       by the state of Kansas with the state of Missouri legally joining
15       therein, in the form substantially as follows:
16       Kansas and Missouri Metropolitan 17       Culture District Compact 18       Article I.--Agreement and Pledge 19             The states of Kansas and Missouri agree to and pledge, each to
20       the other, faithful cooperation in the future planning and develop-
21       ment of the metropolitan culture district, holding in high trust for
22       the benefit of its people and of the nation, the special blessings and
23       natural advantages thereof.
24       Article II.--Policy and Purpose 25             The party states, desiring by common action to fully utilize and
26       improve their cultural facilities, coordinate the services of their cul-
27       tural organizations, enhance the cultural activities of their citizens,
28       and achieve solid financial support for such cultural facilities, or-
29       ganizations and activities, declare that it is the policy of each state
30       to realize such desires on a basis of cooperation with one another,
31       thereby serving the best interests of their citizenry and effecting
32       economies in capital expenditures and operational costs. The pur-
33       pose of this compact is to provide for the creation of a metropolitan
34       culture district as the means to implementation of the policy herein
35       declared with the most beneficial and economical use of human and
36       material resources.
37       Article III.--Definitions 38             As used in this compact, unless the context clearly requires
39       otherwise:
40             (a) ``Metropolitan culture district'' means a political subdivi-
41       sion of the states of Kansas and Missouri which is created under and
42       pursuant to the provisions of this compact and which is composed
43       of the counties in the states of Kansas and Missouri which act to

15
  1       create or to become a part of the district in accordance with the
  2       provisions of Article IV.
  3             (b) ``Commission'' means the governing body of the metropoli-
  4       tan culture district.
  5             (c) ``Cultural activities'' means sports or activities which con-
  6       tribute to or enhance the aesthetic, artistic, historical, intellectual
  7       or social development or appreciation of members of the general
  8       public.
  9             (d) ``Cultural organizations'' means nonprofit and tax exempt
10       social, civic or community organizations and associations which are
11       dedicated to the development, provision, operation, supervision,
12       promotion or support of cultural activities in which members of the
13       general public may engage or participate.
14             (e) ``Cultural facilities'' means facilities operated or used for
15       sports or participation or engagement in cultural activities by mem-
16       bers of the general public.
17       Article IV.--The District 18             (a) The counties in Kansas and Missouri eligible to create and
19       initially compose the metropolitan culture district shall be those
20       counties which meet one or more of the following criteria: (1) The
21       county has a population in excess of 300,000, and is adjacent to the
22       state line; (2) the county contains a part of a city with a population
23       according to the most recent federal census of at least 400,000; or
24       (3) the county is contiguous to any county described in provisions
25       (1) or (2) of this subpart (a). The counties of Johnson in Kansas and
26       Jackson in Missouri shall be sine qua non to the creation and initial
27       composition of the district. Additional counties in Kansas and Mis-
28       souri shall be eligible to become a part of the metropolitan culture
29       district if such counties are contiguous to any one or more of the
30       counties which compose the district and within 60 miles of the coun-
31       ties required by this article to establish the district.
32             (b)  (1) Whenever the governing body of any county which is
33       eligible to create or become a part of the metropolitan culture dis-
34       trict shall determine that creation of or participation in the district
35       is in the best interests of the citizens of the county and that the levy
36       of a tax to provide on a cooperative basis with another county or
37       other counties for financial support of the district would be eco-
38       nomically practical and cost beneficial to the citizens of the county,
39       the governing body may adopt by majority vote a resolution au-
40       thorizing the same.
41             (2) Whenever a petition, signed by not less than the number of
42       qualified electors of an eligible county equal to 5% of the number
43       of ballots cast and counted at the last preceding gubernatorial elec-

16
  1       tion held in the county and requesting adoption of a resolution au-
  2       thorizing creation of or participation in the metropolitan culture
  3       district and the levy of a tax for the purpose of contributing to the
  4       financial support of the district, is filed with the governing body of
  5       the county, the governing body shall adopt such a resolution.
  6             (3) Implementation of a resolution adopted under this subpart
  7       (b) shall be conditioned upon approval of the resolution by a ma-
  8       jority of the qualified electors of the county voting at an election
  9       conducted for such purpose.
10             (c)  (1) Upon adoption of a resolution pursuant to subpart
11       (b)(1) or subpart (b)(2), the governing body of the county shall
12       request, within 36 months after adoption of the resolution, the
13       county election officer to submit to the qualified electors of the
14       county the question of whether the governing body shall be au-
15       thorized to implement the resolution. The resolution shall be
16       printed on the ballot and in the notice of election. The question shall
17       be submitted to the electors of the county at the primary or general
18       election next following the date of the request filed with the county
19       election officer. If a majority of the qualified electors are opposed
20       to implementation of the resolution authorizing creation of or par-
21       ticipation in the district and the levy of a tax for financial support
22       thereof, the same shall not be implemented. The governing body of
23       the county may renew procedures for authorization to create or
24       become a part of the district and to levy a tax for financial support
25       thereof at any time following rejection of the question.
26             (2) The ballot for the proposition in any county shall be sub-
27       stantially the following form:

28	``Shall a retail sales tax of _______	Yes
29       30	(insert amount, not to exceed 1/4 cent) be levied and collected in Kansas and Missouri metropolitancultural district consisting of the county(ies) of _______ (insert name of counties) for the support of cultural facilities and organizations within thedistrict?''	No

31             The governing body of the county may place additional language
32       on the ballot to describe the use or allocation of the funds.
33             (d)  (1) The metropolitan culture district shall be created when
34       implementation of a resolution authorizing the creation of the dis-
35       trict and the levy of a tax for contribution to the financial support
36       thereof is approved by respective majorities of the qualified electors
37       of at least Johnson county, Kansas, and Jackson county, Missouri.
38             (2) When implementation of a resolution authorizing partici-
39       pation in the metropolitan culture district and the levy of a tax for

17
  1       contribution to the financial support thereof is approved by a ma-
  2       jority of the qualified electors of any county eligible to become a
  3       part of the district, the governing body of the county shall proceed
  4       with the performance of all things necessary and incidental to par-
  5       ticipation in the district.
  6             (3) Any question for the levy of a tax submitted after July 1, 2000,
  7       may be submitted to the electors of the county at the primary or general
  8       election next following the date of the request filed with the county election
  9       officer; at a special election called and held as otherwise provided by law;
10       at an election called and held on the first Tuesday after the first Monday
11       in February, except in presidential election years; at an election called and
12       held on the first Tuesday after the first Monday in March, June, August
13       or November; or at an election called and held on the first Tuesday in
14       April, except that no question for a tax levy may be submitted to the
15       electors prior to January 1, 2002.
16             (4) No question shall be submitted to the electors authorizing the levy
17       of a tax the proceeds of which will be exclusively dedicated to sports or
18       sports facilities.
19             (e) Any of the counties composing the metropolitan culture dis-
20       trict may withdraw from the district by adoption of a resolution
21       and approval of the resolution by a majority of the qualified elec-
22       tors of the county, all in the same manner provided in this Article
23       IV for creating or becoming a part of the metropolitan culture dis-
24       trict. The governing body of a withdrawing county shall provide for
25       the sending of formal written notice of withdrawal from the district
26       to the governing body of the other county or each of the other coun-
27       ties comprising the district. Actual withdrawal shall not take effect
28       until 90 days after notice has been sent. A withdrawing county shall
29       not be relieved from any obligation which such county may have
30       assumed or incurred by reason of being a part of the district, in-
31       cluding, but not limited to, the retirement of any outstanding
32       bonded indebtedness of the district.
33       Article V.--The Commission 34             (a) The metropolitan culture district shall be governed by the
35       metropolitan culture commission which shall be a body corporate
36       and politic and which shall be composed of resident electors of the
37       states of Kansas and Missouri, respectively, as follows: (1) A mem-
38       ber of the governing body of each county which is a part of the
39       district, who shall be appointed by majority vote of such governing
40       body; (2) a member of the governing body of each city, with a pop-
41       ulation according to the most recent federal census of at least
42       50,000, located in whole or in part within each county which is a
43       part of the district, who shall be appointed by majority vote of such

18
  1       governing body; and (3) two members of the governing body of a county
  2       with a consolidated or unified county government and city of the first
  3       class which is a part of the district, who shall be appointed by majority
  4       vote of such governing body; (3) (4) a member of the arts commission
  5       of Kansas or the Kansas commission for the humanities, who shall
  6       be appointed by the governor of Kansas; and (5) a member of the
  7       arts commission of Missouri or the Missouri humanities council,
  8       who shall be appointed by the governor of Missouri. To the extent
  9       possible, the gubernatorial appointees to the commission shall be
10       residents of the district. The term of each commissioner initially
11       appointed by a county governing body shall expire concurrently
12       with such commissioner's tenure as a county officer or three years
13       after the date of appointment as a commissioner, whichever occurs
14       sooner. The term of each commissioner succeeding a commissioner
15       initially appointed by a county governing body shall expire con-
16       currently with such successor commissioner's tenure as a county
17       officer or four years after the date of appointment as a commis-
18       sioner, whichever occurs sooner. The term of each commissioner
19       initially appointed by a city governing body shall expire concur-
20       rently with such commissioner's tenure as a city officer or two years
21       after the date of appointment as a commissioner, whichever occurs
22       sooner. The term of each commissioner succeeding a commissioner
23       initially appointed by a city governing body shall expire concur-
24       rently with such successor commissioner's tenure as a city officer
25       or four years after the date of appointment as a commissioner,
26       whichever occurs sooner. The term of each commissioner appointed
27       by the governor of Kansas or the governor of Missouri shall expire
28       concurrently with the term of the appointing governor, the com-
29       missioner's tenure as a state officer, or four years after the date of
30       appointment as a commissioner of the district, whichever occurs
31       sooner. Any vacancy occurring in a commissioner position for rea-
32       sons other than expiration of terms of office shall be filled for the
33       unexpired term by appointment in the same manner that the origi-
34       nal appointment was made. Any commissioner may be removed for
35       cause by the appointing authority of the commissioner.
36             (b) The commission shall select annually, from its membership,
37       a chairperson, a vice-chairperson, and a treasurer. The treasurer
38       shall be bonded in such amounts as the commission may require.
39             (c) The commission may appoint such officers, agents and em-
40       ployees as it may require for the performance of its duties, and shall
41       determine the qualifications and duties and fix the compensation of
42       such officers, agents and employees.
43             (d) The commission shall fix the time and place at which its

19
  1       meetings shall be held. Meetings shall be held within the district
  2       and shall be open to the public. Public notice shall be given of all
  3       meetings.
  4             (e) A majority of the commissioners from each state shall con-
  5       stitute, in the aggregate, a quorum for the transaction of business.
  6       No action of the commission shall be binding unless taken at a meet-
  7       ing at which at least a quorum is present, and unless a majority of
  8       the commissioners from each state, present at such meeting, shall
  9       vote in favor thereof. No action of the commission taken at a meeting
10       thereof shall be binding unless the subject of such action is included
11       in a written agenda for such meeting, the agenda and notice of meet-
12       ing having been mailed to each commissioner by postage paid first-
13       class mail at least 14 calendar days prior to the meeting.
14             (f) The commissioners from each state shall be subject to the
15       provisions of the laws of the states of Kansas and Missouri, respec-
16       tively, which relate to conflicts of interest of public officers and
17       employees. If any commissioner has a direct or indirect financial
18       interest in any cultural facility, organization or activity supported
19       by the district or commission or in any other business transaction
20       of the district or commission, the commissioner shall disclose such
21       interest in writing to the other commissioners and shall abstain from
22       voting on any matter relating to such facility, organization or ac-
23       tivity or to such business transaction.
24             (g) If any action at law or equity, or other legal proceeding,
25       shall be brought against any commissioner for any act or omission
26       arising out of the performance of duties as a commissioner, the com-
27       missioner shall be indemnified in whole and held harmless by the
28       commission for any judgment or decree entered against the com-
29       missioner and, further, shall be defended at the cost and expense of
30       the commission in any such proceeding.
31       Article VI.--Powers and Duties of the Commission 32             (a) The commission shall adopt a seal and suitable bylaws gov-
33       erning its management and procedure.
34             (b) The commission has the power to contract and to be con-
35       tracted with, and to sue and to be sued.
36             (c) The commission may receive for any of its purposes and
37       functions any contributions or moneys appropriated by counties or
38       cities and may solicit and receive any and all donations, and grants
39       of money, equipment, supplies, materials and services from any
40       state or the United States or any agency thereof, or from any insti-
41       tution, foundation, organization, person, firm or corporation, and
42       may utilize and dispose of the same.
43             (d) Upon receipt of recommendations from the advisory com-

20
  1       mittee provided in subsection (g), the commission may provide do-
  2       nations, contributions and grants or other support, financial or oth-
  3       erwise, for or in aid of cultural organizations, facilities or activities
  4       in counties which are part of the district. In determining whether
  5       to provide any such support the commission shall consider the fol-
  6       lowing factors:
  7             (1) Economic impact upon the district;
  8             (2) cultural benefit to citizens of the district and to the general
  9       public;
10             (3) contribution to the quality of life and popular image of the
11       district;
12             (4) contribution to the geographical balance of cultural facili-
13       ties and activities within and outside the district;
14             (5) the breadth of popular appeal within and outside the dis-
15       trict;
16             (6) the needs of the community as identified in an objective cul-
17       tural needs assessment study of the metropolitan area; and
18             (7) any other factor deemed appropriate by the commission.
19             (e) The commission may own and acquire by gift, purchase,
20       lease or devise cultural facilities within the territory of the district.
21       The commission may plan, construct, operate and maintain and
22       contract for the operation and maintenance of cultural facilities
23       within the territory of the district. The commission may sell, lease
24       or otherwise dispose of cultural facilities within the territory of the
25       district.
26             (f) At any time following five years from and after the creation
27       of the metropolitan cultural district as provided in paragraph (1)
28       of subsection (d) of article IV, the commission, may borrow moneys
29       for the planning, construction, equipping, operation, maintenance,
30       repair, extension, expansion, or improvement of any cultural facil-
31       ity and, in that regard, the commission at such time may:
32             (1) Issue notes, bonds or other instruments in writing of the
33       commission in evidence of the sum or sums to be borrowed. No
34       notes, bonds or other instruments in writing shall be issued pursu-
35       ant to this subsection until the issuance of such notes, bonds or
36       instruments has been submitted to and approved by a majority of
37       the qualified electors of the district voting at an election called and
38       held thereon. Such election shall be called and held in the manner
39       provided by the general bond law;
40             (2) issue refunding notes, bonds or other instruments in writing
41       for the purpose of refunding, extending or unifying the whole or any
42       part of its outstanding indebtedness from time to time, whether ev-
43       idenced by notes, bonds or other instruments in writing. Such re-

21
  1       funding notes, bonds or other instruments in writing shall not ex-
  2       ceed in amount the principal of the outstanding indebtedness to be
  3       refunded and the accrued interest thereon to the date of such re-
  4       funding;
  5             (3) provide that all notes, bonds and other instruments in writ-
  6       ing issued hereunder shall or may be payable, both as to principal
  7       and interest, from sales tax revenues authorized under this compact
  8       and disbursed to the district by counties comprising the district,
  9       admissions and other revenues collected from the use of any cul-
10       tural facility or facilities constructed hereunder, or from any other
11       resources of the commission, and further may be secured by a mort-
12       gage or deed of trust upon any property interest of the commission;
13       and
14             (4) prescribe the details of all notes, bonds or other instruments
15       in writing, and of the issuance and sale thereof. The commission
16       shall have the power to enter into covenants with the holders of
17       such notes, bonds or other instruments in writing, not inconsistent
18       with the powers granted herein, without further legislative author-
19       ity.
20             (g) The commission shall appoint an advisory committee com-
21       posed of members of the general public consisting of an equal num-
22       ber of persons from both the states of Kansas and Missouri who have
23       demonstrated interest, expertise, knowledge or experience in cul-
24       tural organizations or activities. The advisory committee shall make
25       recommendations annually to the commission regarding donations,
26       contributions and grants or other support, financial or otherwise,
27       for or in aid of cultural organizations, facilities and activities in
28       counties which are part of the district.
29             (h) The commission may provide for actual and necessary ex-
30       penses of commissioners and advisory committee members incurred
31       in the performance of their official duties.
32             (i) The commission shall cause to be prepared annually a report
33       on the operations and transactions conducted by the commission
34       during the preceding year. The report shall be submitted to the
35       legislatures and governors of the compacting states, to the govern-
36       ing bodies of the counties comprising the district, and to the gov-
37       erning body of each city that appoints a commissioner. The com-
38       mission shall publish the annual report in the official county
39       newspaper of each of the counties comprising the district.
40             (j) The commission has the power to apply to the congress of
41       the United States for its consent and approval of the compact. In
42       the absence of the consent of congress and until consent is secured,
43       the compact is binding upon the states of Kansas and Missouri in

22
  1       all respects permitted by law for the two states, without the consent
  2       of congress, for the purposes enumerated and in the manner pro-
  3       vided in the compact.
  4             (k) The commission has the power to perform all other neces-
  5       sary and incidental functions and duties and to exercise all other
  6       necessary and appropriate powers not inconsistent with the consti-
  7       tution or laws of the United States or of either of the states of Kansas
  8       or Missouri to effectuate the same.
  9       Article VII.--Finance 10             (a) The moneys necessary to finance the operation of the met-
11       ropolitan culture district and the execution of the powers, duties
12       and responsibilities of the commission shall be appropriated to the
13       commission by the counties comprising the district. The moneys to
14       be appropriated to the commission shall be raised by the governing
15       bodies of the respective counties by the levy of taxes as authorized
16       by the legislatures of the respective party states.
17             (b) The commission shall not incur any indebtedness or obli-
18       gation of any kind; nor shall the commission pledge the credit of
19       either or any of the counties comprising the district or either of the
20       states party to this compact, except as authorized by article VI. The
21       budget of the district shall be prepared, adopted and published as
22       provided by law for other political subdivisions of the party states.
23       No budget shall be adopted by the commission until it has been
24       submitted to and reviewed by the governing bodies of the counties
25       comprising the district and the governing body of each city repre-
26       sented on the commission.
27             (c) The commission shall keep accurate accounts of all receipts
28       and disbursements. The receipts and disbursements of the commis-
29       sion shall be audited yearly by a certified or licensed public ac-
30       countant and the report of the audit shall be included in and become
31       part of the annual report of the commission.
32             (d) The accounts of the commission shall be open at any rea-
33       sonable time for inspection by duly authorized representatives of
34       the compacting states, the counties comprising the district, the cities
35       that appoint a commissioner, and other persons authorized by the
36       commission.
37       Article VIII.--Entry into Force 38             (a) This compact shall enter into force and become effective and
39       binding upon the states of Kansas and Missouri when it has been
40       enacted into law by the legislatures of the respective states.
41             (b) Amendments to the compact shall become effective upon en-
42       actment by the legislatures of the respective states.

23
  1       Article IX.--Termination   2             This compact shall continue in force and remain binding upon a
  3       party state until its legislature shall have enacted a statute repeal-
  4       ing the same and providing for the sending of formal written notice
  5       of enactment of such statute to the legislature of the other party
  6       state. Upon enactment of such a statute by the legislature of either
  7       party state, the sending of notice thereof to the other party state,
  8       and payment of any obligations which the metropolitan culture dis-
  9       trict commission may have incurred prior to the effective date of
10       such statute, including, but not limited to, the retirement of any
11       outstanding bonded indebtedness of the district, the agreement of
12       the party states embodied in the compact shall be deemed fully ex-
13       ecuted, the compact shall be null and void and of no further force
14       or effect, the metropolitan culture district shall be dissolved, and
15       the metropolitan culture district commission shall be abolished.
16       Article X.--Construction and Severability 17             The provisions of this compact shall be liberally construed and
18       shall be severable. If any phrase, clause, sentence or provision of
19       this compact is declared to be contrary to the constitution of either
20       of the party states or of the United States or the applicability thereof
21       to any government, agency, person or circumstance is held invalid,
22       the validity of the remainder of this compact and the applicability
23       thereof to any government, agency, person or circumstance shall
24       not be affected thereby. If this compact shall be held contrary to
25       the constitution of either of the states party thereto, the compact
26       shall thereby be nullified and voided and of no further force or
27       effect.
28        [Sec.  2. K.S.A. 1999 Supp. 12-187 is hereby amended to read
29       as follows: 12-187. (a) (1) No city shall impose a retailers' sales tax
30       under the provisions of this act without the governing body of such
31       city having first submitted such proposition to and having received
32       the approval of a majority of the electors of the city voting thereon
33       at an election called and held therefor. The governing body of any
34       city may submit the question of imposing a retailers' sales tax and
35       the governing body shall be required to submit the question upon
36       submission of a petition signed by electors of such city equal in
37       number to not less than 10% of the electors of such city.
38             [(2) The governing body of any class B city located in any
39       county which does not impose a countywide retailers' sales tax pur-
40       suant to paragraph (5) of subsection (b) may submit the question
41       of imposing a retailers' sales tax at the rate of .25%, .5%, .75% or
42       1% and pledging the revenue received therefrom for the purpose of
43       financing the provision of health care services, as enumerated in the

24
  1       question, to the electors at an election called and held thereon. The
  2       tax imposed pursuant to this paragraph shall be deemed to be in
  3       addition to the rate limitations prescribed in K.S.A. 12-189, and
  4       amendments thereto. As used in this paragraph, health care services
  5       shall include but not be limited to the following: Local health de-
  6       partments, city, county or district hospitals, city or county nursing
  7       homes, preventive health care services including immunizations,
  8       prenatal care and the postponement of entry into nursing homes by
  9       home health care services, mental health services, indigent health
10       care, physician or health care worker recruitment, health educa-
11       tion, emergency medical services, rural health clinics, integration
12       of health care services, home health services and rural health net-
13       works.
14             [(b)  (1) The board of county commissioners of any county may
15       submit the question of imposing a countywide retailers' sales tax to
16       the electors at an election called and held thereon, and any such
17       board shall be required to submit the question upon submission of
18       a petition signed by electors of such county equal in number to not
19       less than 10% of the electors of such county who voted at the last
20       preceding general election for the office of secretary of state, or
21       upon receiving resolutions requesting such an election passed by
22       not less than 2/3 of the membership of the governing body of each of
23       one or more cities within such county which contains a population
24       of not less than 25% of the entire population of the county, or upon
25       receiving resolutions requesting such an election passed by 2/3 of the
26       membership of the governing body of each of one or more taxing
27       subdivisions within such county which levy not less than 25% of the
28       property taxes levied by all taxing subdivisions within the county.
29             [(2) The board of county commissioners of Atchison, Barton,
30       Butler, Cowley, Cherokee, Crawford, Ford, Jefferson, Lyon, Mont-
31       gomery, Neosho, Osage, Ottawa, Riley, Saline, Seward, Wabaunsee,
32       Wilson and Wyandotte counties may submit the question of impos-
33       ing a countywide retailers' sales tax and pledging the revenue re-
34       ceived therefrom for the purpose of financing the construction or
35       remodeling of a courthouse, jail, law enforcement center facility or
36       other county administrative facility, to the electors at an election
37       called and held thereon. The tax imposed pursuant to this para-
38       graph shall expire when sales tax sufficient to pay all of the costs
39       incurred in the financing of such facility has been collected by re-
40       tailers as determined by the secretary of revenue. Nothing in this
41       paragraph shall be construed to allow the rate of tax imposed by
42       Butler, Cowley, Lyon, Montgomery or, Neosho, Riley or Wilson
43       county pursuant to this paragraph to exceed or be imposed at any

25
  1       rate other than the rates prescribed in K.S.A. 12-189, and amend-
  2       ments thereto.
  3             [(3)  (A) Except as otherwise provided in this paragraph, the
  4       result of the election held on November 8, 1988, on the question
  5       submitted by the board of county commissioners of Jackson county
  6       for the purpose of increasing its countywide retailers' sales tax by
  7       1% is hereby declared valid, and the revenue received therefrom by
  8       the county shall be expended solely for the purpose of financing the
  9       Banner Creek reservoir project. The tax imposed pursuant to this
10       paragraph shall take effect on the effective date of this act and shall
11       expire not later than five years after such date.
12             [(B) The result of the election held on November 8, 1994, on the
13       question submitted by the board of county commissioners of Ottawa
14       county for the purpose of increasing its countywide retailers' sales
15       tax by 1% is hereby declared valid, and the revenue received there-
16       from by the county shall be expended solely for the purpose of fi-
17       nancing the erection, construction and furnishing of a law enforce-
18       ment center and jail facility.
19             [(4) The board of county commissioners of Finney and Ford
20       counties may submit the question of imposing a countywide retail-
21       ers' sales tax at the rate of .25% and pledging the revenue received
22       therefrom for the purpose of financing all or any portion of the cost
23       to be paid by Finney or Ford county for construction of highway
24       projects identified as system enhancements under the provisions of
25       paragraph (5) of subsection (b) of K.S.A. 68-2314, and amendments
26       thereto, to the electors at an election called and held thereon. Such
27       election shall be called and held in the manner provided by the
28       general bond law. The tax imposed pursuant to this paragraph shall
29       expire upon the payment of all costs authorized pursuant to this
30       paragraph in the financing of such highway projects. Nothing in
31       this paragraph shall be construed to allow the rate of tax imposed
32       by Finney or Ford county pursuant to this paragraph to exceed the
33       maximum rate prescribed in K.S.A. 12-189, and amendments
34       thereto. If any funds remain upon the payment of all costs author-
35       ized pursuant to this paragraph in the financing of such highway
36       projects in Finney county, the state treasurer shall remit such funds
37       to the treasurer of Finney county and upon receipt of such moneys
38       shall be deposited to the credit of the county road and bridge fund.
39       If any funds remain upon the payment of all costs authorized pur-
40       suant to this paragraph in the financing of such highway projects
41       in Ford county, the state treasurer shall remit such funds to the
42       treasurer of Ford county and upon receipt of such moneys shall be
43       deposited to the credit of the county road and bridge fund.

26
  1             [(5) The board of county commissioners of any county may sub-
  2       mit the question of imposing a retailers' sales tax at the rate of .25%,
  3       .5%, .75% or 1% and pledging the revenue received therefrom for
  4       the purpose of financing the provision of health care services, as
  5       enumerated in the question, to the electors at an election called and
  6       held thereon. Whenever any county imposes a tax pursuant to this
  7       paragraph, any tax imposed pursuant to paragraph (2) of subsec-
  8       tion (a) by any city located in such county shall expire upon the
  9       effective date of the imposition of the countywide tax, and thereafter
10       the state treasurer shall remit to each such city that portion of the
11       countywide tax revenue collected by retailers within such city as
12       certified by the director of taxation. The tax imposed pursuant to
13       this paragraph shall be deemed to be in addition to the rate limi-
14       tations prescribed in K.S.A. 12-189, and amendments thereto. As
15       used in this paragraph, health care services shall include but not
16       be limited to the following: Local health departments, city or county
17       hospitals, city or county nursing homes, preventive health care serv-
18       ices including immunizations, prenatal care and the postponement
19       of entry into nursing homes by home care services, mental health
20       services, indigent health care, physician or health care worker re-
21       cruitment, health education, emergency medical services, rural
22       health clinics, integration of health care services, home health serv-
23       ices and rural health networks.
24             [(6) The board of county commissioners of Allen county may
25       submit the question of imposing a countywide retailers' sales tax at
26       the rate of .5% and pledging the revenue received therefrom for the
27       purpose of financing the costs of operation and construction of a
28       solid waste disposal area or the modification of an existing landfill
29       to comply with federal regulations to the electors at an election
30       called and held thereon. The tax imposed pursuant to this para-
31       graph shall expire upon the payment of all costs incurred in the
32       financing of the project undertaken. Nothing in this paragraph shall
33       be construed to allow the rate of tax imposed by Allen county pur-
34       suant to this paragraph to exceed or be imposed at any rate other
35       than the rates prescribed in K.S.A. 12-189 and amendments thereto.
36             [(7) The board of county commissioners of Clay, Dickinson and
37       Miami county may submit the question of imposing a countywide
38       retailers' sales tax at the rate of .50% in the case of Clay and Dickinson
39       county and at a rate of up to 1% in the case of Miami county, and pledg-
40       ing the revenue received therefrom for the purpose of financing the
41       costs of roadway construction and improvement to the electors at
42       an election called and held thereon. The tax imposed pursuant to
43       this paragraph shall expire after five years from the date such tax

27
  1       is first collected.
  2             [(8) The board of county commissioners of Sherman county may
  3       submit the question of imposing a countywide retailers' sales tax at
  4       the rate of .25%, .5% or .75% and pledging the revenue therefrom
  5       for the purpose of financing the costs of the county roads 64 and 65
  6       construction and improvement project. The tax imposed pursuant
  7       to this paragraph shall expire upon payment of all costs authorized
  8       pursuant to this paragraph in the financing of such project.
  9             [(9) The board of county commissioners of Cowley and, Russell
10       and Woodson county may submit the question of imposing a coun-
11       tywide retailers' sales tax at the rate of .5% in the case of Russell
12       and Woodson county and at a rate of up to .25%, in the case of
13       Cowley county and pledging the revenue received therefrom for the
14       purpose of financing economic development initiatives or public in-
15       frastructure projects. The tax imposed pursuant to this paragraph
16       shall expire after five years from the date such tax is first collected.
17             [(10) The board of county commissioners of Franklin county may
18       submit the question of imposing a countywide retailers' sales tax at the
19       rate of .25% and pledging the revenue received therefrom for the purpose
20       of financing recreational facilities. The tax imposed pursuant to this par-
21       agraph shall expire upon payment of all costs authorized in financing such
22       facilities.
23        [(c) The boards of county commissioners of any two or more
24       contiguous counties, upon adoption of a joint resolution by such
25       boards, may submit the question of imposing a retailers' sales tax
26       within such counties to the electors of such counties at an election
27       called and held thereon and such boards of any two or more con-
28       tiguous counties shall be required to submit such question upon
29       submission of a petition in each of such counties, signed by a num-
30       ber of electors of each of such counties where submitted equal in
31       number to not less than 10% of the electors of each of such counties
32       who voted at the last preceding general election for the office of
33       secretary of state, or upon receiving resolutions requesting such an
34       election passed by not less than 2/3 of the membership of the gov-
35       erning body of each of one or more cities within each of such coun-
36       ties which contains a population of not less than 25% of the entire
37       population of each of such counties, or upon receiving resolutions
38       requesting such an election passed by 2/3 of the membership of the
39       governing body of each of one or more taxing subdivisions within
40       each of such counties which levy not less than 25% of the property
41       taxes levied by all taxing subdivisions within each of such counties.
42             [(d) Any city retailers' sales tax in the amount of .5% being lev-
43       ied by a city on July 1, 1990, shall continue in effect until repealed

28
  1       in the manner provided herein for the adoption and approval of
  2       such tax or until repealed by the adoption of an ordinance so pro-
  3       viding. In addition to any city retailers' sales tax being levied by a
  4       city on July 1, 1990, any such city may adopt an additional city
  5       retailers' sales tax in the amount of .25% or .5%, provided that such
  6       additional tax is adopted and approved in the manner provided for
  7       the adoption and approval of a city retailers' sales tax. Any coun-
  8       tywide retailers' sales tax in the amount of .5% or 1% in effect on
  9       July 1, 1990, shall continue in effect until repealed in the manner
10       provided herein for the adoption and approval of such tax.
11             [(e) A class D city shall have the same power to levy and collect
12       a city retailers' sales tax that a class A city is authorized to levy and
13       collect and in addition, the governing body of any class D city may
14       submit the question of imposing an additional city retailers' sales
15       tax in the amount of .125%, .25%, .5% or .75% and pledging the
16       revenue received therefrom for economic development initiatives,
17       strategic planning initiatives or for public infrastructure projects
18       including buildings to the electors at an election called and held
19       thereon. Any additional sales tax imposed pursuant to this para-
20       graph shall expire no later than five years from the date of impo-
21       sition thereof, except that any such tax imposed by any class D city after
22       the effective date of this act shall expire no later than 10 years from the
23       date of imposition thereof.
24             [(f) Any city or county proposing to adopt a retailers' sales tax
25       shall give notice of its intention to submit such proposition for ap-
26       proval by the electors in the manner required by K.S.A. 10-120, and
27       amendments thereto. The notices shall state the time of the election
28       and the rate and effective date of the proposed tax. If a majority of
29       the electors voting thereon at such election fail to approve the prop-
30       osition, such proposition may be resubmitted under the conditions
31       and in the manner provided in this act for submission of the prop-
32       osition. If a majority of the electors voting thereon at such election
33       shall approve the levying of such tax, the governing body of any
34       such city or county shall provide by ordinance or resolution, as the
35       case may be, for the levy of the tax. Any repeal of such tax or any
36       reduction or increase in the rate thereof, within the limits pre-
37       scribed by K.S.A. 12-189, and amendments thereto, shall be accom-
38       plished in the manner provided herein for the adoption and ap-
39       proval of such tax except that the repeal of any such city retailers'
40       sales tax may be accomplished by the adoption of an ordinance so
41       providing.
42             [(g) The sufficiency of the number of signers of any petition filed
43       under this section shall be determined by the county election offi-

29
  1       cer. Every election held under this act shall be conducted by the
  2       county election officer.
  3             [(h) The governing body of the city or county proposing to levy
  4       any retailers' sales tax shall specify the purpose or purposes for
  5       which the revenue would be used, and a statement generally de-
  6       scribing such purpose or purposes shall be included as a part of the
  7       ballot proposition.
  8             [Sec.  3. K.S.A. 1999 Supp. 12-188 is hereby amended to read
  9       as follows: 12-188. The following classes of cities are hereby estab-
10       lished for the purpose of imposing limitations and prohibitions upon
11       the levying of sales and excise taxes or taxes in the nature of an
12       excise upon sales or transfers of personal or real property or the
13       use thereof, or the rendering or furnishing of services by cities as
14       authorized and provided by article 12, section 5, of the constitution
15       of the state of Kansas:
16             [Class A cities. All cities in the state of Kansas which have the
17       authority to levy and collect excise taxes or taxes in the nature of
18       an excise upon the sales or transfers of personal or real property or
19       the use thereof, or the rendering or furnishing of services by cities.
20             [Class B cities. All cities in the state of Kansas which have the
21       authority to levy and collect excise taxes or taxes in the nature of
22       an excise upon the sales or transfers of personal or real property or
23       the use thereof, or the rendering or furnishing of services for the
24       purpose of financing the provision of health care services.
25             [Class C cities. All cities in the state of Kansas having a popula-
26       tion of more than 290,000 located in a county having a population
27       of more than 350,000 which has the authority to levy and collect
28       excise taxes or taxes in the nature of an excise upon the sales or
29       transfers of personal or real property or the use thereof, or the ren-
30       dering or furnishing of services.
31             [Class D cities. All cities in the state of Kansas located in Cowley,
32       Ellis, Ellsworth, Finney, Harper, [johnson, Labette, Lyon, Mont-
33       gomery, Osage or, Reno or Woodson county or in both Riley and
34       Pottawatomie counties which have the authority to levy and collect
35       excise taxes or taxes in the nature of an excise upon the sales or
36       transfers of personal or real property or the use thereof, or the ren-
37       dering or furnishing of services.
38             [Sec.  4. K.S.A. 1999 Supp. 12-189 is hereby amended to read
39       as follows: 12-189. Except as otherwise provided by paragraph (2)
40       of subsection (a) of K.S.A. 12-187, and amendments thereto, the rate
41       of any class A, class B or class C city retailers' sales tax shall be
42       fixed in the amount of .25%, .5%, .75% or 1% which amount shall
43       be determined by the governing body of the city. Except as other-

30
  1       wise provided by paragraph (2) of subsection (a) of K.S.A. 12-187,
  2       and amendments thereto, the rate of any class D city retailers' sales
  3       tax shall be fixed in the amount of .25%, .5%, .75%, 1%, 1.125%,
  4       1.25%, 1.5% or 1.75%. The rate of any countywide retailers' sales
  5       tax shall be fixed in an amount of either .25%, .5%, .75% or 1%
  6       which amount shall be determined by the board of county commis-
  7       sioners, except that:
  8             [(a) The board of county commissioners of Wabaunsee county, for
  9       the purposes of paragraph (2) of subsection (b) of K.S.A. 12-187, and
10       amendments thereto, may fix such rate at 1.25%; the board of county
11       commissioners of Osage county, for the purposes of paragraph (2) of sub-
12       section (b) of K.S.A. 12-187, and amendments thereto, may fix such rate
13       at 1.25% or 1.5%; the board of county commissioners of Cherokee,
14       Crawford, Ford, Saline, Seward or Wyandotte county, for the pur-
15       poses of paragraph (2) of subsection (b) of K.S.A. 12-187, and
16       amendments thereto, may fix such rate at 1.5%, the board of county
17       commissioners of Atchison county, for the purposes of paragraph
18       (2) of subsection (b) of K.S.A. 12-187, and amendments thereto, may
19       fix such rate at 1.5% or 1.75% and the board of county commis-
20       sioners of Barton, Jefferson or Ottawa county, for the purposes of
21       paragraph (2) of subsection (b) of K.S.A. 12-187, and amendments
22       thereto, may fix such rate at 2%;
23             [(b) the board of county commissioners of Jackson county, for
24       the purposes of paragraph (3) of subsection (b) of K.S.A. 12-187,
25       and amendments thereto, may fix such rate at 2%;
26             [(c) the boards of county commissioners of Finney and Ford
27       counties, for the purposes of paragraph (4) of subsection (b) of
28       K.S.A. 12-187, and amendments thereto, may fix such rate at .25%;
29             [(d) the board of county commissioners of any county for the
30       purposes of paragraph (5) of subsection (b) of K.S.A. 12-187, and
31       amendments thereto, may fix such rate at a percentage which is
32       equal to the sum of the rate allowed to be imposed by a board of
33       county commissioners on the effective date of this act plus .25%,
34       .5%, .75% or 1%, as the case requires;
35             [(e) the board of county commissioners of Dickinson county, for
36       the purposes of paragraph (7) of subsection (b) of K.S.A. 12-187,
37       and amendments thereto, may fix such rate at 1.5%, and the board
38       of county commissioners of Miami county, for the purposes of paragraph
39       (7) of subsection (b) of K.S.A. 12-187, and amendments thereto, may fix
40       such rate at 1.25%, 1.5%, 1.75% or 2%;
41             [(f) the board of county commissioners of Sherman county, for
42       the purposes of paragraph (8) of subsection (b) of K.S.A. 12-187, and
43       amendments thereto, may fix such rate at 1.5%, 1.75% or 2%; or

31
  1             [(g) the board of county commissioners of Russell county for the
  2       purposes of paragraph (9) of subsection (b) of K.S.A. 12-187, and
  3       amendments thereto, may fix such rate at 1.5%; or
  4             [(h) the board of county commissioners of Franklin county, for the
  5       purposes of paragraph (10) of subsection (b) of K.S.A. 12-187, and amend-
  6       ments thereto, may fix such rate at 1.75%.
  7             [Any county or city levying a retailers' sales tax is hereby pro-
  8       hibited from administering or collecting such tax locally, but shall
  9       utilize the services of the state department of revenue to administer,
10       enforce and collect such tax. Except as otherwise specifically pro-
11       vided in K.S.A. 12-189a, and amendments thereto, such tax shall be
12       identical in its application, and exemptions therefrom, to the Kansas
13       retailers' sales tax act and all laws and administrative rules and
14       regulations of the state department of revenue relating to the Kansas
15       retailers' sales tax shall apply to such local sales tax insofar as such
16       laws and rules and regulations may be made applicable. The state
17       director of taxation is hereby authorized to administer, enforce and
18       collect such local sales taxes and to adopt such rules and regulations
19       as may be necessary for the efficient and effective administration
20       and enforcement thereof.
21             [Upon receipt of a certified copy of an ordinance or resolution
22       authorizing the levy of a local retailers' sales tax, the state director
23       of taxation shall cause such taxes to be collected within or without
24       the boundaries of such taxing subdivision at the same time and in
25       the same manner provided for the collection of the state retailers'
26       sales tax. All moneys collected by the director of taxation under the
27       provisions of this section shall be credited to a county and city re-
28       tailers' sales tax fund which fund is hereby established in the state
29       treasury. Any refund due on any county or city retailers' sales tax
30       collected pursuant to this act shall be paid out of the sales tax refund
31       fund and reimbursed by the director of taxation from collections of
32       local retailers' sales tax revenue. Except for local retailers' sales tax
33       revenue required to be deposited in the redevelopment bond fund estab-
34       lished under K.S.A. 1999 Supp. 74-8927, and amendments thereto, all
35       local retailers' sales tax revenue collected within any county or city
36       pursuant to this act shall be apportioned and remitted at least quar-
37       terly by the state treasurer, on instruction from the director of tax-
38       ation, to the treasurer of such county or city.
39             [The director of taxation shall provide, upon request by a city or
40       county clerk or treasurer of any city or county levying a local re-
41       tailers' sales tax, a monthly report identifying each retailer having
42       a place of business in such city or county and setting forth the
43       amount of such tax remitted by each retailer during the preceding

32
  1       month. Such report shall be made available to the clerk or treasurer
  2       of such city or county within a reasonable time after it has been
  3       requested from the director of taxation. The director of taxation
  4       shall be allowed to assess a reasonable fee for the issuance of such
  5       report. Information received by any city or county pursuant to this
  6       section shall be confidential, and it shall be unlawful for any officer
  7       or employee of such city or county to divulge any such information
  8       in any manner. Any violation of this paragraph by a city or county
  9       officer or employee is a class B misdemeanor, and such officer or
10       employee shall be dismissed from office.
11        [Sec.  5. K.S.A. 1999 Supp. 79-3606 is hereby amended to read
12       as follows: 79-3606. The following shall be exempt from the tax im-
13       posed by this act:
14             [(a) All sales of motor-vehicle fuel or other articles upon which
15       a sales or excise tax has been paid, not subject to refund, under the
16       laws of this state except cigarettes as defined by K.S.A. 79-3301 and
17       amendments thereto, cereal malt beverages and malt products as
18       defined by K.S.A. 79-3817 and amendments thereto, including wort,
19       liquid malt, malt syrup and malt extract, which is not subject to
20       taxation under the provisions of K.S.A. 79-41a02 and amendments
21       thereto, motor vehicles taxed pursuant to K.S.A. 79-5117, and
22       amendments thereto, tires taxed pursuant to K.S.A. 1999 Supp. 65-
23       3424d, and amendments thereto, and drycleaning and laundry serv-
24       ices taxed pursuant to K.S.A. 1999 Supp. 65-34,150, and amend-
25       ments thereto;
26             [(b) all sales of tangible personal property or service, including
27       the renting and leasing of tangible personal property, purchased
28       directly by the state of Kansas, a political subdivision thereof, other
29       than a school or educational institution, or purchased by a public
30       or private nonprofit hospital or public hospital authority or non-
31       profit blood, tissue or organ bank and used exclusively for state,
32       political subdivision, hospital or public hospital authority or non-
33       profit blood, tissue or organ bank purposes, except when: (1) Such
34       state, hospital or public hospital authority is engaged or proposes
35       to engage in any business specifically taxable under the provisions
36       of this act and such items of tangible personal property or service
37       are used or proposed to be used in such business, or (2) such polit-
38       ical subdivision is engaged or proposes to engage in the business of
39       furnishing gas, water, electricity or heat to others and such items
40       of personal property or service are used or proposed to be used in
41       such business;
42             [(c) all sales of tangible personal property or services, including
43       the renting and leasing of tangible personal property, purchased

33
  1       directly by a public or private elementary or secondary school or
  2       public or private nonprofit educational institution and used pri-
  3       marily by such school or institution for nonsectarian programs and
  4       activities provided or sponsored by such school or institution or in
  5       the erection, repair or enlargement of buildings to be used for such
  6       purposes. The exemption herein provided shall not apply to erec-
  7       tion, construction, repair, enlargement or equipment of buildings
  8       used primarily for human habitation;
  9             [(d) all sales of tangible personal property or services pur-
10       chased by a contractor for the purpose of constructing, equipping,
11       reconstructing, maintaining, repairing, enlarging, furnishing or re-
12       modeling facilities for any public or private nonprofit hospital or
13       public hospital authority, public or private elementary or second-
14       ary school or a public or private nonprofit educational institution,
15       which would be exempt from taxation under the provisions of this
16       act if purchased directly by such hospital or public hospital au-
17       thority, school or educational institution; and all sales of tangible
18       personal property or services purchased by a contractor for the
19       purpose of constructing, equipping, reconstructing, maintaining,
20       repairing, enlarging, furnishing or remodeling facilities for any po-
21       litical subdivision of the state, the total cost of which is paid from
22       funds of such political subdivision and which would be exempt from
23       taxation under the provisions of this act if purchased directly by
24       such political subdivision. Nothing in this subsection or in the pro-
25       visions of K.S.A. 12-3418 and amendments thereto, shall be deemed
26       to exempt the purchase of any construction machinery, equipment
27       or tools used in the constructing, equipping, reconstructing, main-
28       taining, repairing, enlarging, furnishing or remodeling facilities for
29       any political subdivision of the state. As used in this subsection,
30       K.S.A. 12-3418 and 79-3640, and amendments thereto, ``funds of a
31       political subdivision'' shall mean general tax revenues, the proceeds
32       of any bonds and gifts or grants-in-aid. Gifts shall not mean funds
33       used for the purpose of constructing, equipping, reconstructing, re-
34       pairing, enlarging, furnishing or remodeling facilities which are to
35       be leased to the donor. When any political subdivision of the state,
36       public or private nonprofit hospital or public hospital authority,
37       public or private elementary or secondary school or public or pri-
38       vate nonprofit educational institution shall contract for the purpose
39       of constructing, equipping, reconstructing, maintaining, repairing,
40       enlarging, furnishing or remodeling facilities, it shall obtain from
41       the state and furnish to the contractor an exemption certificate for
42       the project involved, and the contractor may purchase materials for
43       incorporation in such project. The contractor shall furnish the num-

34
  1       ber of such certificate to all suppliers from whom such purchases
  2       are made, and such suppliers shall execute invoices covering the
  3       same bearing the number of such certificate. Upon completion of
  4       the project the contractor shall furnish to the political subdivision,
  5       hospital or public hospital authority, school or educational insti-
  6       tution concerned a sworn statement, on a form to be provided by
  7       the director of taxation, that all purchases so made were entitled to
  8       exemption under this subsection. As an alternative to the foregoing
  9       procedure, any such contracting entity may apply to the secretary
10       of revenue for agent status for the sole purpose of issuing and fur-
11       nishing project exemption certificates to contractors pursuant to
12       rules and regulations adopted by the secretary establishing condi-
13       tions and standards for the granting and maintaining of such status.
14       All invoices shall be held by the contractor for a period of five years
15       and shall be subject to audit by the director of taxation. If any
16       materials purchased under such a certificate are found not to have
17       been incorporated in the building or other project or not to have
18       been returned for credit or the sales or compensating tax otherwise
19       imposed upon such materials which will not be so incorporated in
20       the building or other project reported and paid by such contractor
21       to the director of taxation not later than the 20th day of the month
22       following the close of the month in which it shall be determined that
23       such materials will not be used for the purpose for which such cer-
24       tificate was issued, the political subdivision, hospital or public hos-
25       pital authority, school or educational institution concerned shall be
26       liable for tax on all materials purchased for the project, and upon
27       payment thereof it may recover the same from the contractor to-
28       gether with reasonable attorney fees. Any contractor or any agent,
29       employee or subcontractor thereof, who shall use or otherwise dis-
30       pose of any materials purchased under such a certificate for any
31       purpose other than that for which such a certificate is issued with-
32       out the payment of the sales or compensating tax otherwise imposed
33       upon such materials, shall be guilty of a misdemeanor and, upon
34       conviction therefor, shall be subject to the penalties provided for in
35       subsection (g) of K.S.A. 79-3615, and amendments thereto;
36             [(e) all sales of tangible personal property or services purchased
37       by a contractor for the erection, repair or enlargement of buildings
38       or other projects for the government of the United States, its agen-
39       cies or instrumentalities, which would be exempt from taxation if
40       purchased directly by the government of the United States, its agen-
41       cies or instrumentalities. When the government of the United States,
42       its agencies or instrumentalities shall contract for the erection, re-
43       pair, or enlargement of any building or other project, it shall obtain

35
  1       from the state and furnish to the contractor an exemption certificate
  2       for the project involved, and the contractor may purchase materials
  3       for incorporation in such project. The contractor shall furnish the
  4       number of such certificates to all suppliers from whom such pur-
  5       chases are made, and such suppliers shall execute invoices covering
  6       the same bearing the number of such certificate. Upon completion
  7       of the project the contractor shall furnish to the government of the
  8       United States, its agencies or instrumentalities concerned a sworn
  9       statement, on a form to be provided by the director of taxation, that
10       all purchases so made were entitled to exemption under this sub-
11       section. As an alternative to the foregoing procedure, any such con-
12       tracting entity may apply to the secretary of revenue for agent
13       status for the sole purpose of issuing and furnishing project exemp-
14       tion certificates to contractors pursuant to rules and regulations
15       adopted by the secretary establishing conditions and standards for
16       the granting and maintaining of such status. All invoices shall be
17       held by the contractor for a period of five years and shall be subject
18       to audit by the director of taxation. Any contractor or any agent,
19       employee or subcontractor thereof, who shall use or otherwise dis-
20       pose of any materials purchased under such a certificate for any
21       purpose other than that for which such a certificate is issued with-
22       out the payment of the sales or compensating tax otherwise imposed
23       upon such materials, shall be guilty of a misdemeanor and, upon
24       conviction therefor, shall be subject to the penalties provided for in
25       subsection (g) of K.S.A. 79-3615 and amendments thereto;
26             [(f) tangible personal property purchased by a railroad or pub-
27       lic utility for consumption or movement directly and immediately
28       in interstate commerce;
29             [(g) sales of aircraft including remanufactured and modified
30       aircraft, sales of aircraft repair, modification and replacement parts
31       and sales of services employed in the remanufacture, modification
32       and repair of aircraft sold to persons using directly or through an
33       authorized agent such aircraft and aircraft repair, modification and
34       replacement parts as certified or licensed carriers of persons or
35       property in interstate or foreign commerce under authority of the
36       laws of the United States or any foreign government or sold to any
37       foreign government or agency or instrumentality of such foreign
38       government and all sales of aircraft, aircraft parts, replacement
39       parts and services employed in the remanufacture, modification and
40       repair of aircraft for use outside of the United States;
41             [(h) all rentals of nonsectarian textbooks by public or private
42       elementary or secondary schools;
43             [(i) the lease or rental of all films, records, tapes, or any type

36
  1       of sound or picture transcriptions used by motion picture exhibi-
  2       tors;
  3             [(j) meals served without charge or food used in the preparation
  4       of such meals to employees of any restaurant, eating house, dining
  5       car, hotel, drugstore or other place where meals or drinks are reg-
  6       ularly sold to the public if such employees' duties are related to the
  7       furnishing or sale of such meals or drinks;
  8             [(k) any motor vehicle, semitrailer or pole trailer, as such terms
  9       are defined by K.S.A. 8-126 and amendments thereto, or aircraft
10       sold and delivered in this state to a bona fide resident of another
11       state, which motor vehicle, semitrailer, pole trailer or aircraft is not
12       to be registered or based in this state and which vehicle, semitrailer,
13       pole trailer or aircraft will not remain in this state more than 10
14       days;
15             [(l) all isolated or occasional sales of tangible personal prop-
16       erty, services, substances or things, except isolated or occasional
17       sale of motor vehicles specifically taxed under the provisions of sub-
18       section (o) of K.S.A. 79-3603 and amendments thereto;
19             [(m) all sales of tangible personal property which become an
20       ingredient or component part of tangible personal property or serv-
21       ices produced, manufactured or compounded for ultimate sale at
22       retail within or without the state of Kansas; and any such producer,
23       manufacturer or compounder may obtain from the director of tax-
24       ation and furnish to the supplier an exemption certificate number
25       for tangible personal property for use as an ingredient or compo-
26       nent part of the property or services produced, manufactured or
27       compounded;
28             [(n) all sales of tangible personal property which is consumed
29       in the production, manufacture, processing, mining, drilling, refin-
30       ing or compounding of tangible personal property, the treating of
31       by-products or wastes derived from any such production process,
32       the providing of services or the irrigation of crops for ultimate sale
33       at retail within or without the state of Kansas; and any purchaser
34       of such property may obtain from the director of taxation and fur-
35       nish to the supplier an exemption certificate number for tangible
36       personal property for consumption in such production, manufac-
37       ture, processing, mining, drilling, refining, compounding, treating,
38       irrigation and in providing such services;
39             [(o) all sales of animals, fowl and aquatic plants and animals,
40       the primary purpose of which is use in agriculture or aquaculture,
41       as defined in K.S.A. 47-1901, and amendments thereto, the produc-
42       tion of food for human consumption, the production of animal,
43       dairy, poultry or aquatic plant and animal products, fiber or fur,

37
  1       or the production of offspring for use for any such purpose or pur-
  2       poses;
  3             [(p) all sales of drugs, as defined by K.S.A. 65-1626 and amend-
  4       ments thereto, dispensed pursuant to a prescription order, as de-
  5       fined by K.S.A. 65-1626 and amendments thereto, by a licensed
  6       practitioner or a mid-level practitioner as defined by K.S.A. 65-
  7       1626, and amendments thereto;
  8             [(q) all sales of insulin dispensed by a person licensed by the
  9       state board of pharmacy to a person for treatment of diabetes at the
10       direction of a person licensed to practice medicine by the board of
11       healing arts;
12             [(r) all sales of prosthetic and orthopedic appliances prescribed
13       in writing by a person licensed to practice the healing arts, dentistry
14       or optometry. For the purposes of this subsection, the term pros-
15       thetic and orthopedic appliances means any apparatus, instrument,
16       device, or equipment used to replace or substitute for any missing
17       part of the body; used to alleviate the malfunction of any part of
18       the body; or used to assist any disabled person in leading a normal
19       life by facilitating such person's mobility; such term shall include
20       accessories attached or to be attached to motor vehicles, but such
21       term shall not include motor vehicles or personal property which
22       when installed becomes a fixture to real property;
23             [(s) all sales of tangible personal property or services purchased
24       directly by a groundwater management district organized or op-
25       erating under the authority of K.S.A. 82a-1020 et seq. and amend-
26       ments thereto, which property or services are used in the operation
27       or maintenance of the district;
28             [(t) all sales of farm machinery and equipment or aquaculture
29       machinery and equipment, repair and replacement parts therefor
30       and services performed in the repair and maintenance of such ma-
31       chinery and equipment. For the purposes of this subsection the term
32       ``farm machinery and equipment or aquaculture machinery and
33       equipment'' shall include machinery and equipment used in the op-
34       eration of Christmas tree farming but shall not include any passen-
35       ger vehicle, truck, truck tractor, trailer, semitrailer or pole trailer,
36       other than a farm trailer, as such terms are defined by K.S.A. 8-126
37       and amendments thereto. Each purchaser of farm machinery and
38       equipment or aquaculture machinery and equipment exempted
39       herein must certify in writing on the copy of the invoice or sales
40       ticket to be retained by the seller that the farm machinery and
41       equipment or aquaculture machinery and equipment purchased
42       will be used only in farming, ranching or aquaculture production.
43       Farming or ranching shall include the operation of a feedlot and

38
  1       farm and ranch work for hire and the operation of a nursery;
  2             [(u) all leases or rentals of tangible personal property used as
  3       a dwelling if such tangible personal property is leased or rented for
  4       a period of more than 28 consecutive days;
  5             [(v) all sales of food products to any contractor for use in pre-
  6       paring meals for delivery to homebound elderly persons over 60
  7       years of age and to homebound disabled persons or to be served at
  8       a group-sitting at a location outside of the home to otherwise home-
  9       bound elderly persons over 60 years of age and to otherwise home-
10       bound disabled persons, as all or part of any food service project
11       funded in whole or in part by government or as part of a private
12       nonprofit food service project available to all such elderly or dis-
13       abled persons residing within an area of service designated by the
14       private nonprofit organization, and all sales of food products for
15       use in preparing meals for consumption by indigent or homeless
16       individuals whether or not such meals are consumed at a place des-
17       ignated for such purpose;
18             [(w) all sales of natural gas, electricity, heat and water deliv-
19       ered through mains, lines or pipes: (1) To residential premises for
20       noncommercial use by the occupant of such premises; (2) for agri-
21       cultural use and also, for such use, all sales of propane gas; (3) for
22       use in the severing of oil; and (4) to any property which is exempt
23       from property taxation pursuant to K.S.A. 79-201b Second through
24       Sixth. As used in this paragraph, ``severing'' shall have the meaning
25       ascribed thereto by subsection (k) of K.S.A. 79-4216, and amend-
26       ments thereto;
27             [(x) all sales of propane gas, LP-gas, coal, wood and other fuel
28       sources for the production of heat or lighting for noncommercial
29       use of an occupant of residential premises;
30             [(y) all sales of materials and services used in the repairing,
31       servicing, altering, maintaining, manufacturing, remanufacturing,
32       or modification of railroad rolling stock for use in interstate or for-
33       eign commerce under authority of the laws of the United States;
34             [(z) all sales of tangible personal property and services pur-
35       chased directly by a port authority or by a contractor therefor as
36       provided by the provisions of K.S.A. 12-3418 and amendments
37       thereto;
38             [(aa) all sales of materials and services applied to equipment
39       which is transported into the state from without the state for repair,
40       service, alteration, maintenance, remanufacture or modification
41       and which is subsequently transported outside the state for use in
42       the transmission of liquids or natural gas by means of pipeline in
43       interstate or foreign commerce under authority of the laws of the

39
  1       United States;
  2             [(bb) all sales of used mobile homes or manufactured homes. As
  3       used in this subsection: (1) ``Mobile homes'' and ``manufactured
  4       homes'' shall have the meanings ascribed thereto by K.S.A. 58-4202
  5       and amendments thereto; and (2) ``sales of used mobile homes or
  6       manufactured homes'' means sales other than the original retail sale
  7       thereof;
  8             [(cc) all sales of tangible personal property or services pur-
  9       chased for the purpose of and in conjunction with constructing, re-
10       constructing, enlarging or remodeling a business or retail business
11       which meets the requirements established in K.S.A. 74-50,115 and
12       amendments thereto, and the sale and installation of machinery and
13       equipment purchased for installation at any such business or retail
14       business. When a person shall contract for the construction, recon-
15       struction, enlargement or remodeling of any such business or retail
16       business, such person shall obtain from the state and furnish to the
17       contractor an exemption certificate for the project involved, and the
18       contractor may purchase materials, machinery and equipment for
19       incorporation in such project. The contractor shall furnish the num-
20       ber of such certificates to all suppliers from whom such purchases
21       are made, and such suppliers shall execute invoices covering the
22       same bearing the number of such certificate. Upon completion of
23       the project the contractor shall furnish to the owner of the business
24       or retail business a sworn statement, on a form to be provided by
25       the director of taxation, that all purchases so made were entitled to
26       exemption under this subsection. All invoices shall be held by the
27       contractor for a period of five years and shall be subject to audit
28       by the director of taxation. Any contractor or any agent, employee
29       or subcontractor thereof, who shall use or otherwise dispose of any
30       materials, machinery or equipment purchased under such a certif-
31       icate for any purpose other than that for which such a certificate is
32       issued without the payment of the sales or compensating tax oth-
33       erwise imposed thereon, shall be guilty of a misdemeanor and, upon
34       conviction therefor, shall be subject to the penalties provided for in
35       subsection (g) of K.S.A. 79-3615 and amendments thereto. As used
36       in this subsection, ``business'' and ``retail business'' have the mean-
37       ings respectively ascribed thereto by K.S.A. 74-50,114 and amend-
38       ments thereto;
39             [(dd) all sales of tangible personal property purchased with
40       food stamps issued by the United States department of agriculture;
41             [(ee) all sales of lottery tickets and shares made as part of a
42       lottery operated by the state of Kansas;
43             [(ff) on and after July 1, 1988, all sales of new mobile homes or

40
  1       manufactured homes to the extent of 40% of the gross receipts, de-
  2       termined without regard to any trade-in allowance, received from
  3       such sale. As used in this subsection, ``mobile homes'' and ``manu-
  4       factured homes'' shall have the meanings ascribed thereto by K.S.A.
  5       58-4202 and amendments thereto;
  6             [(gg) all sales of tangible personal property purchased in ac-
  7       cordance with vouchers issued pursuant to the federal special sup-
  8       plemental food program for women, infants and children;
  9             [(hh) all sales of medical supplies and equipment purchased di-
10       rectly by a nonprofit skilled nursing home or nonprofit intermediate
11       nursing care home, as defined by K.S.A. 39-923, and amendments
12       thereto, for the purpose of providing medical services to residents
13       thereof. This exemption shall not apply to tangible personal prop-
14       erty customarily used for human habitation purposes;
15             [(ii) all sales of tangible personal property purchased directly
16       by a nonprofit organization for nonsectarian comprehensive mul-
17       tidiscipline youth development programs and activities provided or
18       sponsored by such organization, and all sales of tangible personal
19       property by or on behalf of any such organization. This exemption
20       shall not apply to tangible personal property customarily used for
21       human habitation purposes;
22             [(jj) all sales of tangible personal property or services, includ-
23       ing the renting and leasing of tangible personal property, purchased
24       directly on behalf of a community-based mental retardation facility
25       or mental health center organized pursuant to K.S.A. 19-4001 et seq.,
26       and amendments thereto, and licensed in accordance with the pro-
27       visions of K.S.A. 75-3307b and amendments thereto. This exemption
28       shall not apply to tangible personal property customarily used for
29       human habitation purposes;
30             [(kk) on and after January 1, 1989, all sales of machinery and
31       equipment used directly and primarily for the purposes of manu-
32       facturing, assembling, processing, finishing, storing, warehousing
33       or distributing articles of tangible personal property in this state
34       intended for resale by a manufacturing or processing plant or fa-
35       cility or a storage, warehousing or distribution facility, and all sales
36       of repair and replacement parts and accessories purchased for such
37       machinery and equipment:
38             [(1) For purposes of this subsection, machinery and equipment
39       shall be deemed to be used directly and primarily in the manufac-
40       ture, assemblage, processing, finishing, storing, warehousing or dis-
41       tributing of tangible personal property where such machinery and
42       equipment is used during a manufacturing, assembling, processing
43       or finishing, storing, warehousing or distributing operation:

41
  1             [(A) To effect a direct and immediate physical change upon the
  2       tangible personal property;
  3             [(B) to guide or measure a direct and immediate physical
  4       change upon such property where such function is an integral and
  5       essential part of tuning, verifying or aligning the component parts
  6       of such property;
  7             [(C) to test or measure such property where such function is an
  8       integral part of the production flow or function;
  9             [(D) to transport, convey or handle such property during the
10       manufacturing, processing, storing, warehousing or distribution op-
11       eration at the plant or facility; or
12             [(E) to place such property in the container, package or wrap-
13       ping in which such property is normally sold or transported.
14             [(2)  For purposes of this subsection ``machinery and equipment
15       used directly and primarily'' shall include, but not be limited to:
16             [(A) Mechanical machines or components thereof contributing
17       to a manufacturing, assembling or finishing process;
18             [(B) molds and dies that determine the physical characteristics
19       of the finished product or its packaging material;
20             [(C) testing equipment to determine the quality of the finished
21       product;
22             [(D) computers and related peripheral equipment that directly
23       control or measure the manufacturing process or which are utilized
24       for engineering of the finished product; and
25             [(E) computers and related peripheral equipment utilized for
26       research and development and product design.
27             [(3) ``Machinery and equipment used directly and primarily''
28       shall not include:
29             [(A) Hand tools;
30             [(B) machinery, equipment and tools used in maintaining and
31       repairing any type of machinery and equipment;
32             [(C) transportation equipment not used in the manufacturing,
33       assembling, processing, furnishing, storing, warehousing or distrib-
34       uting process at the plant or facility;
35             [(D) office machines and equipment including computers and
36       related peripheral equipment not directly and primarily used in
37       controlling or measuring the manufacturing process;
38             [(E) furniture and buildings; and
39             [(F) machinery and equipment used in administrative, account-
40       ing, sales or other such activities of the business;
41             [(4) for purposes of this subsection, ``repair and replacement
42       parts and accessories'' means all parts and accessories for exempt
43       machinery and equipment, including but not limited to dies, jigs,

42
  1       molds, and patterns which are attached to exempt machinery or
  2       which are otherwise used in production, short-lived replaceable
  3       parts that can be readily detached from exempt machinery or equip-
  4       ment, such as belts, drill bits, grinding wheels, cutting bars and
  5       saws, and other replacement parts for production equipment, in-
  6       cluding refractory brick and other refractory items for kiln equip-
  7       ment used in production operations;
  8             [(ll) all sales of educational materials purchased for distribu-
  9       tion to the public at no charge by a nonprofit corporation organized
10       for the purpose of encouraging, fostering and conducting programs
11       for the improvement of public health;
12             [(mm) all sales of seeds and tree seedlings; fertilizers, insecti-
13       cides, herbicides, germicides, pesticides and fungicides; and serv-
14       ices, purchased and used for the purpose of producing plants in
15       order to prevent soil erosion on land devoted to agricultural use;
16             [(nn) except as otherwise provided in this act, all sales of serv-
17       ices rendered by an advertising agency or licensed broadcast station
18       or any member, agent or employee thereof;
19             [(oo) all sales of tangible personal property purchased by a
20       community action group or agency for the exclusive purpose of re-
21       pairing or weatherizing housing occupied by low income individu-
22       als;
23             [(pp) all sales of drill bits and explosives actually utilized in the
24       exploration and production of oil or gas;
25             [(qq) all sales of tangible personal property and services pur-
26       chased by a nonprofit museum or historical society or any combi-
27       nation thereof, including a nonprofit organization which is organ-
28       ized for the purpose of stimulating public interest in the exploration
29       of space by providing educational information, exhibits and expe-
30       riences, which is exempt from federal income taxation pursuant to
31       section 501(c)(3) of the federal internal revenue code of 1986;
32             [(rr) all sales of tangible personal property which will admit the
33       purchaser thereof to any annual event sponsored by a nonprofit
34       organization which is exempt from federal income taxation pursu-
35       ant to section 501(c)(3) of the federal internal revenue code of 1986;
36             [(ss) all sales of tangible personal property and services pur-
37       chased by a public broadcasting station licensed by the federal com-
38       munications commission as a noncommercial educational television
39       or radio station;
40             [(tt) all sales of tangible personal property and services pur-
41       chased by or on behalf of a not-for-profit corporation which is ex-
42       empt from federal income taxation pursuant to section 501(c)(3) of
43       the federal internal revenue code of 1986, for the sole purpose of

43
  1       constructing a Kansas Korean War memorial;
  2             [(uu) all sales of tangible personal property and services pur-
  3       chased by or on behalf of any rural volunteer fire-fighting organi-
  4       zation for use exclusively in the performance of its duties and func-
  5       tions;
  6             [(vv) all sales of tangible personal property purchased by any
  7       of the following organizations which are exempt from federal in-
  8       come taxation pursuant to section 501 (c)(3) of the federal internal
  9       revenue code of 1986, for the following purposes, and all sales of
10       any such property by or on behalf of any such organization for any
11       such purpose:
12             [(1) The American Heart Association, Kansas Affiliate, Inc. for
13       the purposes of providing education, training, certification in emer-
14       gency cardiac care, research and other related services to reduce
15       disability and death from cardiovascular diseases and stroke;
16             [(2) the Kansas Alliance for the Mentally Ill, Inc. for the purpose
17       of advocacy for persons with mental illness and to education, re-
18       search and support for their families;
19             [(3) the Kansas Mental Illness Awareness Council for the pur-
20       poses of advocacy for persons who are mentally ill and to education,
21       research and support for them and their families;
22             [(4) the American Diabetes Association Kansas Affiliate, Inc. for
23       the purpose of eliminating diabetes through medical research, pub-
24       lic education focusing on disease prevention and education, patient
25       education including information on coping with diabetes, and pro-
26       fessional education and training;
27             [(5) the American Lung Association of Kansas, Inc. for the pur-
28       pose of eliminating all lung diseases through medical research, pub-
29       lic education including information on coping with lung diseases,
30       professional education and training related to lung disease and
31       other related services to reduce the incidence of disability and death
32       due to lung disease;
33             [(6) the Kansas chapters of the Alzheimer's Disease and Related
34       Disorders Association, Inc. for the purpose of providing assistance
35       and support to persons in Kansas with Alzheimer's disease, and their
36       families and caregivers; and
37             [(ww) all sales of tangible personal property purchased by the
38       Habitat for Humanity for the exclusive use of being incorporated
39       within a housing project constructed by such organization.
40             [(xx) all sales of tangible personal property and services pur-
41       chased by a nonprofit zoo which is exempt from federal income tax-
42       ation pursuant to section 501(c)(3) of the federal internal revenue
43       code of 1986, or on behalf of such zoo by an entity itself exempt

44
  1       from federal income taxation pursuant to section 501(c)(3) of the
  2       federal internal revenue code of 1986 contracted with to operate
  3       such zoo and all sales of tangible personal property or services pur-
  4       chased by a contractor for the purpose of constructing, equipping,
  5       reconstructing, maintaining, repairing, enlarging, furnishing or re-
  6       modeling facilities for any nonprofit zoo which would be exempt
  7       from taxation under the provisions of this section if purchased di-
  8       rectly by such nonprofit zoo or the entity operating such zoo. Noth-
  9       ing in this subsection shall be deemed to exempt the purchase of
10       any construction machinery, equipment or tools used in the con-
11       structing, equipping, reconstructing, maintaining, repairing, en-
12       larging, furnishing or remodeling facilities for any nonprofit zoo.
13       When any nonprofit zoo shall contract for the purpose of construct-
14       ing, equipping, reconstructing, maintaining, repairing, enlarging,
15       furnishing or remodeling facilities, it shall obtain from the state and
16       furnish to the contractor an exemption certificate for the project
17       involved, and the contractor may purchase materials for incorpo-
18       ration in such project. The contractor shall furnish the number of
19       such certificate to all suppliers from whom such purchases are
20       made, and such suppliers shall execute invoices covering the same
21       bearing the number of such certificate. Upon completion of the pro-
22       ject the contractor shall furnish to the nonprofit zoo concerned a
23       sworn statement, on a form to be provided by the director of taxa-
24       tion, that all purchases so made were entitled to exemption under
25       this subsection. All invoices shall be held by the contractor for a
26       period of five years and shall be subject to audit by the director of
27       taxation. If any materials purchased under such a certificate are
28       found not to have been incorporated in the building or other project
29       or not to have been returned for credit or the sales or compensating
30       tax otherwise imposed upon such materials which will not be so
31       incorporated in the building or other project reported and paid by
32       such contractor to the director of taxation not later than the 20th
33       day of the month following the close of the month in which it shall
34       be determined that such materials will not be used for the purpose
35       for which such certificate was issued, the nonprofit zoo concerned
36       shall be liable for tax on all materials purchased for the project,
37       and upon payment thereof it may recover the same from the con-
38       tractor together with reasonable attorney fees. Any contractor or
39       any agent, employee or subcontractor thereof, who shall use or oth-
40       erwise dispose of any materials purchased under such a certificate
41       for any purpose other than that for which such a certificate is issued
42       without the payment of the sales or compensating tax otherwise im-
43       posed upon such materials, shall be guilty of a misdemeanor and,

45
  1       upon conviction therefor, shall be subject to the penalties provided
  2       for in subsection (g) of K.S.A. 79-3615, and amendments thereto;
  3             [(yy) all sales of tangible personal property and services pur-
  4       chased by a parent-teacher association or organization, and all
  5       sales of tangible personal property by or on behalf of such associ-
  6       ation or organization;
  7             [(zz) all sales of machinery and equipment purchased by over-
  8       the-air, free access radio or television station which is used directly
  9       and primarily for the purpose of producing a broadcast signal or is
10       such that the failure of the machinery or equipment to operate
11       would cause broadcasting to cease. For purposes of this subsection,
12       machinery and equipment shall include, but not be limited to, that
13       required by rules and regulations of the federal communications
14       commission, and all sales of electricity which are essential or nec-
15       essary for the purpose of producing a broadcast signal or is such
16       that the failure of the electricity would cause broadcasting to cease;
17             [(aaa) all sales of tangible personal property and services pur-
18       chased by a religious organization which is exempt from federal
19       income taxation pursuant to section 501(c)(3) of the federal internal
20       revenue code, and used exclusively for religious purposes, and all
21       sales of tangible personal property or services purchased by a con-
22       tractor for the purpose of constructing, equipping, reconstructing,
23       maintaining, repairing, enlarging, furnishing or remodeling facili-
24       ties for any such organization which would be exempt from taxation
25       under the provisions of this section if purchased directly by such
26       organization. Nothing in this subsection shall be deemed to exempt
27       the purchase of any construction machinery, equipment or tools
28       used in the constructing, equipping, reconstructing, maintaining,
29       repairing, enlarging, furnishing or remodeling facilities for any
30       such organization. When any such organization shall contract for
31       the purpose of constructing, equipping, reconstructing, maintain-
32       ing, repairing, enlarging, furnishing or remodeling facilities, it shall
33       obtain from the state and furnish to the contractor an exemption
34       certificate for the project involved, and the contractor may pur-
35       chase materials for incorporation in such project. The contractor
36       shall furnish the number of such certificate to all suppliers from
37       whom such purchases are made, and such suppliers shall execute
38       invoices covering the same bearing the number of such certificate.
39       Upon completion of the project the contractor shall furnish to such
40       organization concerned a sworn statement, on a form to be provided
41       by the director of taxation, that all purchases so made were entitled
42       to exemption under this subsection. All invoices shall be held by the
43       contractor for a period of five years and shall be subject to audit

46
  1       by the director of taxation. If any materials purchased under such
  2       a certificate are found not to have been incorporated in the building
  3       or other project or not to have been returned for credit or the sales
  4       or compensating tax otherwise imposed upon such materials which
  5       will not be so incorporated in the building or other project reported
  6       and paid by such contractor to the director of taxation not later
  7       than the 20th day of the month following the close of the month in
  8       which it shall be determined that such materials will not be used
  9       for the purpose for which such certificate was issued, such organi-
10       zation concerned shall be liable for tax on all materials purchased
11       for the project, and upon payment thereof it may recover the same
12       from the contractor together with reasonable attorney fees. Any
13       contractor or any agent, employee or subcontractor thereof, who
14       shall use or otherwise dispose of any materials purchased under
15       such a certificate for any purpose other than that for which such a
16       certificate is issued without the payment of the sales or compensat-
17       ing tax otherwise imposed upon such materials, shall be guilty of a
18       misdemeanor and, upon conviction therefor, shall be subject to the
19       penalties provided for in subsection (g) of K.S.A. 79-3615, and
20       amendments thereto. Sales tax paid on and after July 1, 1998, but
21       prior to the effective date of this act upon the gross receipts received
22       from any sale exempted by the amendatory provisions of this sub-
23       section shall be refunded. Each claim for a sales tax refund shall be
24       verified and submitted to the director of taxation upon forms fur-
25       nished by the director and shall be accompanied by any additional
26       documentation required by the director. The director shall review
27       each claim and shall refund that amount of sales tax paid as deter-
28       mined under the provisions of this subsection. All refunds shall be
29       paid from the sales tax refund fund upon warrants of the director
30       of accounts and reports pursuant to vouchers approved by the di-
31       rector or the director's designee;
32             [(bbb) all sales of food for human consumption by an organi-
33       zation which is exempt from federal income taxation pursuant to
34       section 501 (c)(3) of the federal internal revenue code of 1986, pur-
35       suant to a food distribution program which offers such food at a
36       price below cost in exchange for the performance of community
37       service by the purchaser thereof;
38             [(ccc) on and after July 1, 1999, all sales of tangible personal
39       property and services purchased by a primary care clinic or health
40       center the primary purpose of which is to provide services to med-
41       ically underserved individuals and families, and which is exempt
42       from federal income taxation pursuant to section 501 (c)(3) of the
43       federal internal revenue code, and all sales of tangible personal

47
  1       property or services purchased by a contractor for the purpose of
  2       constructing, equipping, reconstructing, maintaining, repairing, en-
  3       larging, furnishing or remodeling facilities for any such clinic or
  4       center which would be exempt from taxation under the provisions
  5       of this section if purchased directly by such clinic or center. Nothing
  6       in this subsection shall be deemed to exempt the purchase of any
  7       construction machinery, equipment or tools used in the construct-
  8       ing, equipping, reconstructing, maintaining, repairing, enlarging,
  9       furnishing or remodeling facilities for any such clinic or center.
10       When any such clinic or center shall contract for the purpose of
11       constructing, equipping, reconstructing, maintaining, repairing, en-
12       larging, furnishing or remodeling facilities, it shall obtain from the
13       state and furnish to the contractor an exemption certificate for the
14       project involved, and the contractor may purchase materials for
15       incorporation in such project. The contractor shall furnish the num-
16       ber of such certificate to all suppliers from whom such purchases
17       are made, and such suppliers shall execute invoices covering the
18       same bearing the number of such certificate. Upon completion of
19       the project the contractor shall furnish to such clinic or center con-
20       cerned a sworn statement, on a form to be provided by the director
21       of taxation, that all purchases so made were entitled to exemption
22       under this subsection. All invoices shall be held by the contractor
23       for a period of five years and shall be subject to audit by the director
24       of taxation. If any materials purchased under such a certificate are
25       found not to have been incorporated in the building or other project
26       or not to have been returned for credit or the sales or compensating
27       tax otherwise imposed upon such materials which will not be so
28       incorporated in the building or other project reported and paid by
29       such contractor to the director of taxation not later than the 20th
30       day of the month following the close of the month in which it shall
31       be determined that such materials will not be used for the purpose
32       for which such certificate was issued, such clinic or center con-
33       cerned shall be liable for tax on all materials purchased for the
34       project, and upon payment thereof it may recover the same from
35       the contractor together with reasonable attorney fees. Any contrac-
36       tor or any agent, employee or subcontractor thereof, who shall use
37       or otherwise dispose of any materials purchased under such a cer-
38       tificate for any purpose other than that for which such a certificate
39       is issued without the payment of the sales or compensating tax oth-
40       erwise imposed upon such materials, shall be guilty of a misde-
41       meanor and, upon conviction therefor, shall be subject to the pen-
42       alties provided for in subsection (g) of K.S.A. 79-3615, and
43       amendments thereto;

48
  1             [(ddd) on and after January 1, 1999, and before January 1,
  2       2000, all sales of materials and services purchased by any class II
  3       or III railroad as classified by the federal surface transportation
  4       board for the construction, renovation, repair or replacement of
  5       class II or III railroad track and facilities used directly in interstate
  6       commerce. In the event any such track or facility for which mate-
  7       rials and services were purchased sales tax exempt is not operational
  8       for five years succeeding the allowance of such exemption, the total
  9       amount of sales tax which would have been payable except for the
10       operation of this subsection shall be recouped in accordance with
11       rules and regulations adopted for such purpose by the secretary of
12       revenue; and
13             [(eee) on and after January 1, 1999, and before January 1, 2000
14       2001, all sales of materials and services purchased for the original
15       construction, reconstruction, repair or replacement of grain storage
16       facilities, including railroad sidings providing access thereto.]
17        Sec.  2. [6.] K.S.A. 1999 Supp. [12-187, 12-188, 12-189, 12-189c
18       and] 12-2536 is [and 79-3606 are] hereby repealed.
19        Sec.  3. [7.] This act shall take effect and be in force from and after
20       its publication in the statute book.