March 25, 1998


Journal of the House


FIFTIETH DAY
______
Hall of the House of Representatives, Topeka, KS,
Wednesday, March 25, 1998, 9:00 a.m. 
 The House met pursuant to adjournment with Speaker pro tem Wagle in the chair.

 The roll was called with 124 members present.

 Rep. Lloyd was excused on verified illness.

 Prayer by Chaplain Washington:

      Heavenly Father,

       In Genesis 28:14, one named Jacob traveled to a certain place, and spent the night
      away from home, where You could get his attention. It was from that place that he
      was inspired by You to be a blessing to the people.

       Father, these men and women have traveled to this place. Many have spent nights
      away from home. Lord we pray that You have their attention. From this place, let
      them be a blessing to the people.

       You told Jacob that You wouldn't leave him until you'd accomplished Your pur-
      poses. In a like manner Lord, grab the hearts and minds of these legislators and
      don't leave them until You've accomplished the blessing of Your people.

       I come to You in the Name of Jesus, the Christ. Amen and Amen.

INTRODUCTION OF BILLS AND CONCURRENT RESOLUTIONS
 The following concurrent resolution was introduced and read by title:

HOUSE CONCURRENT RESOLUTION No. 5053--

Representatives McCreary, Ballou, Beggs, Campbell, Carmody, Compton, Cook, Cox, Dahl,
      Dillon, Dreher, Edmonds, Empson, Faber, Farmer, Feuerborn, Flower, Franklin, Free-
      born, Geringer, Gilmore, Glasscock, Gregory, Hayzlett, Howell, Huff, Humerickhouse,
      Hutchins, Kejr, Landwehr, P. Long, Mason, Mayans, Mays, Mollenkamp, Morrison,
      Myers, Neufeld, O'Connor, O'Neal, Osborne, Packer, Palmer, J. Peterson, Pottorff,
      Powell, Powers, Presta, Ray, Schwartz, Shore, Showalter, Shultz, Stone, Swenson, Tan-
      ner, Thimesch, Tomlinson, Toplikar, Vickrey, Vining, Wagle, Wilk and Wilson

      A CONCURRENT RESOLUTION memorializing the Senate of the U.S. Congress to pass
      H.J. Res. 54, proposing an amendment to the Constitution of the United States author-
      izing Congress to prohibit the physical desecration of the flag of the United States.

          WHEREAS, Millions of Americans hold the American flag in deep reverence, as evi-
denced by the fact that flag desecration was prohibited by an act of Congress and by the
laws of 48 of the 50 states; and

    WHEREAS, The United States Supreme Court has held that the burning of the Amer-
ican flag is a protected form of free speech under the First Amendment of the United States
Constitution; and

    WHEREAS, The American flag symbolizes the ideas of liberty and equality and what
our nation is and what it values. No other American symbol has been as universally honored
as the American flag; and

    WHEREAS, The American flag has served as a rallying force for American fighting men
from Yorktown to the Persian Gulf; and

    WHEREAS, Kansans find the desecration of the American flag to be highly offensive
and are appalled by the Supreme Court's decision allowing this type of repugnant behavior;
and

    WHEREAS, More than 500 Kansas veteran, fraternal and civic organizations have joined
many city and county bodies of government in signing resolutions calling upon the Kansas
Legislature to approve a resolution memorializing the Congress of the United States to
propose a Constitutional Amendment prohibiting the physical desecration of the flag of the
United States; and

    WHEREAS, Kansans believe that the right to express displeasure with government is a
cherished right protected by the First Amendment. However, Kansans believe that the
desecration of the American flag is an atrocious act which should be prohibited; and

    WHEREAS, H.J. Res. 54, which proposes an amendment which when ratified would
give Congress the power to prohibit the physical desecration of the flag of the United States,
has been passed by the U.S. House of Representatives: Now, therefore,

    Be it resolved by the House of Representatives of the State of Kansas, the Senate concurring
therein: That the Legislature memorialize the Congress of the United States to pass H.J.
Res. 54 proposing an amendment to the United States Constitution, for ratification by the
states, specifying that Congress shall have the power to prohibit the physical desecration of
the flag of the United States; and

    Be it further resolved: That the Secretary of State be directed to send enrolled copies
of this resolution to the Speaker of the United States House of Representatives, the Presi-
dent of the United States Senate and all members of the congressional delegation from the
State of Kansas.

REFERENCE OF BILLS AND CONCURRENT RESOLUTIONS
 The following bills and resolutions were referred to committees as indicated:

 Appropriations: HB 3021.

MESSAGE FROM THE SENATE
 The Senate concurs in House amendments to SB 198.

 The Senate nonconcurs in House amendments to Sub. SB 573, requests a conference
and has appointed Senators Salisbury, Ranson and Barone as conferees on the part of the
Senate.

INTRODUCTION OF ORIGINAL MOTIONS
 On motion of Rep. Jennison, the House acceded to the request of the Senate for a
conference on Sub. SB 573.

 Speaker pro tem Wagle thereupon appointed Reps. Lane, Geringer and Pauls as conferees
on the part of the House.

CONSENT CALENDAR
 No objection was made to SB 408, 418 appearing on the Consent Calendar for the second
day.

 No objection was made to HB 2995, 3016; SB 484 appearing on the Consent Calendar
for the third day. The bills were advanced to Final Action on Bills and Concurrent Reso-
lutions.

FINAL ACTION ON BILLS AND CONCURRENT RESOLUTIONS
 HB 2995, An act relating to property taxation; concerning the classification of detention
centers; amending K.S.A. 79-1439 and repealing the existing section, was considered on
final action.

 On roll call, the vote was: Yeas 123; Nays 0; Present but not voting: 1; Absent or not
voting: 1.

 Yeas: Adkins, Alldritt, Allen, Aurand, Ballard, Ballou, Beggs, Benlon, Boston, Burroughs,
Campbell, Carmody, Compton, Cook, Correll, Cox, Dahl, Dean, Dillon, Dreher, Edmonds,
Empson, Faber, Farmer, Feuerborn, Findley, Flaharty, Flora, Flower, Franklin, Freeborn,
Garner, Geringer, Gilbert, Gilmore, Glasscock, Grant, Gregory, Haley, Hayzlett, Helgerson,
Henderson, Henry, Holmes, Horst, Howell, Huff, Humerickhouse, Hutchins, Jennison,
Johnson, Johnston, Kejr, Kirk, Klein, Phil Kline, Phill Kline, Krehbiel, Kuether, Landwehr,
Lane, Larkin, M. Long, P. Long, Mason, Mayans, Mays, McClure, McCreary, McKechnie,
McKinney, Minor, Mollenkamp, Morrison, Myers, Neufeld, Nichols, O'Connor, O'Neal,
Osborne, Packer, Palmer, Pauls, E. Peterson, J. Peterson, Phelps, Pottorff, Powell, Powers,
Presta, Ray, Reardon, Reinhardt, Ruff, Samuelson, Sawyer, Schwartz, Shallenburger, Sharp,
Shore, Showalter, Shriver, Shultz, Sloan, Spangler, Stone, Storm, Swenson, Tanner, Thi-
mesch, Toelkes, Tomlinson, Toplikar, Vickrey, Vining, Wagle, Weber, Weiland, Wells, Wel-
shimer, Wempe, Wilk, Wilson.

 Nays: None.

 Present but not voting: Crow.

 Absent or not voting: Lloyd.

 The bill passed.

 HB 3016, An act relating to sales taxation; concerning treatment of sales of prepaid
telephone calling cards; amending K.S.A. 79-3603 and repealing the existing section, was
considered on final action.

 On roll call, the vote was: Yeas 123; Nays 1; Present but not voting: 0; Absent or not
voting: 1.

 Yeas: Adkins, Alldritt, Allen, Aurand, Ballard, Ballou, Beggs, Benlon, Boston, Burroughs,
Campbell, Carmody, Compton, Cook, Correll, Cox, Crow, Dahl, Dean, Dillon, Dreher,
Edmonds, Empson, Faber, Farmer, Feuerborn, Findley, Flaharty, Flora, Flower, Franklin,
Freeborn, Garner, Geringer, Gilbert, Gilmore, Glasscock, Grant, Gregory, Haley, Hayzlett,
Helgerson, Henderson, Henry, Holmes, Horst, Howell, Huff, Humerickhouse, Hutchins,
Jennison, Johnson, Johnston, Kejr, Kirk, Klein, Phil Kline, Phill Kline, Krehbiel, Kuether,
Landwehr, Lane, Larkin, M. Long, P. Long, Mason, Mayans, Mays, McClure, McCreary,
McKechnie, McKinney, Minor, Mollenkamp, Morrison, Myers, Neufeld, Nichols,
O'Connor, O'Neal, Osborne, Packer, Palmer, Pauls, E. Peterson, J. Peterson, Phelps, Pot-
torff, Powell, Powers, Presta, Ray, Reardon, Reinhardt, Ruff, Samuelson, Sawyer, Schwartz,
Shallenburger, Sharp, Shore, Showalter, Shultz, Sloan, Spangler, Stone, Storm, Swenson,
Tanner, Thimesch, Toelkes, Tomlinson, Toplikar, Vickrey, Vining, Wagle, Weber, Weiland,
Wells, Welshimer, Wempe, Wilk, Wilson.

 Nays: Shriver.

 Present but not voting: None.

 Absent or not voting: Lloyd.

 The bill passed.

 SB 484, An act concerning the practice of pharmacy; filling transferred prescriptions;
amending K.S.A. 1997 Supp. 65-1656 and repealing the existing section, was considered on
final action.

 On roll call, the vote was: Yeas 124; Nays 0; Present but not voting: 0; Absent or not
voting: 1.

 Yeas: Adkins, Alldritt, Allen, Aurand, Ballard, Ballou, Beggs, Benlon, Boston, Burroughs,
Campbell, Carmody, Compton, Cook, Correll, Cox, Crow, Dahl, Dean, Dillon, Dreher,
Edmonds, Empson, Faber, Farmer, Feuerborn, Findley, Flaharty, Flora, Flower, Franklin,
Freeborn, Garner, Geringer, Gilbert, Gilmore, Glasscock, Grant, Gregory, Haley, Hayzlett,
Helgerson, Henderson, Henry, Holmes, Horst, Howell, Huff, Humerickhouse, Hutchins,
Jennison, Johnson, Johnston, Kejr, Kirk, Klein, Phil Kline, Phill Kline, Krehbiel, Kuether,
Landwehr, Lane, Larkin, M. Long, P. Long, Mason, Mayans, Mays, McClure, McCreary,
McKechnie, McKinney, Minor, Mollenkamp, Morrison, Myers, Neufeld, Nichols,
O'Connor, O'Neal, Osborne, Packer, Palmer, Pauls, E. Peterson, J. Peterson, Phelps, Pot-
torff, Powell, Powers, Presta, Ray, Reardon, Reinhardt, Ruff, Samuelson, Sawyer, Schwartz,
Shallenburger, Sharp, Shore, Showalter, Shriver, Shultz, Sloan, Spangler, Stone, Storm,
Swenson, Tanner, Thimesch, Toelkes, Tomlinson, Toplikar, Vickrey, Vining, Wagle, Weber,
Weiland, Wells, Welshimer, Wempe, Wilk, Wilson.

 Nays: None.

 Present but not voting: None.

 Absent or not voting: Lloyd.

 The bill passed.

 HB 2999, An act concerning lottery machines; relating to the unlawful sale of lottery
tickets; amending K.S.A. 74-8702 and 79-4701 and K.S.A. 1997 Supp. 74-8710, 74-8718 and
74-9802 and repealing the existing sections, was considered on final action.

 On roll call, the vote was: Yeas 107; Nays 16; Present but not voting: 1; Absent or not
voting: 1.

 Yeas: Adkins, Alldritt, Aurand, Ballard, Ballou, Beggs, Benlon, Boston, Campbell, Car-
mody, Compton, Cook, Correll, Dahl, Dean, Dillon, Dreher, Edmonds, Empson, Faber,
Farmer, Feuerborn, Findley, Flaharty, Flower, Franklin, Freeborn, Garner, Geringer, Gil-
bert, Gilmore, Glasscock, Grant, Gregory, Haley, Hayzlett, Helgerson, Henderson, Henry,
Holmes, Horst, Howell, Huff, Humerickhouse, Hutchins, Jennison, Johnson, Johnston,
Kejr, Kirk, Klein, Phil Kline, Phill Kline, Landwehr, M. Long, P. Long, Mason, Mayans,
Mays, McClure, McCreary, McKechnie, McKinney, Minor, Mollenkamp, Morrison, Myers,
Neufeld, Nichols, O'Connor, O'Neal, Osborne, Packer, Palmer, Pauls, E. Peterson, J. Pe-
terson, Pottorff, Powell, Powers, Reardon, Reinhardt, Samuelson, Sawyer, Schwartz, Shal-
lenburger, Shore, Showalter, Shultz, Sloan, Stone, Storm, Swenson, Tanner, Thimesch, To-
elkes, Tomlinson, Toplikar, Vickrey, Vining, Wagle, Weber, Weiland, Wells, Welshimer,
Wempe, Wilson.

 Nays: Allen, Burroughs, Cox, Crow, Flora, Krehbiel, Kuether, Lane, Larkin, Phelps, Ray,
Ruff, Sharp, Shriver, Spangler, Wilk.

 Present but not voting: Presta.

 Absent or not voting: Lloyd.

 The bill passed, as amended.

CONFERENCE COMMITTEE REPORT
    Mr. President and Mr. Speaker: Your committee on conference on Senate amend-
ments to HB 2025, submits the following report:

    The House accedes to all Senate amendments to the bill, and your committee on con-
ference further agrees to amend the bill, as printed as Further Amended by Senate Com-
mittee of the Whole, as follows:

    On page 4, strike lines 10 through 18 and insert the following section:

    ``Sec. 2. K.S.A. 1997 Supp. 21-3106 is hereby amended to read as follows: 21-3106. (1)
A prosecution for murder may be commenced at any time.

    (2) Except as provided by subsection (7) (8), a prosecution for any of the following
crimes must be commenced within five years after its commission if the victim is less than
16 years of age: (a) Indecent liberties with a child as defined in K.S.A. 21-3503 and amend-
ments thereto; (b) aggravated indecent liberties with a child as defined in K.S.A. 21-3504
and amendments thereto; (c) enticement of a child as defined in K.S.A. 21-3509 and amend-
ments thereto; (d) indecent solicitation of a child as defined in K.S.A. 21-3510 and amend-
ments thereto; (e) aggravated indecent solicitation of a child as defined in K.S.A. 21-3511
and amendments thereto; (f) sexual exploitation of a child as defined in K.S.A. 21-3516 and
amendments thereto; or (g) aggravated incest as defined in K.S.A. 21-3603 and amendments
thereto.

    (3) Except as provided in subsection (7) (8), a prosecution for any crime must be com-
menced within 10 years after its commission if the victim is the Kansas public employees
retirement system.

    (4) Except as provided by subsection (7) (8), a prosecution for rape, as defined in K.S.A.
21-3502 and amendments thereto, or aggravated criminal sodomy, as defined in K.S.A.
21-3506 and amendments thereto, must be commenced within five years after its commis-
sion.

    (5) Except as provided in subsection (7) (8), a prosecution for any crime found in the
Kansas medicaid fraud control act must be commenced within five years after its commis-
sion.

    (6) Except as provided by subsection (8), a prosecution for the crime of arson, as defined
in K.S.A. 21-3718 and amendments thereto, or aggravated arson, as defined in K.S.A. 21-
3719 and amendments thereto, must be commenced within five years after its commission.
    (7) Except as provided by subsection (7) (8), a prosecution for any crime not governed
by subsections (1), (2), (3), (4) and, (5) and (6) must be commenced within two years after
it is committed.

    (7) The period within which a prosecution must be commenced shall not include any
period in which:

    (a) The accused is absent from the state;

    (b) the accused is concealed within the state so that process cannot be served upon the
accused;

    (c) the fact of the crime is concealed;

    (d) a prosecution is pending against the defendant for the same conduct, even if the
indictment or information which commences the prosecution is quashed or the proceedings
thereon are set aside, or are reversed on appeal;

    (e) an administrative agency is restrained by court order from investigating or otherwise
proceeding on a matter before it as to any criminal conduct defined as a violation of any of
the provisions of article 41 of chapter 25 and article 2 of chapter 46 of the Kansas Statutes
Annotated which may be discovered as a result thereof regardless of who obtains the order
of restraint; or

    (f) whether or not the fact of the crime is concealed by the active act or conduct of the
accused, there is substantially competent evidence to believe two or more of the following
factors are present: (i) The victim was a child under 15 years of age at the time of the crime;
(ii) the victim was of such age or intelligence that the victim was unable to determine that
the acts constituted a crime; (iii) the victim was prevented by a parent or other legal authority
from making known to law enforcement authorities the fact of the crime whether or not
the parent or other legal authority is the accused; and (iv) there is substantially competent
expert testimony indicating the victim psychologically repressed such witness' memory of
the fact of the crime, and in the expert's professional opinion the recall of such memory is
accurate and free of undue manipulation, and substantial corroborating evidence can be
produced in support of the allegations contained in the complaint or information but in no
event may a prosecution be commenced as provided in this section later than the date the
victim turns 28 years of age. Corroborating evidence may include, but is not limited to,
evidence the defendant committed similar acts against other persons or evidence of con-
temporaneous physical manifestations of the crime. ``Parent or other legal authority'' shall
include but not be limited to natural and stepparents, grandparents, aunts, uncles or siblings.

    (8) An offense is committed either when every element occurs, or, if a legislative pur-
pose to prohibit a continuing offense plainly appears, at the time when the course of conduct
or the defendant's complicity therein is terminated. Time starts to run on the day after the
offense is committed.

    (9) A prosecution is commenced when a complaint or information is filed, or an in-
dictment returned, and a warrant thereon is delivered to the sheriff or other officer for
execution. No such prosecution shall be deemed to have been commenced if the warrant
so issued is not executed without unreasonable delay.'';

    On page 5, strike all in lines 22 through 43;

    By striking all on pages 6 through 25;

    On page 26, by striking all in lines 1 through 40;

    And by renumbering the remaining sections accordingly;

    On page 27, by striking lines 42 and 43;

    By striking all on pages 28 through 31;

    On page 32, by striking all in lines 1 through 24;

    And by renumbering the remaining sections accordingly;

    Also on page 32, in line 25, by striking all after ``21-4318''; in line 26, by striking ``22-
4504,'' and inserting ``and''; also in line 26, after ``22-4507'' by striking ``, 22-4513 and 22-
4522''; also in line 26, by striking ``1996'' and inserting ``1997''; in line 27, by striking ``4603d,
22-3717 and 75-719'' and inserting ``3106'';

    In the title, on page 1, in line 21, by striking ``recoupment of certain state expenditures
to provide''; in line 22, by striking ``concerning''; in line 23, by striking ``pretrial release
procedures;'' and inserting ``relating to time limitations on prosecutions for certain crimes;
concerning bail forfeiture;''; also in line 23, after ``21-4318'' by striking the comma; in line
24, by striking ``21-4603, 21-4610, 22-3718, 22-4504,'' and inserting ``and''; also in line 24,
by striking all after ``22-4507''; in line 25, by striking ``4522''; also in line 25, by striking
``1996'' and inserting ``1997''; also in line 25, after ``Supp.'' by striking ``21-4603d, 22-3717
and 75-719'' and inserting ``21-3106'';

                                                                                        And your committee on conference recommends the adoption of this report.

                                                                                    Tim Emert

                                                                                    Lana Oleen

                                                                                    Greta Goodwin
 
                                                                                    Conferees on part of Senate

                                                                                    Garry Boston

                                                                                    Ralph Tanner

                                                                                    Ruby Gilbert
 
Conferees on part of House

 On motion of Rep. Boston, the conference committee report on HB 2025 was adopted.

 On roll call, the vote was: Yeas 87; Nays 35; Present but not voting: 0; Absent or not
voting: 3.

 Yeas: Adkins, Alldritt, Allen, Aurand, Ballard, Ballou, Beggs, Benlon, Boston, Campbell,
Carmody, Compton, Cook, Cox, Dahl, Dreher, Edmonds, Empson, Faber, Farmer, Feuer-
born, Findley, Flower, Franklin, Freeborn, Geringer, Gilbert, Gilmore, Glasscock, Gregory,
Hayzlett, Henry, Holmes, Horst, Huff, Humerickhouse, Hutchins, Jennison, Johnson, Kejr,
Phil Kline, Phill Kline, Lane, P. Long, Mason, Mayans, Mays, McCreary, McKinney, Minor,
Mollenkamp, Morrison, Myers, O'Connor, O'Neal, Osborne, Packer, Palmer, J. Peterson,
Pottorff, Powell, Ray, Reinhardt, Samuelson, Schwartz, Shallenburger, Shore, Showalter,
Shriver, Shultz, Sloan, Stone, Storm, Swenson, Tanner, Thimesch, Toelkes, Toplikar, Vick-
rey, Vining, Wagle, Weber, Weiland, Wells, Wempe, Wilk, Wilson.

 Nays: Burroughs, Correll, Crow, Dean, Dillon, Flaharty, Flora, Garner, Grant, Haley,
Helgerson, Henderson, Howell, Johnston, Kirk, Klein, Krehbiel, Kuether, Larkin, M. Long,
McClure, McKechnie, Neufeld, Nichols, Pauls, E. Peterson, Phelps, Powers, Reardon, Ruff,
Sawyer, Sharp, Spangler, Tomlinson, Welshimer.

 Present but not voting: None.

 Absent or not voting: Landwehr, Lloyd, Presta.

 On motion of Rep. Jennison, the House went into Committee of the Whole, with Rep.
Shore in the chair.

COMMITTEE OF THE WHOLE
 On motion of Rep. Shore, Committee of the Whole report, as follows, was adopted:

 Recommended that committee report to HB 2602 be adopted; also, on motion of Rep.
Powell be amended on page 23, by striking all in lines 1 through 4; in line 5, by striking
``(4)'' and inserting ``and (3)'';

 Also, on further motion of Rep. Powell HB 2602 be amended on page 5, in line 24, after
``20'' by inserting ``of chapter 79'';

    On page 21, in line 19, by striking ``1997 Supp.'';

    On page 23, in line 11, before ``79-213'' by inserting ``77-529,'';

    In the title, in line 14, before ``79-213'' by inserting ``77-529,''; in line 15, by striking ``and
77-529'';

 Also, on motion of Rep. Vickrey HB 2602 be amended on page 13, in line 1, by striking
``scheduled'' and inserting ``deemed approved unless the commission schedules a hearing'';

 Also, on motion of Rep. Franklin HB 2602 be amended on page 4, by striking all in lines
28 through 30;

    On page 9, after line 42, by inserting a new section to read as follows:

    ``New Sec. 22. The performance of the duties of a tax appeals commissioner, the ex-
ecutive director of the tax appeals commission, or any hearing officer shall not be based
upon a production quota system or on the total amount or percentage of tax collected based
upon aggregate revenue projections of any governmental official.'';

    By renumbering existing sections accordingly;

 Also, on motion of Rep. Johnston HB 2602 be amended on page 3, in line 38, after the
period by inserting ``The remaining commissioners shall be: (1) A resident of Kansas at the
time of taking the oath of office and maintain residency in Kansas, while holding office; and
(2) selected with special reference to training and experience for duties imposed by this
act.'';

 Also, on motion of Rep. Mays to amend HB 2602, the motion did not prevail.

 Also, on motion of Rep. Shriver to amend HB 2602, the motion did not prevail. Also, on
motion of Rep. Shriver to refer the bill to Committee on Judiciary, the motion did not
prevail.

 Also, on motion of Rep. Presta to amend HB 2602, the motion did not prevail.

 Also, on motion of Rep. Neufeld HB 2602 be amended on page 23, after line 8, by
inserting a new section to read as follows:

    ``Sec. 31. K.S.A. 79-201j is hereby amended to read as follows: 79-201j. The following
described property, to the extent specified by this section, shall be exempt from all property
or ad valorem taxes levied under the laws of the state of Kansas:

    (a) All farm machinery and equipment. The term ``farm machinery and equipment''
means that personal property actually and regularly used in any farming or ranching oper-
ation. The term ``farming or ranching operation'' shall include the operation of a feedlot and
the performing of farm or ranch work for hire. The term ``farm machinery and equipment''
shall not include any passenger vehicle other than an all-terrain vehicle, truck, truck tractor,
trailer, semitrailer or pole trailer, other than a farm trailer, as the terms are defined by
K.S.A. 8-126 and amendments thereto.

    The provisions of this subsection shall apply to all taxable years commencing after De-
cember 31, 1984 1997.

    (b) (1) All aquaculture machinery and equipment. The term ``aquaculture machinery
and equipment'' means that personal property actually and regularly used in any aquaculture
operation. The term ``aquaculture operation'' shall include the feeding out of aquatic plants
and animals; breeding, growing or rearing aquatic plants and animals; and selling or trans-
porting aquatic plants and animals. The term ``aquaculture machinery and equipment'' shall
not include any passenger vehicle other than an all-terrain vehicle, truck, truck tractor,
trailer, semitrailer or pole trailer.

    (2) All Christmas tree machinery and equipment. The term ``Christmas tree machinery
and equipment'' means that personal property actually and regularly used in any Christmas
tree operation. The term ``Christmas tree operation'' shall include the planting, cultivating
and harvesting of Christmas trees; and selling or transporting Christmas trees. The term
``Christmas tree machinery and equipment'' shall not include any passenger vehicle other
than an all-terrain vehicle, truck, truck tractor, trailer, semitrailer or pole trailer.

    The provisions of this subsection shall apply to all taxable years commencing after De-
cember 31, 1992 1997.'';

    By renumbering existing sections accordingly;

    Also, on page 23, in line 11, before ``79-213'' by inserting ``79-201j,'';

    In the title, in line 13, after the comma, by inserting ``79-201j,'';

 Also, on motion of Rep. Larkin to amend HB 2602, the motion did not prevail.

 Also, roll call was demanded on motion of Rep. Spangler to amend HB 2602 on page 7,
by striking all in lines 18 through 22;

    By renumbering existing sections accordingly;

 On roll call, the vote was: Yeas 122; Nays 1; Present but not voting: 0; Absent or not
voting: 2.

 Yeas: Adkins, Alldritt, Allen, Aurand, Ballard, Ballou, Beggs, Benlon, Boston, Burroughs,
Campbell, Compton, Cook, Correll, Cox, Crow, Dahl, Dean, Dillon, Dreher, Edmonds,
Empson, Faber, Farmer, Feuerborn, Findley, Flaharty, Flora, Flower, Franklin, Freeborn,
Garner, Geringer, Gilbert, Gilmore, Glasscock, Grant, Gregory, Haley, Hayzlett, Helgerson,
Henderson, Henry, Holmes, Horst, Howell, Huff, Humerickhouse, Hutchins, Jennison,
Johnson, Johnston, Kejr, Kirk, Klein, Phil Kline, Phill Kline, Krehbiel, Kuether, Landwehr,
Lane, Larkin, M. Long, P. Long, Mason, Mays, McClure, McCreary, McKechnie, McKin-
ney, Minor, Mollenkamp, Morrison, Myers, Neufeld, Nichols, O'Connor, O'Neal, Osborne,
Packer, Palmer, Pauls, E. Peterson, J. Peterson, Phelps, Pottorff, Powell, Powers, Presta,
Ray, Reardon, Reinhardt, Ruff, Samuelson, Sawyer, Schwartz, Shallenburger, Sharp, Shore,
Showalter, Shriver, Shultz, Sloan, Spangler, Stone, Storm, Swenson, Tanner, Thimesch,
Toelkes, Tomlinson, Toplikar, Vickrey, Vining, Wagle, Weber, Weiland, Wells, Welshimer,
Wempe, Wilk, Wilson.

 Nays: Carmody.

 Present but not voting: None.

 Absent or not voting: Lloyd, Mayans.

 The motion of Rep. Spangler prevailed.

 Also, on motion of Rep. Howell HB 2602 be amended on page 23, after line 8, by
inserting the following:

    ``Sec. 31. K.S.A. 79-503a is hereby amended to read as follows: 79-503a. ''Fair market
value`` means the amount in terms of money that a well informed buyer is justified in paying
and a well informed seller is justified in accepting for property in an open and competitive
market, assuming that the parties are acting without undue compulsion. For the purposes
of this definition it will be assumed that consummation of a sale occurs as of January 1.

    Sales in and of themselves shall not be the sole criteria of fair market value but shall be
used in connection with cost, income and other factors including but not by way of exclusion:

    (a) The proper classification of lands and improvements;

    (b) the size thereof;

    (c) the effect of location on value;

    (d) depreciation, including physical deterioration or functional, economic or social ob-
solescence;

    (e) cost of reproduction of improvements;

    (f) productivity;

    (g) earning capacity as indicated by lease price, by capitalization of net income or by
absorption or sell-out period;

    (h) rental or reasonable rental values;

    (i) sale value on open market with due allowance to abnormal inflationary factors influ-
encing such values;

    (j) restrictions imposed upon the use of real estate by local governing bodies, including
zoning and planning boards or commissions; and

    (k) comparison with values of other property of known or recognized value. The as-
sessment-sales ratio study shall not be used as an appraisal for appraisal purposes.

    The appraisal process utilized in the valuation of all real and tangible personal property
for ad valorem tax purposes shall conform to generally accepted appraisal procedures which
are adaptable to mass appraisal and consistent with the definition of fair market value unless
otherwise specified by law.

    Appraisals produced by the computer assisted mass appraisal system prescribed or ap-
proved by the director of property valuation shall be acceptable when the following infor-
mation is provided: (1) Clear and concise information on how computer assisted mass ap-
praisal generated the appraisal for taxpayers;
    (2) whether the appraisal was based upon income, cost, or the market valuation ap-
praisal process; and
    (3) provide comparable residential properties as part of the written appraisal.

    Sec. 32. K.S.A. 79-504 is hereby amended to read as follows: 79-504. For the purposes
of this act:

    (a) ``Appraisal foundation'' and ``foundation'' mean the appraisal foundation established
on November 30, 1987, as a not-for-profit corporation under the laws of Illinois.

    (b) ``Written appraisal'' means a written statement used in connection with the activities
of the division of property valuation or a county appraiser that is independently and impar-
tially prepared by a county appraiser setting forth an opinion of defined value of an ade-
quately described property as of a specific date, supported by presentation and analysis of
relevant market information. Appraisals produced by the computer assisted mass appraisal
system prescribed or approved by the director of property valuation shall be deemed to be
written appraisals for the purposes of this act.'';

    By renumbering existing sections accordingly.

    Also, on page 23, in line 11, before ``79-1448'' by inserting ``79-503a, 79-504'';

    In the title, in line 14, before ``79-1448'' by inserting ``79-503a, 79-504,'';

 Also, on motion of Rep. Ballou to amend HB 2602, the motion did not prevail; and the
bill be passed as amended.

 Roll call was demanded on motion of Rep. McKinney to amend HB 2828 in line 25, by
striking all after the fourth comma; by striking all in lines 26 through 40 and inserting ``such
amount shall be transferred from the state general fund to the state debt reduction fund.

    (b) There is hereby established in the state treasury the state debt reduction fund which
shall be administered by the secretary of revenue. All expenditures from the state debt
reduction fund shall be for the purposes providing funding for retirement or defeasement
of bonds issued for programs and capital improvement projects for state agencies and shall
be made in accordance with appropriation acts upon warrants of the director of accounts
and reports issued pursuant to vouchers approved by the secretary of revenue or the sec-
retary's designee.'';

 On roll call, the vote was: Yeas 115; Nays 9; Present but not voting: 0; Absent or not
voting: 1.

 Yeas: Adkins, Alldritt, Allen, Aurand, Ballard, Beggs, Benlon, Boston, Burroughs, Camp-
bell, Compton, Cook, Correll, Cox, Crow, Dahl, Dean, Dillon, Dreher, Edmonds, Empson,
Faber, Farmer, Feuerborn, Findley, Flaharty, Flora, Flower, Freeborn, Garner, Geringer,
Gilbert, Gilmore, Glasscock, Grant, Haley, Hayzlett, Helgerson, Henderson, Henry,
Holmes, Horst, Howell, Huff, Humerickhouse, Hutchins, Jennison, Johnson, Johnston,
Kejr, Kirk, Klein, Krehbiel, Kuether, Landwehr, Larkin, M. Long, P. Long, Mayans, Mays,
McClure, McCreary, McKechnie, McKinney, Minor, Mollenkamp, Morrison, Myers, Neu-
feld, Nichols, O'Neal, Osborne, Packer, Palmer, Pauls, E. Peterson, J. Peterson, Phelps,
Pottorff, Powell, Powers, Presta, Ray, Reardon, Reinhardt, Ruff, Samuelson, Sawyer,
Schwartz, Shallenburger, Sharp, Shore, Showalter, Shriver, Shultz, Sloan, Spangler, Stone,
Storm, Swenson, Tanner, Thimesch, Toelkes, Tomlinson, Toplikar, Vickrey, Vining, Wagle,
Weber, Weiland, Wells, Welshimer, Wempe, Wilk, Wilson.

 Nays: Ballou, Carmody, Franklin, Gregory, Phil Kline, Phill Kline, Lane, Mason,
O'Connor.

 Present but not voting: None.

 Absent or not voting: Lloyd.

 The motion of Rep. McKinney prevailed; and HB 2828 be passed as amended.

REPORTS OF STANDING COMMITTEES
 The Committee on Transportation recommends HB 3019 be passed and, because the
committee is of the opinion that the bill is of a noncontroversial nature, be placed on the
consent calendar.

    The Committee on Transportation recommends SB 679, as amended by Senate Com-
mittee of the Whole, be amended on page 2, by striking all in lines 12 through 14; in line
16, following the stricken material, by inserting: ``:

    (1) The costs for the construction, repair or reconstruction of such bridge or culvert
under the provisions of this subsection. Any bonds issued pursuant to this subsection to pay
the costs of such bridge or culvert work shall not be subject to any limitation on the bonded
indebtedness of the county; or

    (2) the costs for the construction, repair or reconstruction of any such road under the
provisions of this subsection; except that no such bonds shall be issued until the board of
county commissioners shall have published a resolution authorizing the issuance of such
bonds once each week for three consecutive weeks in the official county newspaper. If within
60 days following the last publication of such resolution, a petition in opposition to the
issuance of such bonds, signed by not less than 5% of the qualified electors of the county,
is filed with the county election officer, no bonds shall be issued unless a majority of the
electors voting on the question of issuing such bonds approve the same. Such election shall
be called and held in the manner provided for the calling and holding of elections under
the general bond law.''; and the bill be passed as amended.

    The Committee on Utilities recommends SB 212 be amended by substituting a new bill
to be designated as ``House Substitute for SENATE BILL No. 212,'' as follows:

``House Substitute for SENATE BILL No. 212
By Committee on Utilities
``AN ACT concerning telecommunications services; relating to universal service, enhanced
     
universal service and internet access; amending K.S.A. 1997 Supp. 66-2005, 66-2008
     
and 66-2011 and repealing the existing sections.''; and the substitute bill be passed.
     
    (H. Sub. for SB 212 was thereupon introduced and read by title.
 On motion of Rep. Jennison, the House recessed until 2:30 p.m.



March 25, 1998


______
Afternoon Session
 The House met pursuant to recess with Speaker pro tem Wagle in the chair.

 On motion of Rep. Jennison, the House went into Committee of the Whole, with Rep.
Dean in the chair.

COMMITTEE OF THE WHOLE
 On motion of Rep. Dean, Committee of the Whole report, as follows, was adopted:

 Recommended that SB 640 be passed over and retain a place on the calendar.

 Committee report recommending a substitute bill and committee report to Sub. HB
2793 be adopted; also, on motion of Rep. Adkins be amended on page 26, by striking all
of lines 7 and 8;

 Also, on motion of Rep. Krehbiel to amend Sub. HB 2793, the motion did not prevail.
Also, roll call was demanded on further motion of Rep. Krehbiel to amend on page 50,
following line 12, by inserting the following:

    ``New Sec. 71. (a) For all taxable years commencing after December 31, 1997, a credit
shall be allowed against the tax liability imposed under the Kansas income tax act upon an
individual for amounts incurred during the taxable year for tuition, textbooks and associated
fees for all dependents of such individual attending any Kansas area vocational school, area
vocational-technical school, community college, technical college, municipal university, state
educational institution under the control and supervision of the state board of regents or its
successor, or accredited independent postsecondary educational institution located and op-
erating in Kansas.

    (b) The amount of such credit shall be the amount paid for tuition, textbooks and as-
sociated fees but shall not exceed $500 for each dependent expended in any taxable year.
If the amount of such credit exceeds the individual's income tax liability for the appropriate
taxable year, such excess amount shall be refunded. This credit shall not be allowed, how-
ever, if the taxpayer's adjusted gross income exceeds the sum of $80,000 in the event of a
married taxpayer filing a joint return, or the sum of $40,000 in the event of all other tax-
payers.

    (c) No credit shall be allowed for such expenses incurred for any dependent who has
completed four years of attendance at any such institution after the effective date of this
act.'';

    And by renumbering sections accordingly;

 On roll call, the vote was: Yeas 102; Nays 16; Present but not voting: 3; Absent or not
voting: 4.

 Yeas: Alldritt, Allen, Aurand, Ballard, Ballou, Beggs, Boston, Burroughs, Campbell,
Compton, Cook, Correll, Crow, Dahl, Dean, Dillon, Dreher, Edmonds, Empson, Faber,
Feuerborn, Findley, Flaharty, Flora, Flower, Franklin, Garner, Geringer, Gilbert, Glas-
scock, Grant, Gregory, Haley, Hayzlett, Helgerson, Henry, Holmes, Horst, Howell, Huff,
Humerickhouse, Hutchins, Jennison, Johnson, Johnston, Kirk, Klein, Phill Kline, Krehbiel,
Kuether, Landwehr, Larkin, M. Long, P. Long, Mayans, Mays, McClure, McCreary,
McKechnie, McKinney, Minor, Morrison, Myers, Neufeld, Nichols, O'Connor, O'Neal,
Packer, Palmer, Pauls, E. Peterson, Phelps, Pottorff, Powell, Powers, Reardon, Reinhardt,
Ruff, Samuelson, Sawyer, Schwartz, Sharp, Showalter, Shriver, Shultz, Sloan, Stone, Storm,
Swenson, Tanner, Thimesch, Toelkes, Toplikar, Vickrey, Vining, Wagle, Weiland, Wells,
Welshimer, Wempe, Wilk, Wilson.

 Nays: Adkins, Cox, Farmer, Freeborn, Phil Kline, Lane, Mason, Mollenkamp, Osborne,
J. Peterson, Presta, Ray, Shallenburger, Shore, Tomlinson, Weber.

 Present but not voting: Benlon, Carmody, Gilmore.

 Absent or not voting: Henderson, Kejr, Lloyd, Spangler.

 The motion of Rep. Krehbiel prevailed.

 Also, on motion of Rep. Franklin to amend Sub. HB 2793, the motion did not prevail.
Also, on further motion of Rep. Franklin to amend, the motion did not prevail.

 Also, on motion of Rep. Sloan to amend Sub. HB 2793, the motion did not prevail.

 Also, on motion of Rep. Dahl to amend Sub. HB 2793, the motion did not prevail; and
the bill be passed as amended.

 On motion of Rep. Thimesch to amend SB 505, the motion did not prevail. Also, on
further motion of Rep. Thimesch to amend, the motion did not prevail; and the bill be
passed.

 Committee report to SB 469 be adopted; also, on motion of Rep. Burroughs be amended
on page 1, after line 27, by inserting the following:

    ``Sec. 2. K.S.A. 1997 Supp. 21-4201 is hereby amended to read as follows: 21-4201. (a)
Criminal use of weapons is knowingly:

    (1) Selling, manufacturing, purchasing, possessing or carrying any bludgeon, sandclub,
metal knuckles or throwing star, or any knife, commonly referred to as a switch-blade, which
has a blade that opens automatically by hand pressure applied to a button, spring or other
device in the handle of the knife, or any knife having a blade that opens or falls or is ejected
into position by the force of gravity or by an outward, downward or centrifugal thrust or
movement;

    (2) carrying concealed on one's person, or possessing with intent to use the same un-
lawfully against another, a dagger, dirk, billy, blackjack, slung shot, dangerous knife, straight-
edged razor, stiletto or any other dangerous or deadly weapon or instrument of like char-
acter, except that an ordinary pocket knife with no blade more than four inches in length
shall not be construed to be a dangerous knife, or a dangerous or deadly weapon or instru-
ment;

    (3) carrying on one's person or in any land, water or air vehicle, with intent to use the
same unlawfully, a tear gas or smoke bomb or projector or any object containing a noxious
liquid, gas or substance;

    (4) carrying any pistol, revolver or other firearm concealed on one's person except when
on the person's land or in the person's abode or fixed place of business;

    (5) setting a spring gun;

    (6) possessing any device or attachment of any kind designed, used or intended for use
in silencing the report of any firearm;

    (7) selling, manufacturing, purchasing, possessing or carrying a shotgun with a barrel
less than 18 inches in length or any other firearm designed to discharge or capable of
discharging automatically more than once by a single function of the trigger;

    (8) possessing, manufacturing, causing to be manufactured, selling, offering for sale,
lending, purchasing or giving away any cartridge which can be fired by a handgun and which
has a plastic-coated bullet that has a core of less than 60% lead by weight; or

    (9) possessing or transporting any incendiary or explosive material, liquid, solid or mix-
ture, equipped with a fuse, wick or any other detonating device, commonly known as a
molotov cocktail or a pipe bomb.

    (b) Subsections (a)(1), (2), (3), (4) and (7) shall not apply to or affect any of the following:

    (1) Law enforcement officers, or any person summoned by any such officers to assist
in making arrests or preserving the peace while actually engaged in assisting such officer;

    (2) wardens, superintendents, directors, security personnel and keepers of prisons, pen-
itentiaries, jails and other institutions for the detention of persons accused or convicted of
crime, while acting within the scope of their authority;

    (3) members of the armed services or reserve forces of the United States or the Kansas
national guard while in the performance of their official duty; or

    (4) manufacture of, transportation to, or sale of weapons to a person authorized under
subsections (b)(1), (2) and (3) to possess such weapons.

    (c) Subsection (a)(4) shall not apply to or affect the following:

    (1) Watchmen, while actually engaged in the performance of the duties of their em-
ployment;

    (2) licensed hunters or fishermen, while engaged in hunting or fishing;

    (3) private detectives licensed by the state to carry the firearm involved, while actually
engaged in the duties of their employment;

    (4) detectives or special agents regularly employed by railroad companies or other cor-
porations to perform full-time security or investigative service, while actually engaged in the
duties of their employment;

    (5) the state fire marshal, the state fire marshal's deputies or any member of a fire
department authorized to carry a firearm pursuant to K.S.A. 31-157 and amendments
thereto, while engaged in an investigation in which such fire marshal, deputy or member is
authorized to carry a firearm pursuant to K.S.A. 31-157 and amendments thereto; or

    (6) special deputy sheriffs described in K.S.A. 1997 Supp. 19-827 who have satisfactorily
completed the basic course of instruction required for permanent appointment as a part-
time law enforcement officer under K.S.A. 74-5607a and amendments thereto.

    (d) Subsections (a)(1), (6) and (7) shall not apply to any person who sells, purchases,
possesses or carries a firearm, device or attachment which has been rendered unserviceable
by steel weld in the chamber and marriage weld of the barrel to the receiver and which has
been registered in the national firearms registration and transfer record in compliance with
26 U.S.C. 5841 et seq. in the name of such person and, if such person transfers such firearm,
device or attachment to another person, has been so registered in the transferee's name by
the transferor.

    (e) Subsection (a)(8) shall not apply to a governmental laboratory or solid plastic bullets.

    (f) Subsection (a)(6) shall not apply to law enforcement officers who are members of a
city or county law enforcement agency tactical unit. Such tactical unit members shall be
designated by the sheriff or the chief of police or such sheriff's or chief of police's designee.
    (g) It shall be a defense that the defendant is within an exemption.

    (g) (h) Violation of subsections (a)(1) through (a)(5) or subsection (a)(9) is a class A
nonperson misdemeanor. Violation of subsection (a)(6), (a)(7) or (a)(8) is a severity level 9,
nonperson felony.

    (h) (i) As used in this section, ``throwing star'' means any instrument, without handles,
consisting of a metal plate having three or more radiating points with one or more sharp
edges and designed in the shape of a polygon, trefoil, cross, star, diamond or other geometric
shape, manufactured for use as a weapon for throwing.''

    And by renumbering sections accordingly;

    Also on page 1, in line 28, by striking ``is'' and inserting ``and K.S.A. 1997 Supp. 21-4201
are'';

    Also on page 1, in the title, in line 10, by striking ``sheriffs'' and inserting ``law enforcement
officers; relating to the use of firearms silencers''; also in line 10, before ``uniforms'' by
inserting ``sheriffs''; in line 11, after ``824'' by inserting ``and K.S.A. 1997 Supp. 21-4201'';
also in line 11, by striking ``section'' and inserting ``sections''; and SB 469 be passed as
amended.

 Committee report to SB 510 be adopted; also, on motion of Rep. Tanner be amended
on page 2, following line 37, by inserting a new section as follows:

    ``New Sec. 2. (a) As used in this section, the term ``credit hour'' means one hour of
instruction per week for 18 weeks or the equivalent thereof in a subject or course at a level
not higher than those subjects or courses normally offered to freshmen and sophomores in
four-year institutions of postsecondary education, which subject or course is approved by
the state board of education. Credit hour does not include within its meaning any hour of
instruction in a subject or course taken by a student enrolled for audit or in any subject or
course not approved by the state board of education. The state board of education, in
consultation with the state board of regents, shall determine which subjects and courses
offered by Haskell Indian nations university are at the level of freshmen and sophomore
subjects and courses offered in the state educational institutions and shall not approve any
subject or course offered at a higher level.

    (b) (1) Haskell Indian nations university shall be entitled to receive credit hour state
aid as provided in this section. The basis for payments of credit hour state aid to Haskell
Indian nations university for each credit hour of each duly enrolled student during the
current university session shall be equal to the amount which is provided for by the legis-
lature in acts making appropriations for the credit hour state aid entitlement of community
colleges in accordance with K.S.A. 71-602 and amendments thereto. Payments of credit
hour state aid shall be based only upon credit hours of duly enrolled students of Haskell
Indian nations university who are bona fide residents of the state of Kansas as determined
under the provisions of K.S.A. 71-406, and amendments thereto, or who would be consid-
ered to be bona fide residents of the state of Kansas under the provisions of K.S.A. 1997
Supp. 71-407, and amendments thereto, under the same conditions and circumstances as
would apply for determination of eligibility to be considered residents of the state of Kansas
if such students were enrolled in a community college.

    (2) The determination of credit hours of duly enrolled students shall be made at times
prescribed by the state board of education.

    (c) Haskell Indian nations university shall be entitled to receive out-district state aid as
provided in this section. The basis for payment of out-district state aid to Haskell Indian
nations university shall be $24 for each credit hour of each duly enrolled out-district student.
Out-district state aid payments under this section shall be made only for credit hours of out-
district students if such students (1) are residents of the state of Kansas or are deemed to
be residents of the state of Kansas, as determined under subsection (b), (2) are not residents
of Douglas county, and (3) upon determination by the state board of education, have not
more than 64 credit hours from any institution of postsecondary education or have not more
than 72 credit hours and are enrolled in terminal-type nursing courses or freshman-soph-
omore level pre-engineering courses.

    (d) No out-district state aid entitlement and no credit hour state aid entitlement of
Haskell Indian nations university shall be based upon enrollment in any subject or course
the principal part of which is taught at a location outside Douglas county, unless the location
of such course or subject is specifically authorized by the state board of education.

    (e) On or before November 1 and on or before March 1 of each year, beginning No-
vember 1, 1998, the chief administrative officer of Haskell Indian nations university shall
certify under oath to the state board of education the total number of duly enrolled credit
hours of students of the university during the current university session who meet the state
residence requirement. Each November 1 and March 1 certification for payment shall set
forth separately the credit hour enrollment for preceding sessions and for the current ses-
sion. The state board of education may require the university to furnish any additional
information deemed necessary by it to carry out the provisions of this section, and shall
prescribe such forms and policies as may be necessary for furnishing such information.

    (f) From the reports and information submitted and other information available to it,
the state board of education shall determine the amount Haskell Indian nations university
is entitled to receive as provided in this section. The state board of education may audit the
records of the Haskell Indian nations university to verify the accuracy of the reports sub-
mitted by the university. The state board of education may adopt rules and regulations for
the administration of this section.

    (g) In the event the Haskell Indian nations university is paid more than it is entitled to
receive under any distribution made under this section, the state board of education shall
notify the university of the amount of such overpayment and the university shall remit the
amount of overpayment to the state board of education and the state board shall deposit
the entire amount remitted in the state treasury to the credit of the state general fund, and
if the university fails so to remit, the state board of education shall deduct the excess amount
so paid from future payments becoming due to the university. In the event the university
is paid less than the amount to which it is entitled under any distribution made under this
section, the state board of education shall pay the additional amount due at any time within
the fiscal year in which the underpayment was made or within 60 days after the end of such
fiscal year.

    (h) Payments to Haskell Indian nations university of credit hour state aid and out-district
state aid under this section shall be made on December 1 and April 1 of each fiscal year,
commencing December 1, 1998, or as soon thereafter as is possible. The state board of
education shall certify, on or before November 25 and March 25 of each fiscal year, to the
director of accounts and reports the amount due the university on December 1 or April 1,
as the case may be, and the director of accounts and reports shall draw a warrant upon the
state treasurer in favor of the Haskell Indian nations university for such amount. Upon
receipt of such warrant, the treasurer of the Haskell Indian nations university shall credit
the entire amount received to a separate operating fund of the university. All moneys re-
ceived by the university under this section shall be used to pay current operating expenses
of the university, and shall not be used for the making of capital improvements.'';

    By renumbering sections 2 and 3 as sections 3 and 4, respectively;

    In the title, in line 10, after ``concerning'', by inserting ``higher education; relating to
residence of students enrolling at''; also in line 10, by striking ``relating to resi-''; in line 11,
by striking all before the semicolon and inserting ``providing state aid for Haskell Indian
nations university''; and SB 510 be passed as amended.

REPORTS OF STANDING COMMITTEES
 The Committee on Judiciary recommends SB 482, 516 as amended by Senate Com-
mittee of the Whole, be passed.

    The Committee on Judiciary recommends SB 100 be amended by substituting a new
bill to be designated as ``HOUSE Substitute for SENATE BILL No. 100,'' as follows:

``HOUSE Substitute for SENATE BILL No. 100
By Committee on Judiciary
``AN ACT concerning public records; relating to county and court records; amending K.S.A.
      19-250, 19-252 and 20-159 and repealing the existing sections.''; and the substitute bill
      be passed.

       (H. Sub. for SB 100 was thereupon introduced and read by title.)

    The Committee on Judiciary recommends SB 405 be amended by substituting a new
bill to be designated as ``HOUSE Substitute for SENATE BILL No. 405,'' as follows:

``HOUSE Substitute for SENATE BILL No. 405
By Committee on Judiciary
``AN ACT concerning administrative procedure; concerning presiding officers; amending
      K.S.A. 2-1208a, 2-3311, 8-2426, 21-3110, 31-140, 36-509, 40-2,137, 44-322a, 49-606,
      65-163a, 65-673, 65-720a, 65-747, 65-753, 65-2305, 65-3483, 65-3488, 65-3490, 66-
      1,117, 75-3306, as amended by section 91 of chapter 182 of the 1997 Session Laws of
      Kansas, 75-37,121, 75-37,121, as amended by section 31 of this act, 75-6207, 76-3110,
      77-514, as amended by section 92 of chapter 182 of the 1997 Session Laws of Kansas,
      77-514, as amended by section 35 of this act, 77-549, 77-550, 77-551, 77-551, as
      amended by section 39 of this act, 79-3313, 82a-1405, 82a-1501a, 82a-1502, 82a-1503
      and 82a-1504 and K.S.A. 1997 Supp. 44-1005, 65-163, 65-525, 65-526, 74-4904, 74-
      8804, 74-8816, 74-8817 and 74-8837 and repealing the existing sections; also repealing
      K.S.A. 75-5611a.''; and the substitute bill be passed.

       (H. Sub. for SB 405 was thereupon introduced and read by title.)

    The Committee on Taxation recommends SB 44, as amended by Senate Committee, be
amended on page 1, by striking all in lines 19 through 43;

    By striking all on pages 2 through 5 and inserting the following:

    ``New Section 1. For all taxable years commencing after December 31, 1997, there
shall be allowed as a credit against the tax liability imposed under the Kansas income tax
act upon an individual who is certificated to instruct and educate students of grades kin-
dergarten through 12 in an accredited school, whether public or otherwise, an amount, not
to exceed $125, equal to the purchase costs of equipment, materials or other teaching aids
for use in the classroom to assist in the education of the students of such individual. If the
amount of such tax credit exceeds the individual's income tax liability for the appropriate
taxable year, such excess amount shall be refunded.

    New Sec. 2. For all taxable years commencing after December 31, 1997, there shall be
allowed as a credit against the tax liability imposed under the Kansas income tax act upon
an individual amounts incurred during the taxable year for education expenses for all de-
pendents of such individual attending an elementary or secondary school which is located
in Kansas which adheres to the provisions of the federal civil rights act of 1964 and the
Kansas act against discrimination, and attendance at which satisfies the requirements of
K.S.A. 72-1111, and amendments thereto. As used in this section: ``Education expenses''
include, but are not limited to, textbooks and other instructional materials and equipment
and computer hardware and software but shall not include tuition or other attendance fees.
The amount of such credit shall be 25% of the amounts paid for education expenses in
excess of $250, but shall not exceed $300 expended for all dependents in any taxable year.
If the amount of such tax credit exceeds the individual's income tax liability for the appro-
priate taxable year, such excess amount shall be refunded.

    Sec. 3. K.S.A. 79-32,117 is hereby amended to read as follows: 79-32,117. (a) The Kan-
sas adjusted gross income of an individual means such individual's federal adjusted gross
income for the taxable year, with the modifications specified in this section.

    (b) There shall be added to federal adjusted gross income:

    (i) Interest income less any related expenses directly incurred in the purchase of state
or political subdivision obligations, to the extent that the same is not included in federal
adjusted gross income, on obligations of any state or political subdivision thereof, but to the
extent that interest income on obligations of this state or a political subdivision thereof issued
prior to January 1, 1988, is specifically exempt from income tax under the laws of this state
authorizing the issuance of such obligations, it shall be excluded from computation of Kansas
adjusted gross income whether or not included in federal adjusted gross income. Interest
income on obligations of this state or a political subdivision thereof issued after December
31, 1987, shall be excluded from computation of Kansas adjusted gross income whether or
not included in federal adjusted gross income.

    (ii) Taxes on or measured by income or fees or payments in lieu of income taxes imposed
by this state or any other taxing jurisdiction to the extent deductible in determining federal
adjusted gross income and not credited against federal income tax. This paragraph shall not
apply to taxes imposed under the provisions of K.S.A. 79-1107 or 79-1108, and amendments
thereto, for privilege tax year 1995, and all such years thereafter.

    (iii) The federal net operating loss deduction.

    (iv) Federal income tax refunds received by the taxpayer if the deduction of the taxes
being refunded resulted in a tax benefit for Kansas income tax purposes during a prior
taxable year. Such refunds shall be included in income in the year actually received regard-
less of the method of accounting used by the taxpayer. For purposes hereof, a tax benefit
shall be deemed to have resulted if the amount of the tax had been deducted in determining
income subject to a Kansas income tax for a prior year regardless of the rate of taxation
applied in such prior year to the Kansas taxable income, but only that portion of the refund
shall be included as bears the same proportion to the total refund received as the federal
taxes deducted in the year to which such refund is attributable bears to the total federal
income taxes paid for such year. For purposes of the foregoing sentence, federal taxes shall
be considered to have been deducted only to the extent such deduction does not reduce
Kansas taxable income below zero.

    (v) The amount of any depreciation deduction or business expense deduction claimed
on the taxpayer's federal income tax return for any capital expenditure in making any build-
ing or facility accessible to the handicapped, for which expenditure the taxpayer claimed
the credit allowed by K.S.A. 79-32,177, and amendments thereto.

    (vi) Any amount of designated employee contributions picked up by an employer pur-
suant to K.S.A. 12-5005, 20-2603, 74-4919 and 74-4965, and amendments to such sections.

    (vii) The amount of any charitable contribution made to the extent the same is claimed
as the basis for the credit allowed pursuant to K.S.A. 79-32,196, and amendments thereto.

    (viii) The amount of any contribution made to an elementary or secondary school to the
extent the same is claimed as the basis for the credit allowed pursuant to section 1.

    (c) There shall be subtracted from federal adjusted gross income:

    (i) Interest or dividend income on obligations or securities of any authority, commission
or instrumentality of the United States and its possessions less any related expenses directly
incurred in the purchase of such obligations or securities, to the extent included in federal
adjusted gross income but exempt from state income taxes under the laws of the United
States.

    (ii) Any amounts received which are included in federal adjusted gross income but which
are specifically exempt from Kansas income taxation under the laws of the state of Kansas.

    (iii) The portion of any gain or loss from the sale or other disposition of property having
a higher adjusted basis for Kansas income tax purposes than for federal income tax purposes
on the date such property was sold or disposed of in a transaction in which gain or loss was
recognized for purposes of federal income tax that does not exceed such difference in basis,
but if a gain is considered a long-term capital gain for federal income tax purposes, the
modification shall be limited to that portion of such gain which is included in federal adjusted
gross income.

    (iv) The amount necessary to prevent the taxation under this act of any annuity or other
amount of income or gain which was properly included in income or gain and was taxed
under the laws of this state for a taxable year prior to the effective date of this act, as
amended, to the taxpayer, or to a decedent by reason of whose death the taxpayer acquired
the right to receive the income or gain, or to a trust or estate from which the taxpayer
received the income or gain.

    (v) The amount of any refund or credit for overpayment of taxes on or measured by
income or fees or payments in lieu of income taxes imposed by this state, or any taxing
jurisdiction, to the extent included in gross income for federal income tax purposes.

    (vi) Accumulation distributions received by a taxpayer as a beneficiary of a trust to the
extent that the same are included in federal adjusted gross income.

    (vii) Amounts received as annuities under the federal civil service retirement system
from the civil service retirement and disability fund and other amounts received as retire-
ment benefits in whatever form which were earned for being employed by the federal
government or for service in the armed forces of the United States.

    (viii) Amounts received by retired railroad employees as a supplemental annuity under
the provisions of 45 U.S.C. 228b (a) and 228c (a)(1) et seq.

    (ix) Amounts received by retired employees of a city and by retired employees of any
board of such city as retirement allowances pursuant to K.S.A. 13-14,106, and amendments
thereto, or pursuant to any charter ordinance exempting a city from the provisions of K.S.A.
13-14,106, and amendments thereto.

    (x) For taxable years beginning after December 31, 1976, the amount of the federal
tentative jobs tax credit disallowance under the provisions of 26 U.S.C. 280 C. For taxable
years ending after December 31, 1978, the amount of the targeted jobs tax credit and work
incentive credit disallowances under 26 U.S.C. 280 C.

    (xi) For taxable years beginning after December 31, 1986, dividend income on stock
issued by Kansas Venture Capital, Inc.

    (xii) For taxable years beginning after December 31, 1989, amounts received by retired
employees of a board of public utilities as pension and retirement benefits pursuant to K.S.A.
13-1246, 13-1246a and 13-1249 and amendments thereto.

    (xiii) For taxable years beginning after December 31, 1993, the amount of income
earned on contributions deposited to an individual development account under K.S.A. 79-
32,117h, and amendments thereto.

    (xiv) For all taxable years commencing after December 31, 1996, that portion of any
income of a bank organized under the laws of this state or any other state, a national banking
association organized under the laws of the United States, an association organized under
the savings and loan code of this state or any other state, or a federal savings association
organized under the laws of the United States, for which an election as an S corporation
under subchapter S of the federal internal revenue code is in effect, which accrues to the
taxpayer who is a stockholder of such corporation and which is not distributed to the stock-
holders as dividends of the corporation.

    (d) There shall be added to or subtracted from federal adjusted gross income the tax-
payer's share, as beneficiary of an estate or trust, of the Kansas fiduciary adjustment deter-
mined under K.S.A. 79-32,135, and amendments thereto.

    (e) The amount of modifications required to be made under this section by a partner
which relates to items of income, gain, loss, deduction or credit of a partnership shall be
determined under K.S.A. 79-32,131, and amendments thereto, to the extent that such items
affect federal adjusted gross income of the partner.

    New Sec. 4. (a) As used in this section:

    (1) ``Agricultural cooperative'' means any corporation which is organized pursuant to
the provisions of K.S.A. 17-1601 et seq., and amendments thereto, and which engages in
the activity of developing and promoting the processing and marketing of agricultural com-
modities grown, made or manufactured in this state through marketing contracts entered
into pursuant to K.S.A. 17-1616, and amendments thereto; and

    (2) ``direct investment'' means the payment of money or the transfer of any form of
economic value, whether tangible or intangible, other than money in exchange for stock.

    (b) For all taxable years commencing after December 31, 1997, there shall be allowed
a credit against the tax liability of a member of an agricultural cooperative imposed under
the Kansas income tax act in an amount equal to 10% of the direct investment in an agri-
cultural cooperative. The credit allowed by this subsection in any taxable year to a taxpayer
shall not exceed $500, or the amount of tax imposed under the Kansas income tax act
reduced by the sum of any other credits allowable pursuant to law, whichever amount is
less. If the amount of such tax credit exceeds the taxpayer's income tax liability for any such
taxable year, such excess amount may be carried over for deduction from the taxpayer's
income tax liability in the next succeeding taxable year or years until the total amount of
the tax credit has been deducted from tax liability, except that no such excess amount shall
be carried over for deduction after the fourth taxable year succeeding the taxable year in
which the direct investment was made.

    Sec. 5. K.S.A. 79-32,117 is hereby repealed.

    Sec. 6. This act shall take effect and be in force from and after its publication in the
statute book.'';

    In the title, in line 13, by striking all after ``ACT''; by striking all in lines 14 through 16
and inserting ``relating to income taxation; providing certain credits therefrom; amending
K.S.A. 79-32,117 and repealing the existing section.'' and the bill be passed as amended.



March 25, 1998


    The Committee on Taxation recommends SB 493, as amended by Senate Committee
of the Whole, be amended on page 1, by striking all in lines 19 through 43;

    By striking all on pages 2 through 11 and inserting the following:

    ``New Section 1. (a) A tax is hereby imposed on the estate of every resident decedent,
and every nonresident decedent who died holding an interest in property with a Kansas tax
situs, whose estate is required by federal law to file a return for federal state taxes. The
amount of such tax shall be equal to the amount of the maximum credit allowed by section
2011 of the internal revenue code against the tax that would otherwise be imposed on the
transfer of the estate of the decedent by section 2001 of the internal revenue code.

    (b) When the estate of a resident decedent shall consist of property within and without
the state, or in the case of the estate of a nonresident decedent who died holding an interest
in property with a Kansas tax situs, the tax imposed under subsection (a) shall be the per-
centage thereof that the gross estate for federal estate tax purposes less the value of all
property included therein having a tax situs which is not within the jurisdiction of the state
of Kansas, bears to the total gross estate for federal estate tax purposes.

    Sec. 2. K.S.A. 79-1541a is hereby amended to read as follows: 79-1541a. Whenever the
amount of the tax imposed upon a generation-skipping transfer by section 2601 of the
internal revenue code is determined, a tax, equal to the maximum amount of the credit
allowed against such tax by section 2604 of the internal revenue code, is hereby imposed
upon the taxable estate of the decedent as of the date of such determination. The tax imposed
under the provisions of this act shall be chargeable against the interests of each beneficiary
in proportion to the share received by each beneficiary under such transfer.

    Sec. 3. K.S.A. 79-1541b is hereby amended to read as follows: 79-1541b. When the
property transferred subject to the tax imposed by K.S.A. 79-1541a shall consist of both
property within and property without the state, the tax imposed shall be the percentage that
the Kansas assets of the generation-skipping trust or generation-skipping trust equivalent
bears to the total assets of the generation-skipping trust or generation-skipping trust equiv-
alent.

    Sec. 4. K.S.A. 79-1542 is hereby amended to read as follows: 79-1542. As used in this
act unless the context otherwise requires:

    (a) Any term used in this act shall have the same meaning as when used in a comparable
context in the internal revenue code. Any reference in this act to the ``internal revenue code''
shall mean the provisions of the United States internal revenue code of 1986, as such code
exists on December 31, 1992 1997. Any reference in this act to a specific provision of the
internal revenue code shall be to such provision as it exists on December 31, 1992 1997.

    (b) ``Deemed executor'' includes any person in actual or constructive possession of any
property of the decedent.

    (c) ``Director'' means the director of taxation.

    (d) ``Distributee'' means a beneficiary, legatee, devisee, heir, next of kin, grantee, donee,
vendee, joint tenant or any other successor in interest, whether outright or in trust.
    (e) ``Distributive share'' or ``distributive shares'' means the share or shares of the dis-
tributive estate passing to a distributee or distributees.

    (f) (d) ``Domicile'' refers to that place where a person resides, has an intention to remain
and to which they intend to return following any absence.

    (g) (e) ``Estate'' and ``property'' shall mean the real, personal and mixed property or
interest therein of the testator, intestate, grantor, bargainor, vendor or donor which shall
pass or be transferred to legatees, devisees, heirs, next of kin, grantees, donees, vendees, or
successors and shall include all personal property within or without the state.

    (h) (f) ``Executor'' and ``administrator'' mean the duly appointed, qualified and acting
executor or administrator of the decedent in this state.

    (i) (g) ``Nonresident decedent'' means a decedent who was not a resident decedent at
the time of death.

    (j) (h) ``Personal representative'' means the executor, administrator or deemed executor
of the decedent.

    (k) (i) ``Resident decedent'' means a decedent who was domiciled in this state at the
time of death.

    (l) (j) ``Secretary'' means the secretary of revenue, or the secretary's designee.

    (m) (k) ``Tax'' includes tax, penalty and interest, unless the context of a particular section
otherwise requires.

    (n) (l) ``Transfer'' shall include the passing of property or any interest therein in pos-
session or enjoyment, present or future, by inheritance, descent, devise, succession, bequest,
grant, deed, bargain, sale, gift or appointment in the manner herein prescribed.

    Sec. 5. K.S.A. 79-1564 is hereby amended to read as follows: 79-1564. (a) Except as
hereinafter provided, the executor or administrator of the estate of every decedent whose
death gives rise to a tax liability under the provisions of this act, within nine months following
the death of the decedent, shall make and The personal representative of every estate subject
to the tax imposed by section 1 who is required by federal law to file a return for federal
estate taxes shall file in the office of the director a return on forms prepared and furnished
by the secretary together with a copy of the federal estate tax return on or before the date
the federal estate tax return is required to be filed.

    (b) In those estates in which no executor or administrator has been appointed, the
deemed executor shall make and file such return. In the event there is more than one
deemed executor, all deemed executors shall be jointly responsible for completing and filing
one return reporting all of the assets of the estate except as hereinafter provided.
    (c) If, after exercising due diligence, the personal representative making and filing such
return is unable to make a complete return as to any part of the gross estate of the decedent,
such personal representative shall make and file a return reporting all information as to the
estate assets, including a description thereof and the name of any person holding a legal or
beneficial interest in the assets to the best of such personal representative's knowledge.

    (d) (b) The taxes imposed under the provisions of this act shall be paid at the expiration
of nine months after the death of the decedent. Such taxes shall be payable from the assets
of the estate or proceeds therefrom, in order, so far as practicable, that each distributive
share of the estate shall bear a just and equitable proportion of such taxes unless otherwise
directed by the will of the decedent or trust agreement by the personal representative to
the director not later than the date of the filing of the return.

    (1) The executor or administrator of the estate of every decedent who is required to file
a return shall pay to the director all taxes imposed under this act. In the event the tax
imposed against the shares of the decedent's estate exceeds the value of the assets or the
proceeds therefrom which were in the custody or control of the executor or administrator,
the executor or administrator shall pay the tax imposed to the extent of the value of the
amount or the proceeds therefrom within such executor's or administrator's custody or
control and the balance of the taxes may be stayed upon application to and approval by the
director. Such application shall be made at the time the return is filed upon forms prescribed
by the secretary. Upon approval of such application payment of the taxes shall be stayed for
a period not to exceed one year and the executor or administrator shall have a right to
proceed against the individual distributee or distributees receiving such taxable shares and
may perfect a lien therefor under the provisions of K.S.A. 79-1569, and amendments thereto.
    (2) Except as hereinafter provided, the deemed executor or deemed executors of the
estate of every decedent who are required to file a return shall pay to the director all of the
taxes imposed by this act. To the extent that all deemed executors do not join in the filing
of the return, the deemed executors who jointly file shall pay only that portion of the taxes
representing the aggregate tax liability imposed upon the distributive shares of those so
filing.
    (3) Where an asset not within the custody or control of a personal representative gives
rise to a tax liability and such personal representative is required to pay such tax or has
voluntarily paid such tax from the assets within such personal representative's custody or
control, the personal representative shall have a right to proceed against the individual
distributee receiving such share and may perfect a lien therefor under the provisions of
K.S.A. 79-1569, and amendments thereto. For the purpose of this paragraph: (1) With
respect to the tax liability caused without consideration of K.S.A. 79-1539 or 79-1540, and
amendments thereto, the personal representative shall be entitled to recover from the dis-
tributee the amount by which the total tax liability of the decedent's estate resulting from
such assets outside the control of the personal representative and received by the distributee
exceeds the total tax liability which would have been payable if the value of such property
had not been included in the decedent's gross estate; and (2) with respect to any additional
tax liability resulting from the application of K.S.A. 79-1539 or 79-1540, and amendments
thereto, the personal representative shall be entitled to recover from the distributee that
portion of the total tax liability caused by such application equal to the ratio that the value
of such assets outside the control of the personal representative received by the distributee
bears to the total value of such assets outside the control of the personal representative.
    (4) Whenever the personal representative is required to pay the taxes imposed upon an
asset not within the personal representative's custody or control and pays the taxes imposed
thereon from assets or proceeds therefrom of the estate within the personal representative's
custody or control and thereafter fails to collect the taxes attributable to the distributive
shares of the decedent's estate which were not within the personal representative's custody
or control, the personal representative shall be entitled to a refund of the taxes attributable
to such shares which were paid from assets or proceeds therefrom within the personal
representative's custody or control upon application to the director. The application for
refund shall be filed on forms prescribed by the secretary within the time allowed for refunds
pursuant to K.S.A. 79-1574, and amendments thereto. Upon being satisfied that the personal
representative has exercised due diligence in attempting to recover the taxes attributable to
the distributive shares of the decedent's estate which were not within such personal rep-
resentative's custody or control, the director shall refund the same.
    (5) The director shall issue a receipt acknowledging payment of such taxes whenever
the taxes as shown to be due on the return or any additional taxes assessed by the director
have been paid by a personal representative and (A) such executor or administrator has
requested a cash receipt in order to be subrogated to the state's right to proceed in collecting
the tax against a distributee; or (B) such executor or administrator has received a stay of
payment from the director. Such a receipt shall be issued only under circumstances de-
scribed in clauses (A) or (B) of this subsection and shall not constitute evidence that a final
determination of taxes pursuant to K.S.A. 79-1571, and amendments thereto, has been
made.

    (e) (c) If the taxes contemplated by this act are not paid when due, interest at the rate
prescribed by K.S.A. 79-2968(b), and amendments thereto, shall be charged and collected
commencing at the time the same become payable. When the filing of the return is delayed
beyond nine months after the death of the decedent and the director finds that such delay
was due to the inability of the personal representative to determine the distributive shares
of an estate or the proper recipients thereof, or to litigation, interest shall commence at the
time the return is filed.

    (f) At the election of the personal representative, the taxes imposed by this act may be
determined by the director. Such election shall be made by filing a return disclosing all
information necessary for the determination of the taxes imposed by this act. Upon receipt
of all necessary information, the director shall determine the taxes due and owing and shall
notify the personal representative of the tax liability by registered or certified mail. Not-
withstanding any election made pursuant to this section, the taxes shall be due and payable
at the same time and in the same manner as if the taxes had been determined by the personal
representative. If the election pursuant to this subsection is made before the expiration of
the nine-month period after the death of the decedent, interest shall be charged and col-
lected commencing 10 days after notice of the tax liability has been received by the personal
representative, or at the expiration of the nine-month period after the decedent's death,
whichever is later. If the election pursuant to this subsection is not timely made and the
director shall find that the delay was not due to the circumstances set forth in subsection
(e), interest shall be charged and collected commencing at the expiration of the nine-month
period after the decedent's death.

    Sec. 6. K.S.A. 79-1569 is hereby amended to read as follows: 79-1569. (a) Subject to
the provisions of subsection (b), Property of which a decedent died seized or possessed,
subject to the taxes imposed by this act, in whatever form of investment it may happen to
be shall be charged with a lien for all taxes, penalty and interest thereon which are or may
become due on such property; but the lien shall not affect any property after it has been
sold or disposed of for value by the executors or administrators in accordance with law, and
no consent to transfer issued by the director shall be required to release such lien, but in
all such cases a lien shall attach to the proceeds realized from any such sale or other dis-
position for all taxes and interest thereon which are or may be due on such property. That
portion of the decedent's property which is used for the payment of charges against the
estate and expenses of its administration, allowed by any court having jurisdiction thereof,
shall be divested of such lien. The lien on any property subject to the inheritance tax act by
virtue of the provisions of this subsection shall be divested after 10 years from the date of
the decedent's death.

    (b) If the taxes imposed under this act are not paid when due, the spouse, transferee,
surviving tenant, person in possession of the property by reason of the exercise, nonexercise,
or release of a power of appointment, or beneficiary, who receives, or has on the date of
the decedent's death, property included in the gross estate under K.S.A. 79-1548 through
79-1553 and 79-1555 through 79-1557, and amendments thereto, to the extent of the value
of such property at the time of the decedent's death shall be personally liable for such tax.
Any part of such property transferred by, or transferred by a transferee of, such spouse,
transferee, trustee, surviving tenant, person in possession, or beneficiary to a purchaser or
holder of a security interest shall be divested of the lien provided for in subsection (a) and
a similar lien shall then attach to all the property of such spouse, transferee, trustee, surviving
tenant, person in possession, beneficiary or transferee of any such person, except any part
transferred to a purchaser or a holder of a security interest.

    (c) Upon issuance of a receipt for taxes paid pursuant to subsection (d)(5) of K.S.A. 79-
1564 and amendments thereto to a personal representative who has paid the taxes imposed
by this act or an approved application for stay filed pursuant to subsection (d)(1) of K.S.A.
79-1564 and amendments thereto, the personal representative shall be subrogated to the
right to proceed against any real or personal property in which a distributee has an interest
which the state might have had. The issuance of a receipt for taxes paid by the director after
payment of the taxes or approved application for stay shall be deemed an assignment by the
state to the personal representative of the right to proceed against the real and personal
property in which a distributee has an interest and shall be conclusive evidence thereof. A
right to proceed shall arise and a lien shall be perfected to aid the personal representative
in the right to proceed against property of a distributee only if the personal representative
files a notice of lien with the register of deeds. The lien shall be effective only against
property of a distributee located in the county where the notice of lien is filed. Such notice
of lien may be filed in any county wherein any real or personal property in which the
distributee has an interest is located. The notice of lien shall be made on forms prescribed
by the secretary. Upon satisfaction of the lien, a release shall be issued by such personal
representative on forms prescribed by the secretary.
    (d) If the personal representative has requested and received a refund of taxes paid
pursuant to subsection (d)(4) of K.S.A. 79-1564, and amendments thereto, or whenever the
personal representative fails to collect the tax pursuant to subsection (d)(4) of K.S.A. 79-
1564, and amendments thereto, or is not required to pay the tax imposed by this act or the
taxes imposed by this act are not paid at the expiration of nine months after the death of
the decedent,

    (b) If the personal representative fails to timely pay the tax imposed by section 1, the
director shall enforce the director's lien by the issuance of a warrant under the director's
hand and official seal, directed to the sheriff of any county of the state, commanding such
sheriff to levy upon and sell the real and personal property of the distributee estate found
within the sheriff's county for the payment of the amount thereof, with the added interest
and the cost of executing the warrant, and to return such warrant to the director and pay
to the director the money collected by virtue thereof not more than 60 days from the date
of the warrant. The sheriff shall within five days after the receipt of the warrant, file with
the clerk of the district court of the sheriff's county a copy thereof, and thereupon the clerk
shall enter in the appearance docket in appropriate columns, the name of the distributee
estate named in the warrant, the amount of the tax or portion thereof and interest for which
the warrant is issued and the date such copy is filed. The amount of such warrant so docketed
shall thereupon become a lien upon the title to, and interest in, the real property of the
distributee estate against whom it is issued in the same manner, as a judgment duly docketed
in the office of such clerk. The sheriff shall proceed in the same manner and with like effect
as prescribed by law with respect to executions issued against property upon judgments of
a court of record, and shall be entitled to the same fees for the sheriff's services to be
collected in the same manner.

    The court in which the warrant is docketed shall have jurisdiction over all subsequent
proceedings as fully as though a judgment had been rendered in the court. In the discretion
of the director, a warrant of like terms, force and effect may be issued and directed to any
officer or employee of the director, and in the execution thereof such officer or employee
shall have all the powers conferred by laws upon sheriffs, and the subsequent proceedings
thereunder shall be the same as provided where the warrant is issued directly to the sheriff.
The distributee estate shall have the right to redeem the real estate within a period of 18
months from the date of such sale. If a warrant be returned, unsatisfied in full, the director
shall have the same remedies to enforce the claim for taxes as if the state of Kansas had
recovered judgment against the distributee for the amount of the tax. No law exempting
any goods and chattels, land and tenements from forced sale under execution shall apply to
a levy and sale under any such warrants or upon any execution issued upon any judgment
rendered in any action for inheritance taxes. The director shall have the right at any time
after the warrant has been returned unsatisfied or satisfied only in part, to issue alias warrants
until the full amount of the tax is collected.

    Sec. 7. K.S.A. 79-1570 is hereby amended to read as follows: 79-1570. No final account
of a personal representative shall be allowed by the district court unless such account shows,
and the judge of such court finds, that all taxes imposed by the provisions of this act upon
any property or interest therein belonging to the estate to be settled by such account and
already payable have been paid, and that all taxes which may become due on such estate
have been paid or settled as hereinbefore provided, or that the payment thereof to the state
is secured by bond.

    Sec. 8. K.S.A. 79-1571 is hereby amended to read as follows: 79-1571. (a) As soon as
practicable after the return is filed and the taxes paid, the director shall issue a closing letter.
Such closing letter shall be issued upon the director being satisfied that there has been a
final determination of all taxes due and that all such taxes have been paid. The director shall
issue such closing letter to the personal representative, and when the estate is involved in
probate proceedings before a district court, a copy of such closing letter shall be forwarded
to the judge of such court for recording in full in the journal of such court.

    (b) In the event that all deemed executors do not join in the filing of a return, or in the
event the personal representative is unable to make a complete return as to any part of the
gross estate of the decedent, upon the director being satisfied that a final determination of
the taxes due on that portion of the estate reported has been made and all taxes due thereon
have been paid, the director shall issue a closing letter as to that portion of the gross estate
which has actually been reported.
    (c) The closing letter shall be applicable only to assets reported in the return filed with
the director. To the extent the gross assets of the decedent were reported, the issuance of
a closing letter shall be conclusive evidence that all taxes have been determined and paid
and shall release any lien which attached to the decedent's property and that of any deemed
executor or distributee unless such lien has been subrogated, assigned and perfected pur-
suant to K.S.A. 79-1569, and amendments thereto. The closing letter may contain a legal
description of the real property so reported.
    (d) Release of the lien imposed by K.S.A. 79-1569, and amendments thereto, may be
provided by filing notice of release in the office of the register of deeds in any county where
any such real property included in the gross estate is located or, when the estate is involved
in proceedings before the district court, with the court. Any such notice of release shall be
in such form as prescribed by the secretary and may include use of or reference to the
closing letter issued by the director or may be included as part of that closing letter.

    Sec. 9. K.S.A. 79-1572 is hereby amended to read as follows: 79-1572. (a) Assets be-
longing to the estate of a deceased nonresident, other than intangible assets of a decedent
who at the time of death resided in the United States but outside this state, shall not be
delivered or transferred to a foreign personal representative of such decedent without serv-
ing notice upon the director of taxation of the time and place of such intended delivery or
transfer at least seven days before the time of such delivery or transfer. The director or the
director's representative may examine such assets prior to the time of such delivery or
transfer. Failure to serve such notice or to allow such examination or the making of a delivery
or transfer of such assets against the objection of the director shall render the person,
association, or corporation making the delivery or transfer liable for the payment of the tax
and interest due upon such assets, in an action brought by the department of revenue in
the name of the state.

    (b) A foreign or Kansas person, corporation, partnership or other association of persons
may release or transfer intangible assets of a nonresident decedent upon receipt of a sworn
affidavit from the personal representative of the decedent's estate, stating that the decedent
was not a resident of the state of Kansas at the time of the decedent's death but that such
decedent was a resident of another state in the United States.

    Sec. 10. K.S.A. 79-1574 is hereby amended to read as follows: 79-1574. (a) Except as
otherwise provided in this section, the amount of any tax imposed by this act shall be assessed
within three years after the return or affidavit was filed, whether or not such return was
filed on or after the date prescribed, or the tax as shown to be due on such return was paid,
whichever is the later date, and no proceedings in court for the collection of such taxes shall
be begun after the expiration of such period. Where the assessment of any inheritance tax
imposed under this act has been made within the period of limitation properly applicable
thereto, such tax may be collected by distraint or by a proceeding in court, but only if begun
within one year after the period of limitation as provided in this act. The foregoing provisions
of this section shall not apply in those cases where the time for the payment of the tax has
been extended pursuant to K.S.A. 79-1544 or 79-1567, and amendments thereto. In those
cases where the director has retained jurisdiction over the estate pursuant to K.S.A. 79-
1544, and amendments thereto, assessment of taxes or proceedings to collect taxes must be
made or commenced within three years after notice of the death of the life tenant. In those
cases where a bond has been given guaranteeing the payment of the tax pursuant to K.S.A.
79-1567, and amendments thereto, assessment of taxes or proceedings for collection of the
tax must be made or commenced within three years after the date of the expiration of the
last bond so given.

    (b) For the purposes of this section, a return of tax required under this act filed before
the last day prescribed by law shall be deemed to be filed on such last day and any tax shown
to be due on such return and paid before the last day prescribed by law shall be deemed
to be paid on such last day.

    (c) In the case of a false or fraudulent return or affidavit with intent to evade tax or in
the case of failure to file a return, the tax may be assessed, or a proceeding in court for
collection of such tax may be begun at any time. If the personal representative omits from
the gross estate items includable in such gross estate as exceed 25% of the gross estate stated
in the return or affidavit, the tax may be assessed or a proceeding in court for collection of
such tax may be begun at any time within six years after the return or affidavit was filed. In
determining the items omitted from the gross estate, there shall not be taken into account
any item which is omitted from the gross estate if such item is disclosed in the return or
affidavit, or in a statement attached to the return or affidavit, in a manner adequate to
apprise the director of the nature and amount of such item.

    (d) No refund or credit shall be allowed by the director after three years from the date
the return was filed, or one year after an assessment is made, whichever is the later date,
unless before the expiration of such period a claim therefor is filed by the personal repre-
sentative.

    (e) In case a personal representative has made claim for a refund, such personal rep-
resentative shall have the right to commence a suit for the recovery of the same at the
expiration of six months after the filing of the claim for refund, if no action has been taken
by the director.

    (f) Any personal representative of an estate of a decedent who has been notified of any
adjustment by the internal revenue service shall notify the director within 90 days of the
date such adjustment is agreed to or becomes final between the estate and the internal
revenue service. Such adjustments shall be reported by filing an amended return and a copy
of the revenue agent's report detailing such adjustments, along with any other statements
or documents as may be necessary to explain and support the adjustments.:

    (1) Notwithstanding the provisions of subsections (a) or (d), additional tax may be as-
sessed and proceedings in court for collection of such taxes may be commenced and any
refund or credit may be allowed by the director of taxation within 180 days following receipt
of any such report of adjustments by the Kansas department of revenue. No assessment
shall be made nor shall any refund or credit be allowed under the provisions of this paragraph
except to the extent the same is attributable to changes in the estate due to adjustments
indicated by such report.

    (2) In the event of failure to comply with the provisions of this subsection, the statute
of limitations shall be tolled.

    Sec. 11. K.S.A. 79-1575 is hereby amended to read as follows: 79-1575. As soon as
practicable after the return or affidavit is filed, the director shall make an examination
thereof and shall issue final determinations of tax liability hereunder in the manner pre-
scribed by K.S.A. 79-3226, and amendments thereto. If the tax found due is less than the
amount paid, the excess paid shall be refunded to the personal representative who paid the
tax, except that no refund of $25 or less shall be made. If the tax found due shall be greater
than the amount previously paid, or if a claim for a refund is denied, notice shall be mailed
to the person filing the return by registered or certified mail. An order finding additional
tax shall be accompanied by a notice and demand for payment. The tax shall be paid within
30 days thereafter, together with interest on the additional tax from the date the tax was
due unless an appeal is taken in the manner provided by K.S.A. 74-2438, and amendments
thereto. No additional tax shall be assessed for less than $25.

    Sec. 12. K.S.A. 79-1576 is hereby amended to read as follows: 79-1576. Subject to the
right of any personal representative to apply for review as provided for in this act, the director
shall hear and determine all questions relative to such tax. The attorney for the director, at
the request of the director, shall represent the state in any court proceedings brought to
review any action of the director. If any district court shall find that any such tax remains
due and that proper proceedings have not been taken before the director for abatement
thereof, it shall order the personal representative to pay the same, with interest, and costs,
and no question regarding the validity of such tax shall be heard in such court. If it appears
that there are no goods or assets of the estate in the personal representative's hands, the
court may assess the amount of the tax against the personal representative, as if for the
personal representative's own debt, and may enforce compliance with such order; but the
personal representatives shall be personally liable only for such taxes as shall be payable
while they continue in such offices or have custody or control of decedent's property. In
the cases where the tax is due and payable by and collectible from the distributee, all actions
shall be prosecuted by the attorney for the director in the name of the state, and such actions
may be brought in the same courts as other actions for money.

    Sec. 13. K.S.A. 79-1579 is hereby amended to read as follows: 79-1579. A refund clear-
ing fund, designated inheritance estate tax abatement refund, not to exceed $50,000 shall
be set apart and maintained by the director of taxation from inheritance estate tax collections
and held by the state treasurer for the prompt payment of all abatements and refunds. If
the director of taxation finds that a claim for refund duly filed by a personal representative
pursuant to K.S.A. 79-1564(d)(4), 79-1574(d) or 79-1575, and amendments thereto, should
be allowed, or if a court upon a final judgment shall find that the inheritance estate tax,
penalty or interest paid by a personal representative is in excess of the amount legally due,
then the director of taxation shall issue the director's vouchers to the director of accounts
and reports for the refund to the personal representative of such tax, penalty or interest
together with interest provided for hereinafter. Upon receipt of such voucher properly
executed and endorsed, the director of accounts and reports shall issue the director's war-
rants to the state treasurer for the payment to the personal representative out of the inher-
itance estate tax abatement refund fund. The director of taxation shall file a duplicate of
such voucher and also a statement which shall set forth the reasons why such abatement or
refund was allowed. Upon the allowance of an abatement or refund of any tax or interest
paid, interest shall be allowed and paid on the amount of such abatement or refund at the
rate of 12% per annum from the date such tax, penalty or interest was paid to the date the
refund or abatement of inheritance estate taxes is made. No refunds in an amount of less
than $25 shall be made.

    Sec. 14. K.S.A. 79-1580 is hereby amended to read as follows: 79-1580. (a) The director
of taxation shall fix and charge an amount pursuant to K.S.A. 45-218 and 45-219, and amend-
ments thereto for furnishing certified copies of returns or affidavits.

    (b) All fees collected hereunder shall be remitted to the state treasurer at least monthly.
Upon receipt of each such remittance, the state treasurer shall deposit the entire amount
thereof in the state treasury and the same shall be credited to the state general fund.

    Sec. 15. K.S.A. 79-1587 is hereby amended to read as follows: 79-1587. (a) All reports
and returns required under the provisions of the Kansas inheritance estate tax act shall be
preserved for three years and thereafter until the director of taxation orders them to be
destroyed.

    (b) Except in accordance with proper judicial order, or as provided in subsection (c) of
this section, subsection (g) of K.S.A. 17-7511, and amendments thereto, or 46-1106, and
amendments thereto, it shall be unlawful for the director of taxation, or any deputy, agent,
clerk or other officer, employee or former employee of the department of revenue or any
other state officer or employee or former state officer or employee to divulge, or to make
known in any way, the value of any estate or any particulars set forth or disclosed in any
report, return, federal return or federal return information required under the provisions
of the Kansas inheritance estate tax act; and it shall be unlawful for the director of taxation,
any deputy, agent, clerk or other officer or employee of the department of revenue engaged
in the administration of the Kansas inheritance estate tax act to engage in the business or
profession of tax accounting or to accept employment, with or without consideration, from
any person, firm or corporation for the purpose, directly or indirectly, of preparing tax
returns or reports required by the laws of the state of Kansas, by any other state or by the
United States government, or to accept any employment for the purpose of advising, pre-
paring material or data, or the auditing of books or records to be used in an effort to defeat
or cancel any tax or part thereof that has been assessed by the state of Kansas, any other
state or by the United States government.

    (c) Nothing herein shall be construed to prohibit the publication of statistics, so clas-
sified as to prevent the identification of particular reports or returns and the items thereof,
or the inspection of returns by the attorney general or other legal representatives of the
state. Nothing in this section shall prohibit the post auditor from access to all inheritance
estate tax reports or returns in accordance with and subject to the provisions of subsection
(g) of K.S.A. 46-1106, and amendments thereto. Nothing in this section shall be construed
to prohibit the disclosure of the taxpayer's name, social security number, last known address
and total tax liability, including penalty and interest, from inheritance estate tax returns to
a debt collection agency contracting with the secretary of revenue pursuant to K.S.A. 75-
5140 to 75-5143, inclusive, and amendments thereto. Any person receiving any information
under the provisions of this subsection shall be subject to the confidentiality provisions of
subsection (b) of this section and to the penalty provisions of subsection (d) of this section.

    (d) Any violation of subsections (b) or (c) of this section shall be a class B misdemeanor;
and if the offender be an officer or employee of the state, such officer or employee shall be
dismissed from office.

    (e) Notwithstanding the provisions of this section, the secretary of revenue may permit
the commissioner of internal revenue of the United States, or the proper official of any state
imposing an inheritance or estate tax, or the authorized representative of either, to inspect
the inheritance estate tax returns made under the provisions of the Kansas inheritance estate
tax act and the secretary of revenue may make available or furnish to the taxing officials of
any other state or the commissioner of internal revenue of the United States or other taxing
officials of the federal government, or their authorized representatives, information con-
tained in inheritance tax reports or returns or any audit thereof or the report of any inves-
tigation made with respect thereto, filed pursuant to the Kansas inheritance estate tax act,
as the secretary may consider proper, but such information shall not be used for any other
purpose than that of the administration of tax laws of such state, the state of Kansas or of
the United States.

    (f) Notwithstanding the provisions of this section, the inheritance estate tax return filed
with respect to the estate of a decedent shall, upon written request, be open to inspection
by or disclosure to: (1) The administrator, executor or trustee of such decedent's estate,;
and (2) any heir at law, next of kin or beneficiary under the will of such decedent or a donee
or distributee of the decedent's property, but only if the secretary of revenue finds that such
heir at law, next of kin, beneficiary, donee or distributee has a material interest which will
be affected by information contained therein.

    New Sec. 16. Sections 1 through 17 of this act and the provisions of article 15 of chapter
79 of the Kansas Statutes Annotated not repealed by this act shall be known and may be
cited as the Kansas estate tax act.

    New Sec. 17. The provisions of sections 1 through 17 of this act shall be applicable to
the estates of all decedents dying after June 30, 1998. The provisions of article 15 of chapter
79 of the Kansas Statutes Annotated in effect immediately before the effective date of this
act shall be applicable to the estates of all decedents dying before July 1, 1998.

    Sec. 18. K.S.A. 79-32,110 is hereby amended to read as follows: 79-32,110. (a) Resident
Individuals. Except as otherwise provided by subsection (a) of K.S.A. 79-3220, and amend-
ments thereto, a tax is hereby imposed upon the Kansas taxable income of every resident
individual, which tax shall be computed in accordance with the following tax schedules:

    (1) Married individuals filing joint returns.

If the taxable income is:The tax is:
Not over $30,000 3.5% of Kansas taxable income
Over $30,000 but not over $60,000 $1,050 plus 6.25% of excess over $30,000
Over $60,000 $2,925 plus 6.45% of excess over $60,000
    (2) All other individuals.

     (A) For tax year 1997:

If the taxable income is:The tax is:
Not over $20,000 4.1% of Kansas taxable income
Over $20,000 but not over $30,000 $820 plus 7.5% of excess over $20,000
Over $30,000 $1,570 plus 7.75% of excess over $30,000
     (B) For tax year 1998, and all tax years thereafter:

If the taxable income is:The tax is:
Not over $15,000 3.5% of Kansas taxable income
Over $15,000 but not over $30,000 $525 plus 6.75% of excess over $15,000
Over $30,000 $1,537.50 plus 7.75% of excess over $30,000
(C) For tax year 1999:
If the taxable income is:The tax is:
Not over $15,000 3.5% of Kansas taxable income
Over $15,000 but not over $30,000 $525 plus 6.25% of excess over $15,000
Over $30,000 $1,462.50 plus 7.45% of excess over $30,000
     (D) For tax year 2000, and all tax years thereafter:

If the taxable income is:The tax is:
Not over $15,000 3.5% of Kansas taxable income
Over $15,000 but not over $30,000 $525 plus 6.25% of excess over $15,000
Over $30,000 $1,462.50 plus 6.45% of excess over $30,000
    (b) Nonresident Individuals. A tax is hereby imposed upon the Kansas taxable income
of every nonresident individual, which tax shall be an amount equal to the tax computed
under subsection (a) as if the nonresident were a resident multiplied by the ratio of modified
Kansas source income to Kansas adjusted gross income.

    (c) Corporations. A tax is hereby imposed upon the Kansas taxable income of every
corporation doing business within this state or deriving income from sources within this
state. Such tax shall consist of a normal tax and a surtax and shall be computed as follows:

    (1) The normal tax shall be in an amount equal to 4% of the Kansas taxable income of
such corporation; and

    (2) the surtax shall be in an amount equal to 3.35% of the Kansas taxable income of
such corporation in excess of $50,000.

    (d) Fiduciaries. A tax is hereby imposed upon the Kansas taxable income of estates and
trusts at the rates provided in paragraph (2) of subsection (a) hereof.

    Sec. 19. K.S.A. 79-32,117 is hereby amended to read as follows: 79-32,117. (a) The
Kansas adjusted gross income of an individual means such individual's federal adjusted gross
income for the taxable year, with the modifications specified in this section.

    (b) There shall be added to federal adjusted gross income:

    (i) Interest income less any related expenses directly incurred in the purchase of state
or political subdivision obligations, to the extent that the same is not included in federal
adjusted gross income, on obligations of any state or political subdivision thereof, but to the
extent that interest income on obligations of this state or a political subdivision thereof issued
prior to January 1, 1988, is specifically exempt from income tax under the laws of this state
authorizing the issuance of such obligations, it shall be excluded from computation of Kansas
adjusted gross income whether or not included in federal adjusted gross income. Interest
income on obligations of this state or a political subdivision thereof issued after December
31, 1987, shall be excluded from computation of Kansas adjusted gross income whether or
not included in federal adjusted gross income.

    (ii) Taxes on or measured by income or fees or payments in lieu of income taxes imposed
by this state or any other taxing jurisdiction to the extent deductible in determining federal
adjusted gross income and not credited against federal income tax. This paragraph shall not
apply to taxes imposed under the provisions of K.S.A. 79-1107 or 79-1108, and amendments
thereto, for privilege tax year 1995, and all such years thereafter.

    (iii) The federal net operating loss deduction.

    (iv) Federal income tax refunds received by the taxpayer if the deduction of the taxes
being refunded resulted in a tax benefit for Kansas income tax purposes during a prior
taxable year. Such refunds shall be included in income in the year actually received regard-
less of the method of accounting used by the taxpayer. For purposes hereof, a tax benefit
shall be deemed to have resulted if the amount of the tax had been deducted in determining
income subject to a Kansas income tax for a prior year regardless of the rate of taxation
applied in such prior year to the Kansas taxable income, but only that portion of the refund
shall be included as bears the same proportion to the total refund received as the federal
taxes deducted in the year to which such refund is attributable bears to the total federal
income taxes paid for such year. For purposes of the foregoing sentence, federal taxes shall
be considered to have been deducted only to the extent such deduction does not reduce
Kansas taxable income below zero.

    (v) The amount of any depreciation deduction or business expense deduction claimed
on the taxpayer's federal income tax return for any capital expenditure in making any build-
ing or facility accessible to the handicapped, for which expenditure the taxpayer claimed
the credit allowed by K.S.A. 79-32,177, and amendments thereto.

    (vi) Any amount of designated employee contributions picked up by an employer pur-
suant to K.S.A. 12-5005, 20-2603, 74-4919 and 74-4965, and amendments to such sections.

    (vii) The amount of any charitable contribution made to the extent the same is claimed
as the basis for the credit allowed pursuant to K.S.A. 79-32,196, and amendments thereto.

    (viii) The amount of any ad valorem taxes and assessments paid and the amount of any
costs incurred for habitat management or construction and maintenance of improvements
on real property, claimed for deduction in determining federal adjusted gross income, to the
extent the same is claimed as the basis for any credit allowed pursuant to K.S.A. 79-32,203
and amendments thereto.

    (c) There shall be subtracted from federal adjusted gross income:

    (i) Interest or dividend income on obligations or securities of any authority, commission
or instrumentality of the United States and its possessions less any related expenses directly
incurred in the purchase of such obligations or securities, to the extent included in federal
adjusted gross income but exempt from state income taxes under the laws of the United
States.

    (ii) Any amounts received which are included in federal adjusted gross income but which
are specifically exempt from Kansas income taxation under the laws of the state of Kansas.

    (iii) The portion of any gain or loss from the sale or other disposition of property having
a higher adjusted basis for Kansas income tax purposes than for federal income tax purposes
on the date such property was sold or disposed of in a transaction in which gain or loss was
recognized for purposes of federal income tax that does not exceed such difference in basis,
but if a gain is considered a long-term capital gain for federal income tax purposes, the
modification shall be limited to that portion of such gain which is included in federal adjusted
gross income.

    (iv) The amount necessary to prevent the taxation under this act of any annuity or other
amount of income or gain which was properly included in income or gain and was taxed
under the laws of this state for a taxable year prior to the effective date of this act, as
amended, to the taxpayer, or to a decedent by reason of whose death the taxpayer acquired
the right to receive the income or gain, or to a trust or estate from which the taxpayer
received the income or gain.

    (v) The amount of any refund or credit for overpayment of taxes on or measured by
income or fees or payments in lieu of income taxes imposed by this state, or any taxing
jurisdiction, to the extent included in gross income for federal income tax purposes.

    (vi) Accumulation distributions received by a taxpayer as a beneficiary of a trust to the
extent that the same are included in federal adjusted gross income.

    (vii) Amounts received as annuities under the federal civil service retirement system
from the civil service retirement and disability fund and other amounts received as retire-
ment benefits in whatever form which were earned for being employed by the federal
government or for service in the armed forces of the United States.

    (viii) Amounts received by retired railroad employees as a supplemental annuity under
the provisions of 45 U.S.C. 228b (a) and 228c (a)(1) et seq.

    (ix) Amounts received by retired employees of a city and by retired employees of any
board of such city as retirement allowances pursuant to K.S.A. 13-14,106, and amendments
thereto, or pursuant to any charter ordinance exempting a city from the provisions of K.S.A.
13-14,106, and amendments thereto.

    (x) For taxable years beginning after December 31, 1976, the amount of the federal
tentative jobs tax credit disallowance under the provisions of 26 U.S.C. 280 C. For taxable
years ending after December 31, 1978, the amount of the targeted jobs tax credit and work
incentive credit disallowances under 26 U.S.C. 280 C.

    (xi) For taxable years beginning after December 31, 1986, dividend income on stock
issued by Kansas Venture Capital, Inc.

    (xii) For taxable years beginning after December 31, 1989, amounts received by retired
employees of a board of public utilities as pension and retirement benefits pursuant to K.S.A.
13-1246, 13-1246a and 13-1249 and amendments thereto.

    (xiii) For taxable years beginning after December 31, 1993, the amount of income
earned on contributions deposited to an individual development account under K.S.A. 79-
32,117h, and amendments thereto.

    (xiv) For all taxable years commencing after December 31, 1996, that portion of any
income of a bank organized under the laws of this state or any other state, a national banking
association organized under the laws of the United States, an association organized under
the savings and loan code of this state or any other state, or a federal savings association
organized under the laws of the United States, for which an election as an S corporation
under subchapter S of the federal internal revenue code is in effect, which accrues to the
taxpayer who is a stockholder of such corporation and which is not distributed to the stock-
holders as dividends of the corporation.

    (xv) For all taxable years commencing after December 31, 1997, the amount, not to
exceed $2,000, of contributions to an education savings account pursuant to section 21.

    (d) There shall be added to or subtracted from federal adjusted gross income the tax-
payer's share, as beneficiary of an estate or trust, of the Kansas fiduciary adjustment deter-
mined under K.S.A. 79-32,135, and amendments thereto.

    (e) The amount of modifications required to be made under this section by a partner
which relates to items of income, gain, loss, deduction or credit of a partnership shall be
determined under K.S.A. 79-32,131, and amendments thereto, to the extent that such items
affect federal adjusted gross income of the partner.

    Sec. 20. K.S.A. 79-32,117h is hereby amended to read as follows: 79-32,117h. (a) This
section may be cited as the individual development account act.

    (b) For the purposes of this section:

    (1) ``Account holder'' means the individual on whose behalf the individual development
account is established.

    (2) ``Dependent child'' means any person under the age of 21 years or any person who
is legally entitled or subject to a court order for the provision of proper and necessary
subsistence and education, and who is not emancipated, married or a member of the armed
forces of the United States.

    (3) ``Individual development account'' means a custodial account established or organ-
ized to pay for K-12 education expenses of the account holder.

    (4) ``Custodian'' means a chartered state bank or trust company authorized to act as a
fiduciary, a national banking association or savings and loan association authorized to act as
a fiduciary, or an insurance company or a credit union and shall include any other qualified
financial custodian as defined by rules and regulations adopted by the secretary of revenue.

    (c) (1) For taxable years beginning after December 31, 1993, a resident of this state
shall be allowed to deposit contributions to an individual development account. Except as
provided in subsection (c)(8), the amount of deposit for the first taxable year subsequent to
the effective date of this act shall not exceed:

    (A) $2,000 for the account holder; or

    (B) $2,000 for the account holder and $1,000 for each dependent child of the account
holder.

    (2) The maximum allowable amount of deposit for subsequent years shall be increased
annually by a percentage equal to the previous year's increase in the consumer price index
as published annually as soon after December 31 each year as possible by the secretary of
state in the Kansas register. As used in this paragraph (2), ``consumer price index'' means
the twelve-month average of the consumer price index for all urban consumers United States
city average which is published by the United States department of labor.

    (3) Income earned on an individual development account shall be exempt from state
income taxation under the Kansas income tax act.

    (4) Upon agreement between an employer and employee, an employer may contribute
to the employee's individual development account, subject to the restrictions in subsection
(6)(A).

    (5) The individual development account shall be established as a custodial account and
be placed with a custodian.

    (6) Individual development account funds may be withdrawn by the account holder at
any time for any purpose, subject to the following restrictions and penalties:

    (A) There shall be a distribution penalty for withdrawal of individual development ac-
count funds by the account holder; such penalty shall be 25% of the amount of interest
earned as of the date of withdrawal on the account and shall be remitted by the custodian
to the state and disposed of in the same manner as other penalties imposed under the Kansas
income tax act; and, upon such withdrawal, the interest earned during the tax year in which
withdrawal occurs shall be subject to state income taxation; and

    (B) withdrawals shall be permitted without penalty for the purposes for which the in-
dividual development account was created.

    (7) Upon the death of the account holder, the account principal, as well as any interest
accumulated thereon, shall be distributed to the decedent's estate and taxed as part of the
estate.

    (8) There shall be no limit on the amount of earned income of a dependent child, who
is a recipient of aid to families with dependent children, deposited in an individual devel-
opment account of such dependent child that was created or organized to pay for educational
expenses of such dependent child.

    New Sec. 21. (a) This section may be cited as the education savings account act.

    (b) For the purposes of this section:

    (1) ``Account holder'' means the individual on whose behalf the education savings ac-
count is established.

    (2) ``Dependent child'' means any person under the age of 21 years or any person who
is legally entitled or subject to a court order for the provision of proper and necessary
subsistence and education, and who is not emancipated, married or a member of the armed
forces of the United States.

    (3) ``Education savings account'' means a custodial account established or organized to
pay for post secondary education expenses of the account holder.

    (4) ``Custodian'' means a chartered state bank or trust company authorized to act as a
fiduciary, a national banking association or savings and loan association authorized to act as
a fiduciary, an insurance company or a credit union and shall include any other qualified
financial custodian as defined by rules and regulations adopted by the secretary of revenue.

    (c) For taxable years beginning after December 31, 1997, a resident of this state shall
be allowed to deposit contributions to an education savings account. Except as provided in
subsection (c)(8), the amount of deposit for the first taxable year subsequent to the effective
date of this act shall not exceed:

    (1) $2,000 for the account holder; or

    (2) $2,000 for the account holder and $1,000 for each dependent child of the account
holder.

    (3) Income earned on an education savings account shall be exempt from state income
taxation under the Kansas income tax act.

    (4) Upon agreement between an employer and employee, an employer may contribute
to the employee's education savings account, subject to the restrictions in subsection (6)(A).

    (5) The education savings account shall be established as a custodial account and be
placed with a custodian.

    (6) Education savings account funds may be withdrawn by the account holder at any
time for any purpose, subject to the following restrictions and penalties:

    (A) There shall be a distribution penalty for withdrawal of education savings account
funds by the account holder; such penalty shall be 25% of the amount of interest earned as
of the date of withdrawal on the account and shall be remitted by the custodian to the state
and disposed of in the same manner as other penalties imposed under the Kansas income
tax act; and, upon such withdrawal, the interest earned during the tax year in which with-
drawal occurs shall be subject to state income taxation; and

    (B) withdrawals shall be permitted without penalty for the purposes for which the ed-
ucation savings account was created.

    (7) Upon the death of the account holder, the account principal, as well as any interest
accumulated thereon, shall be distributed to the decedent's estate and taxed as part of the
estate.

    (8) There shall be no limit on the amount of earned income of a dependent child, who
is a recipient of aid to families with dependent children, deposited in an education savings
account of such dependent child that was created or organized to pay for educational ex-
penses of such dependent child.

    Sec. 22. K.S.A. 79-32,119 is hereby amended to read as follows: 79-32,119. The Kansas
standard deduction of an individual, including a husband and wife who are either both
residents or who file a joint return as if both were residents, shall be equal to the sum of
the standard deduction amount allowed pursuant to this section, and the additional standard
deduction amount allowed pursuant to this section for each such deduction allowable to
such individual or to such husband and wife under the federal internal revenue code as in
effect for tax year 1988. For tax year 1998, and all tax years thereafter, the standard de-
duction amount shall be as follows: Single individual filing status, $3,000; married filing
status, $5,400; and head of household filing status, $4,450. For tax year 1998, and all tax
years thereafter, the additional standard deduction amount shall be as follows: Single indi-
vidual and head of household filing status, $850; and married filing status, $700. For pur-
poses of the foregoing, the federal standard deduction allowable to a husband and wife filing
separate Kansas income tax returns shall be determined on the basis that separate federal
returns were filed, and the federal standard deduction of a husband and wife filing a joint
Kansas income tax return shall be determined on the basis that a joint federal income tax
return was filed.

    Sec. 23. K.S.A. 79-32,121 is hereby amended to read as follows: 79-32,121. (a) An
individual shall be allowed a Kansas exemption of $1,950 for tax year 1988, and $2,000 for
each tax year thereafter $2,300 for tax year 1998, and all tax years thereafter, and tax years
thereafter for each exemption for which such individual is entitled to a deduction for the
taxable year for federal income tax purposes. In addition to the exemptions authorized in
the foregoing provision, an individual filing a federal income tax return under the status of
head of household, as the same is defined by 26 U.S.C. 2(b), shall be allowed an additional
Kansas exemption of $1,950 for tax year 1988, and $2,000 for each tax year thereafter $2,300
for tax year 1998.

    (b) For tax year 1987, there shall be allowed as a credit against the tax liability of a
resident individual imposed under the Kansas income tax act who except for the operation
of the provisions of K.S.A. 79-32,121 resulting from amendments to the federal internal
revenue code would have been allowed an additional exemption for blindness or age or both
pursuant to such section in tax year 1987, an amount equal to $60 for each such exemption.
The total amount of such credits shall not exceed the amount of tax imposed by K.S.A.
79-32,110, and amendments thereto, reduced by the sum of any other credits allowable
pursuant to law.

    New Sec. 24. (a) There shall be allowed as a credit against the tax liability of a resident
individual imposed under the Kansas income tax act an amount equal to 10% for tax year
1998, and all tax years thereafter, of the amount of the earned income credit allowed against
such taxpayer's federal income tax liability pursuant to section 32 of the federal internal
revenue code for the taxable year in which such credit was claimed against the taxpayer's
federal income tax liability.

    (b) If the amount of the credit allowed by subsection (a) exceeds the taxpayer's income
tax liability imposed under the Kansas income tax act, such excess amount shall be refunded
to the taxpayer.

    (c) The provisions of this section shall be applicable to all taxable years commencing
after December 31, 1997.

    New Sec. 25. For all taxable years commencing after December 31, 1997, there shall
be allowed as a credit against the tax liability of a taxpayer imposed under the Kansas income
tax act, the premiums tax upon insurance companies imposed pursuant to K.S.A. 40-252,
and amendments thereto, and the privilege tax as measured by net income of financial
institutions imposed pursuant to article 11 of chapter 79 of the Kansas Statutes Annotated,
an amount equal to 15% of the property tax levied for property tax year 1998, and all such
years thereafter, actually and timely paid during an income or privilege taxable year upon
commercial and industrial machinery and equipment classified for property taxation pur-
poses pursuant to section 1 of article 11 of the Kansas constitution in subclass (5) or (6) of
class 2 and machinery and equipment classified for such purposes in subclass (2) of class 2.
If the amount of such tax credit exceeds the taxpayer's income tax liability for the taxable
year, the amount thereof which exceeds such tax liability shall be refunded to the taxpayer.
If the taxpayer is a corporation having an election in effect under subchapter S of the federal
internal revenue code, a partnership or a limited liability company, the credit provided by
this section shall be claimed by the shareholders of such corporation, the partners of such
partnership or the members of such limited liability company in the same manner as such
shareholders, partners or members account for their proportionate shares of the income or
loss of the corporation, partnership or limited liability company.

    Sec. 26. K.S.A. 79-201w is hereby amended to read as follows: 79-201w. The following
described property, to the extent specified by this section, shall be exempt from all property
or ad valorem taxes levied under the laws of the state of Kansas:

    (a) Any item of machinery, equipment, materials and supplies which, except for the
operation of the provisions of this section, would be required to be listed for the purpose
of taxation pursuant to K.S.A. 79-306, and amendments thereto, and which is actually and
regularly used exclusively for business purposes or to be used in the conduct of the owner's
business, or in the conduct of activities by an entity not subject to Kansas income taxation
pursuant to K.S.A. 79-32,113, and amendments thereto, whose original retail cost when new
is $250 or less.

    (b) The provisions of this section shall apply to all taxable years commencing after
December 31, 1995.

    Sec. 27. K.S.A. 1997 Supp. 72-6431 is hereby amended to read as follows: 72-6431. (a)
The board of each district shall levy an ad valorem tax upon the taxable tangible property
of the district in the school years specified in subsection (b) for the purpose of:

    (1) Financing that portion of the district's general fund budget which is not financed
from any other source provided by law;

    (2) paying a portion of the costs of operating and maintaining public schools in partial
fulfillment of the constitutional obligation of the legislature to finance the educational in-
terests of the state; and

    (3) with respect to any redevelopment district established prior to July 1, 1997, pursuant
to K.S.A. 12-1771, and amendments thereto, paying a portion of the principal and interest
on bonds issued by cities under authority of K.S.A. 12-1774, and amendments thereto, for
the financing of redevelopment projects upon property located within the district.

    (b) The tax required under subsection (a) shall be levied at a rate of 27 23 mills in the
1997-98 school year and in the 1998-99 school year and in the 1999-2000 school year.

    (c) The proceeds from the tax levied by a district under authority of this section, except
the proceeds of such tax levied for the purpose of paying a portion of the principal and
interest on bonds issued by cities under authority of K.S.A. 12-1774, and amendments
thereto, for the financing of redevelopment projects upon property located within the dis-
trict, shall be deposited in the general fund of the district.

    (d) On June 1 of each year, the amount, if any, by which a district's local effort exceeds
the amount of the district's state financial aid, as determined by the state board, shall be
remitted to the state treasurer. Upon receipt of any such remittance, the state treasurer
shall deposit the same in the state treasury to the credit of the state school district finance
fund.

    (e) No district shall proceed under K.S.A. 79-1964, 79-1964a or 79-1964b, and amend-
ments to such sections.

    Sec. 28. K.S.A. 79-201x is hereby amended to read as follows: 79-201x. For taxable
years 1997 and 1998 and 1999, the following described property, to the extent herein spec-
ified, shall be and is hereby exempt from the property tax levied pursuant to the provisions
of K.S.A. 1997 Supp. 72-6431, and amendments thereto: Property used for residential pur-
poses to the extent of $20,000 of its appraised valuation.

    Sec. 29. K.S.A. 79-201t is hereby amended to read as follows: 79-201t. The following
described property, to the extent herein specified, shall be and is hereby exempt from all
property or ad valorem taxes levied under the laws of the state of Kansas:

    (a) All oil leases, other than royalty interests therein, the average daily production from
which is two three barrels or less per producing well, or three five barrels or less per pro-
ducing well which has a completion depth of 2,000 feet or more.

    (b) The provisions of this section shall apply to all taxable years commencing after
December 31, 1991 1997.

    Sec. 30. K.S.A. 79-4217 is hereby amended to read as follows: 79-4217. (a) There is
hereby imposed an excise tax upon the severance and production of coal, oil or gas from
the earth or water in this state for sale, transport, storage, profit or commercial use, subject
to the following provisions of this section. Such tax shall be borne ratably by all persons
within the term ``producer'' as such term is defined in K.S.A. 79-4216, and amendments
thereto, in proportion to their respective beneficial interest in the coal, oil or gas severed.
Such tax shall be applied equally to all portions of the gross value of each barrel of oil
severed and subject to such tax and to the gross value of the gas severed and subject to such
tax. The rate of such tax shall be 8% of the gross value of all oil or gas severed from the
earth or water in this state and subject to the tax imposed under this act. The rate of such
tax with respect to coal shall be $1 per ton. For the purposes of the tax imposed hereunder
the amount of oil or gas produced shall be measured or determined: (1) In the case of oil,
by tank tables compiled to show 100% of the full capacity of tanks without deduction for
overage or losses in handling; allowance for any reasonable and bona fide deduction for
basic sediment and water, and for correction of temperature to 60 degrees Fahrenheit will
be allowed; and if the amount of oil severed has been measured or determined by tank
tables compiled to show less than 100% of the full capacity of tanks, such amount shall be
raised to a basis of 100% for the purpose of the tax imposed by this act; and (2) in the case
of gas, by meter readings showing 100% of the full volume expressed in cubic feet at a
standard base and flowing temperature of 60 degrees Fahrenheit, and at the absolute pres-
sure at which the gas is sold and purchased; correction to be made for pressure according
to Boyle's law, and used for specific gravity according to the gravity at which the gas is sold
and purchased, or if not so specified, according to the test made by the balance method.

    (b) The following shall be exempt from the tax imposed under this section:

    (1) The severance and production of gas which is: (A) Injected into the earth for the
purpose of lifting oil, recycling or repressuring; (B) used for fuel in connection with the
operation and development for, or production of, oil or gas in the lease or production unit
where severed; (C) lawfully vented or flared; (D) severed from a well having an average
daily production during a calendar month having a gross value of not more than $81 $87
per day, which well has not been significantly curtailed by reason of mechanical failure or
other disruption of production; in the event that the production of gas from more than one
well is gauged by a common meter, eligibility for exemption hereunder shall be determined
by computing the gross value of the average daily combined production from all such wells
and dividing the same by the number of wells gauged by such meter; (E) inadvertently lost
on the lease or production unit by reason of leaks, blowouts or other accidental losses; (F)
used or consumed for domestic or agricultural purposes on the lease or production unit
from which it is severed; or (G) placed in underground storage for recovery at a later date
and which was either originally severed outside of the state of Kansas, or as to which the
tax levied pursuant to this act has been paid;

    (2) the severance and production of oil which is: (A) From a lease or production unit
whose average daily production is two five barrels or less per producing well, which well or
wells have not been significantly curtailed by reason of mechanical failure or other disruption
of production; (B) from a lease or production unit, the producing well or wells upon which
have a completion depth of 2,000 feet or more, and whose average daily production is three
six barrels or less per producing well or, if the price of oil as determined pursuant to
subsection (d) is $30 $16 or less, whose average daily production is four seven barrels or
less per producing well, or, if the price of oil as determined pursuant to subsection (d) is
$24 $15 or less, whose average daily production is five eight barrels or less per producing
well, or, if the price of oil as determined pursuant to subsection (d) is $16 $14 or less, whose
average daily production is six nine barrels or less per producing well, or, if the price of oil
as determined pursuant to subsection (d) is $10 $13 or less, whose average daily production
is seven 10 barrels or less per producing well, which well or wells have not been significantly
curtailed by reason of mechanical failure or other disruption of production; (C) from a lease
or production unit, whose production results from a tertiary recovery process. ``Tertiary
recovery process'' means the process or processes described in subparagraphs (1) through
(9) of 10 C.F.R. 212.78(c) as in effect on June 1, 1979; (D) from a lease or production unit,
the producing well or wells upon which have a completion depth of less than 2,000 feet and
whose average daily production resulting from a water flood process, is three six barrels or
less per producing well, which well or wells have not been significantly curtailed by reason
of mechanical failure or other disruption of production; (E) from a lease or production unit,
the producing well or wells upon which have a completion depth of 2,000 feet or more, and
whose average daily production resulting from a water flood process, is four seven barrels
or less per producing well or, if the price of oil as determined pursuant to subsection (d) is
$30 $16 or less, whose average daily production is five eight barrels or less per producing
well, or, if the price of oil as determined pursuant to subsection (d) is $24 $15 or less, whose
average daily production is six nine barrels or less per producing well, or, if the price of oil
as determined pursuant to subsection (d) is $16 $14 or less, whose average daily production
is seven 10 barrels or less per producing well, or, if the price of oil as determined pursuant
to subsection (d) is $10 or less, whose average daily production is eight barrels or less per
producing well, which well or wells have not been significantly curtailed by reason of me-
chanical failure or other disruption of production; (F) test, frac or swab oil which is sold or
exchanged for value; or (G) inadvertently lost on the lease or production unit by reason of
leaks or other accidental means;

    (3) (A) any taxpayer applying for an exemption pursuant to subsection (b)(2)(A) and
(B) shall make application annually to the director of taxation therefor. Exemptions granted
pursuant to subsection (b)(2)(A) and (B) shall be valid for a period of one year following
the date of certification thereof by the director of taxation; (B) any taxpayer applying for an
exemption pursuant to subsection (b)(2)(D) or (E) shall make application annually to the
director of taxation therefor. Such application shall be accompanied by proof of the approval
of an application for the utilization of a water flood process therefor by the corporation
commission pursuant to rules and regulations adopted under the authority of K.S.A. 55-152
and amendments thereto and proof that the oil produced therefrom is kept in a separate
tank battery and that separate books and records are maintained therefor. Such exemption
shall be valid for a period of one year following the date of certification thereof by the
director of taxation; and (C) notwithstanding the provisions of paragraph (A) or (B), any
exemption in effect on the effective date of this act affected by the amendments to subsection
(b)(2) by this act shall be redetermined in accordance with such amendments. Any such
exemption, and any new exemption established by such amendments and applied for after
the effective date of this shall be valid for a period commencing with May 1, 1998, and
ending on April 30, 1999.

    (4) the severance and production of gas or oil from any pool from which oil or gas was
first produced on or after April 1, 1983, as determined by the state corporation commission
and certified to the director of taxation, and continuing for a period of 24 months from the
month in which oil or gas was first produced from such pool as evidenced by an affidavit of
completion of a well, filed with the state corporation commission and certified to the director
of taxation. Exemptions granted for production from any well pursuant to this paragraph
shall be valid for a period of 24 months following the month in which oil or gas was first
produced from such pool. The term ``pool'' means an underground accumulation of oil or
gas in a single and separate natural reservoir characterized by a single pressure system so
that production from one part of the pool affects the reservoir pressure throughout its extent;

    (5) the severance and production of oil or gas from a three-year inactive well, as deter-
mined by the state corporation commission and certified to the director of taxation, for a
period of 10 years after the date of receipt of such certification. As used in this paragraph,
``three-year inactive well'' means any well that has not produced oil or gas in more than one
month in the three years prior to the date of application to the state corporation commission
for certification as a three-year inactive well. An application for certification as a three-year
inactive well shall be in such form and contain such information as required by the state
corporation commission, and shall be made prior to July 1, 1996. The commission may
revoke a certification if information indicates that a certified well was not a three-year
inactive well or if other lease production is credited to the certified well. Upon notice to
the operator that the certification for a well has been revoked, the exemption shall not be
applied to the production from that well from the date of revocation; and

    (6) for the calendar year 1988, and any year thereafter, the severance or production of
the first 350,000 tons of coal from any mine as certified by the state geological survey.

    (c) No exemption shall be granted pursuant to subsection (b)(3) or (4) to any person
who does not have a valid operator's license issued by the state corporation commission,
and no refund of tax shall be made to any taxpayer attributable to any production in a period
when such taxpayer did not hold a valid operator's license issued by the state corporation
commission.

    (d) On April 15, 1988, and on April 15 of each year thereafter, the secretary of revenue
shall determine from statistics compiled and provided by the United States department of
energy, the average price per barrel paid by the first purchaser of crude oil in this state for
the six-month period ending on December 31 of the preceding year. Such price shall be
used for the purpose of determining exemptions allowed by subsection (b)(2)(B) or (E) for
the twelve-month period commencing on May 1 of such year and ending on April 30 of the
next succeeding year.

    ``Sec. 31. K.S.A. 79-3602 is hereby amended to read as follows: 79-3602. (a) ``Persons''
means any individual, firm, copartnership, joint adventure, association, corporation, estate
or trust, receiver or trustee, or any group or combination acting as a unit, and the plural as
well as the singular number; and shall specifically mean any city or other political subdivision
of the state of Kansas engaging in a business or providing a service specifically taxable under
the provisions of this act.

    (b) ``Director'' means the state director of taxation.

    (c) ``Sale'' or ``sales'' means the exchange of tangible personal property, as well as the
sale thereof for money, and every transaction, conditional or otherwise, for a consideration,
constituting a sale, including the sale or furnishing of electrical energy, gas, water, services
or entertainment taxable under the terms of this act and including, except as provided in
the following provision, the sale of the use of tangible personal property by way of a lease,
license to use or the rental thereof regardless of the method by which the title, possession
or right to use the tangible personal property is transferred. The term ``sale'' or ``sales'' shall
not mean the sale of the use of any tangible personal property used as a dwelling by way of
a lease or rental thereof for a term of more than 28 consecutive days.

    (d) ``Retailer'' means a person regularly engaged in the business of selling tangible per-
sonal property at retail or furnishing electrical energy, gas, water, services or entertainment,
and selling only to the user or consumer and not for resale.

    (e) ``Retail sale'' or ``sale at retail'' means all sales made within the state of tangible
personal property or electrical energy, gas, water, services or entertainment for use or con-
sumption and not for resale.

    (f) ``Tangible personal property'' means corporeal personal property. Such term shall
include any computer software program which is not a custom computer software program,
as described by subsection (s) of K.S.A. 79-3603, and amendments thereto.

    (g) ``Selling price'' means the total cost to the consumer exclusive of discounts allowed
and credited, but including freight and transportation charges from retailer to consumer.

    (h) ``Gross receipts'' means the total selling price or the amount received as defined in
this act, in money, credits, property or other consideration valued in money from sales at
retail within this state; and embraced within the provisions of this act. The taxpayer, may
take credit in the report of gross receipts for: (1) An amount equal to the selling price of
property returned by the purchaser when the full sale price thereof, including the tax col-
lected, is refunded in cash or by credit; (2) an amount equal to the allowance given for the
trade-in of property.

    (i) ``Taxpayer'' means any person obligated to account to the director for taxes collected
under the terms of this act.

    (j) ``Isolated or occasional sale'' means the nonrecurring sale of tangible personal prop-
erty, or services taxable hereunder by a person not engaged at the time of such sale in the
business of selling such property or services. Any religious organization which makes a
nonrecurring sale of tangible personal property acquired for the purpose of resale shall be
deemed to be not engaged at the time of such sale in the business of selling such property.
Such term shall include: (1) Any sale by a bank, savings and loan institution, credit union
or any finance company licensed under the provisions of the Kansas uniform consumer
credit code of tangible personal property which has been repossessed by any such entity;
and (2) any sale of tangible personal property made by an auctioneer or agent on behalf of
not more than two principals or households if such sale is nonrecurring and any such prin-
cipal or household is not engaged at the time of such sale in the business of selling tangible
personal property.

    (k) ``Service'' means those services described in and taxed under the provisions of K.S.A.
79-3603 and amendments thereto.

    (l) ``Ingredient or component part'' means tangible personal property which is necessary
or essential to, and which is actually used in and becomes an integral and material part of
tangible personal property or services produced, manufactured or compounded for sale by
the producer, manufacturer or compounder in its regular course of business. The following
items of tangible personal property are hereby declared to be ingredients or component
parts, but the listing of such property shall not be deemed to be exclusive nor shall such
listing be construed to be a restriction upon, or an indication of, the type or types of property
to be included within the definition of ``ingredient or component part'' as herein set forth:

    (1) Containers, labels and shipping cases used in the distribution of property produced,
manufactured or compounded for sale which are not to be returned to the producer, man-
ufacturer or compounder for reuse.

    (2) Containers, labels, shipping cases, paper bags, drinking straws, paper plates, paper
cups, twine and wrapping paper used in the distribution and sale of property taxable under
the provisions of this act by wholesalers and retailers and which is not to be returned to
such wholesaler or retailer for reuse.

    (3) Seeds and seedlings for the production of plants and plant products produced for
resale.

    (4) Paper and ink used in the publication of newspapers.

    (5) Fertilizer used in the production of plants and plant products produced for resale.

    (6) Feed for animals, fowl and aquatic plants and animals, the primary purpose of which
is use in agriculture or aquaculture, as defined in K.S.A. 47-1901, and amendments thereto,
the production of food for human consumption, the production of animal, dairy, poultry or
aquatic plant and animal products, fiber, fur, or the production of offspring for use for any
such purpose or purposes.

    (m) ``Property which is consumed'' means tangible personal property which is essential
or necessary to and which is used in the actual process of and immediately consumed or
dissipated in (1) the production, manufacture, processing, mining, drilling, refining or com-
pounding of tangible personal property, (2) the providing of services or (3) the irrigation of
crops, for sale in the regular course of business, and which is not reusable for such purpose.
The following items of tangible personal property are hereby declared to be ``consumed''
but the listing of such property shall not be deemed to be exclusive nor shall such listing be
construed to be a restriction upon or an indication of, the type or types of property to be
included within the definition of ``property which is consumed'' as herein set forth:

    (A) Insecticides, herbicides, germicides, pesticides, fungicides, fumigants, antibiotics,
biologicals, pharmaceuticals, vitamins and chemicals for use in commercial or agricultural
production, processing or storage of fruit, vegetables, feeds, seeds, grains, animals or animal
products whether fed, injected, applied, combined with or otherwise used; and

    (B) electricity, gas and water.

    (n) ``Political subdivision'' means any municipality, agency or subdivision of the state
which is, or shall hereafter be, authorized to levy taxes upon tangible property within the
state or which certifies a levy to a municipality, agency or subdivision of the state which is,
or shall hereafter be, authorized to levy taxes upon tangible property within the state. Such
term also shall include any public building commission, housing, airport, port, metropolitan
transit or similar authority established pursuant to law.

    (o) ``Municipal corporation'' means any city incorporated under the laws of Kansas.

    (p) ``Quasi-municipal corporation'' means any county, township, school district, drainage
district or any other governmental subdivision in the state of Kansas having authority to
receive or hold moneys or funds.

    (q) ``Nonprofit blood bank'' means any nonprofit place, organization, institution or es-
tablishment that is operated wholly or in part for the purpose of obtaining, storing, proc-
essing, preparing for transfusing, furnishing, donating or distributing human blood or parts
or fractions of single blood units or products derived from single blood units, whether or
not any remuneration is paid therefor, or whether such procedures are done for direct
therapeutic use or for storage for future use of such products.

    (r) ``Contractor, subcontractor or repairman'' means a person who agrees to furnish and
install tangible personal property or install tangible personal property at a specified price.
A person who maintains an inventory of tangible personal property which enables such
person to furnish and install the tangible personal property or install the tangible personal
property shall not be deemed a contractor, subcontractor or repairman but shall be deemed
a retailer.

    (s) ``Educational institution'' means any nonprofit school, college and university that
offers education at a level above the twelfth grade, and conducts regular classes and courses
of study required for accreditation by, or membership in, the North Central Association of
Colleges and Schools, the state board of education, or that otherwise qualify as an ``educa-
tional institution,'' as defined by K.S.A. 74-50,103, and amendments thereto. Such phrase
shall include: (1) A group of educational institutions that operates exclusively for an edu-
cational purpose; (2) nonprofit endowment associations and foundations organized and op-
erated exclusively to receive, hold, invest and administer moneys and property as a per-
manent fund for the support and sole benefit of an educational institution; (3) nonprofit
trusts, foundations and other entities organized and operated principally to hold and own
receipts from intercollegiate sporting events and to disburse such receipts, as well as grants
and gifts, in the interest of collegiate and intercollegiate athletic programs for the support
and sole benefit of an educational institution; and (4) nonprofit trusts, foundations and other
entities organized and operated for the primary purpose of encouraging, fostering and con-
ducting scholarly investigations and industrial and other types of research for the support
and sole benefit of an educational institution.

    Sec. 32. K.S.A. 79-3603 is hereby amended to read as follows: 79-3603. For the privi-
lege of engaging in the business of selling tangible personal property at retail in this state
or rendering or furnishing any of the services taxable under this act, there is hereby levied
and there shall be collected and paid a tax at the rate of 4.9% upon:

    (a) The gross receipts received from the sale of tangible personal property at retail
within this state;

    (b) (1) the gross receipts from intrastate telephone or telegraph services and (2) the
gross receipts received from the sale of interstate telephone or telegraph services, which
(A) originate within this state and terminate outside the state and are billed to a customer's
telephone number or account in this state; or (B) originate outside this state and terminate
within this state and are billed to a customer's telephone number or account in this state
except that the sale of interstate telephone or telegraph service does not include: (A) Any
interstate incoming or outgoing wide area telephone service or wide area transmission type
service which entitles the subscriber to make or receive an unlimited number of commu-
nications to or from persons having telephone service in a specified area which is outside
the state in which the station provided this service is located; (B) any interstate private
communications service to the persons contracting for the receipt of that service that entitles
the purchaser to exclusive or priority use of a communications channel or group of channels
between exchanges; (C) any value-added nonvoice service in which computer processing
applications are used to act on the form, content, code or protocol of the information to be
transmitted; (D) any telecommunication service to a provider of telecommunication services
which will be used to render telecommunications services, including carrier access services;
or (E) any service or transaction defined in this section among entities classified as members
of an affiliated group as provided by federal law (U.S.C. Section 1504);

    (c) the gross receipts from the sale or furnishing of gas, water, electricity and heat,
which sale is not otherwise exempt from taxation under the provisions of this act, and
whether furnished by municipally or privately owned utilities;

    (d) the gross receipts from the sale of meals or drinks furnished at any private club,
drinking establishment, catered event, restaurant, eating house, dining car, hotel, drugstore
or other place where meals or drinks are regularly sold to the public;

    (e) the gross receipts from the sale of admissions to any place providing amusement,
entertainment or recreation services including admissions to state, county, district and local
fairs, but such tax shall not be levied and collected upon the gross receipts received from
sales of admissions to any cultural and historical event which occurs triennially;

    (f) the gross receipts from the operation of any coin-operated device dispensing or
providing tangible personal property, amusement or other services except laundry services,
whether automatic or manually operated;

    (g) the gross receipts from the service of renting of rooms by hotels, as defined by K.S.A.
36-501 and amendments thereto, or by accommodation brokers, as defined by K.S.A. 12-
1692, and amendments thereto;

    (h) the gross receipts from the service of renting or leasing of tangible personal property
except such tax shall not apply to the renting or leasing of machinery, equipment or other
personal property owned by a city and purchased from the proceeds of industrial revenue
bonds issued prior to July 1, 1973, in accordance with the provisions of K.S.A. 12-1740
through 12-1749, and amendments thereto, and any city or lessee renting or leasing such
machinery, equipment or other personal property purchased with the proceeds of such
bonds who shall have paid a tax under the provisions of this section upon sales made prior
to July 1, 1973, shall be entitled to a refund from the sales tax refund fund of all taxes paid
thereon;

    (i) the gross receipts from the rendering of dry cleaning, pressing, dyeing and laundry
services except laundry services rendered through a coin-operated device whether automatic
or manually operated;

    (j) the gross receipts from the rendering of the services of washing and washing and
waxing of vehicles;

    (k) the gross receipts from cable, community antennae and other subscriber radio and
television services;

    (l) the gross receipts received from the sales of tangible personal property to all con-
tractors, subcontractors or repairmen of materials and supplies for use by them in erecting
structures for others, or building on, or otherwise improving, altering, or repairing real or
personal property of others;

    (m) the gross receipts received from fees and charges by public and private clubs, drink-
ing establishments, organizations and businesses for participation in sports, games and other
recreational activities, but such tax shall not be levied and collected upon the gross receipts
received from: (1) Fees and charges by any political subdivision, by any organization exempt
from property taxation pursuant to paragraph Ninth of K.S.A. 79-201, and amendments
thereto, or by any youth recreation organization exclusively providing services to persons 18
years of age or younger which is exempt from federal income taxation pursuant to section
501(c)(3) of the federal internal revenue code of 1986, for participation in sports, games
and other recreational activities; and (2) entry fees and charges for participation in a special
event or tournament sanctioned by a national sporting association to which spectators are
charged an admission which is taxable pursuant to subsection (e);

    (n) the gross receipts received from dues charged by public and private clubs, drinking
establishments, organizations and businesses, payment of which entitles a member to the
use of facilities for recreation or entertainment, but such tax shall not be levied and collected
upon the gross receipts received from: (1) Dues charged by any organization exempt from
property taxation pursuant to paragraphs Eighth and Ninth of K.S.A. 79-201, and amend-
ments thereto,; and (2) sales of memberships in a nonprofit organization which is exempt
from federal income taxation pursuant to section 501 (c)(3) of the federal internal revenue
code of 1986, and whose purpose is to support the operation of a nonprofit zoo;

    (o) the gross receipts received from the isolated or occasional sale of motor vehicles or
trailers but not including: (1) The transfer of motor vehicles or trailers by a person to a
corporation solely in exchange for stock securities in such corporation; or (2) the transfer
of motor vehicles or trailers by one corporation to another when all of the assets of such
corporation are transferred to such other corporation; or (3) the sale of motor vehicles or
trailers which are subject to taxation pursuant to the provisions of K.S.A. 79-5101 et seq.,
and amendments thereto, by an immediate family member to another immediate family
member. For the purposes of clause (3), immediate family member means lineal ascendants
or descendants, and their spouses. In determining the base for computing the tax on such
isolated or occasional sale, the fair market value of any motor vehicle or trailer traded in by
the purchaser to the seller may be deducted from the selling price;

    (p) the gross receipts received for the service of installing or applying tangible personal
property which when installed or applied is not being held for sale in the regular course of
business, and whether or not such tangible personal property when installed or applied
remains tangible personal property or becomes a part of real estate, except that no tax shall
be imposed upon the service of installing or applying tangible personal property in connec-
tion with the original construction of a building or facility or the construction, reconstruction,
restoration, replacement or repair of a bridge or highway.

    For the purposes of this subsection:

    (1) ``Original construction'' shall mean the first or initial construction of a new building
or facility. The term ``original construction'' shall include the addition of an entire room or
floor to any existing building or facility, the completion of any unfinished portion of any
existing building or facility and the restoration, reconstruction or replacement of a building
or facility damaged or destroyed by fire, flood, tornado, lightning, explosion or earthquake,
but such term shall not include replacement, remodeling, restoration, renovation or recon-
struction under any other circumstances;

    (2) ``building'' shall mean only those enclosures within which individuals customarily
live or are employed, or which are customarily used to house machinery, equipment or other
property, and including the land improvements immediately surrounding such building; and

    (3) ``facility'' shall mean a mill, plant, refinery, oil or gas well, water well, feedlot or any
conveyance, transmission or distribution line of any cooperative, nonprofit, membership
corporation organized under or subject to the provisions of K.S.A. 17-4601 et seq., and
amendments thereto, or of any municipal or quasi-municipal corporation, including the land
improvements immediately surrounding such facility;

    (q) the gross receipts received for the service of repairing, servicing, altering or main-
taining tangible personal property, except computer software described in subsection (s),
which when such services are rendered is not being held for sale in the regular course of
business, and whether or not any tangible personal property is transferred in connection
therewith. The tax imposed by this subsection shall be applicable to the services of repairing,
servicing, altering or maintaining an item of tangible personal property which has been and
is fastened to, connected with or built into real property;

    (r) the gross receipts from fees or charges made under service or maintenance agree-
ment contracts for services, charges for the providing of which are taxable under the pro-
visions of subsection (p) or (q);

    (s) the gross receipts received from the sale of computer software, and the sale of the
services of modifying, altering, updating or maintaining computer software. As used in this
subsection, ``computer software'' means information and directions loaded into a computer
which dictate different functions to be performed by the computer. Computer software
includes any canned or prewritten program which is held or existing for general or repeated
sale, even if the program was originally developed for a single end user as custom computer
software. The sale of computer software or services does not include: (1) The initial sale of
any custom computer program which is originally developed for the exclusive use of a single
end user; or (2) those services rendered in the modification of computer software when the
modification is developed exclusively for a single end user only to the extent of the modi-
fication and only to the extent that the actual amount charged for the modification is sep-
arately stated on invoices, statements and other billing documents provided to the end user.
The services of modification, alteration, updating and maintenance of computer software
shall only include the modification, alteration, updating and maintenance of computer soft-
ware taxable under this subsection whether or not the services are actually provided; and

    (t) the gross receipts received for telephone answering services, including mobile phone
services, beeper services and other similar services.

    Sec. 33. K.S.A. 79-3606, as amended by section 27 of 1998 Senate Bill No. 373, is
hereby amended to read as follows: 79-3606. The following shall be exempt from the tax
imposed by this act:

    (a) All sales of motor-vehicle fuel or other articles upon which a sales or excise tax has
been paid, not subject to refund, under the laws of this state except cigarettes as defined
by K.S.A. 79-3301 and amendments thereto, cereal malt beverages and malt products as
defined by K.S.A. 79-3817 and amendments thereto, including wort, liquid malt, malt syrup
and malt extract, which is not subject to taxation under the provisions of K.S.A. 79-41a02
and amendments thereto, and motor vehicles as defined by K.S.A. 79-1017 taxed pursuant
to K.S.A. 79-5117, and amendments thereto, tires taxed pursuant to K.S.A. 1997 Supp.
65-3424d, and amendments thereto, and drycleaning and laundry services taxed pursuant
to K.S.A. 1997 Supp. 65-34,150, and amendments thereto;

    (b) all sales of tangible personal property or service, including the renting and leasing
of tangible personal property, purchased directly by the state of Kansas, a political subdi-
vision thereof, other than a school or educational institution, or purchased by a public or
private nonprofit hospital or public hospital authority or nonprofit blood, tissue or organ
bank and used exclusively for state, political subdivision, hospital or public hospital authority
or nonprofit blood, tissue or organ bank purposes, except when: (1) Such state, hospital or
public hospital authority is engaged or proposes to engage in any business specifically taxable
under the provisions of this act and such items of tangible personal property or service are
used or proposed to be used in such business, or (2) such political subdivision is engaged
or proposes to engage in the business of furnishing gas, water, electricity or heat to others
and such items of personal property or service are used or proposed to be used in such
business;

    (c) all sales of tangible personal property or services, including the renting and leasing
of tangible personal property, purchased directly by a public or private elementary or sec-
ondary school or public or private nonprofit educational institution and used primarily by
such school or institution for nonsectarian programs and activities provided or sponsored
by such school or institution or in the erection, repair or enlargement of buildings to be
used for such purposes. The exemption herein provided shall not apply to erection, con-
struction, repair, enlargement or equipment of buildings used primarily for human habita-
tion;

    (d) all sales of tangible personal property or services purchased by a contractor for the
purpose of constructing, equipping, reconstructing, maintaining, repairing, enlarging, fur-
nishing or remodeling facilities for any public or private nonprofit hospital or public hospital
authority, public or private elementary or secondary school or a public or private nonprofit
educational institution, which would be exempt from taxation under the provisions of this
act if purchased directly by such hospital or public hospital authority, school or educational
institution; and all sales of tangible personal property or services purchased by a contractor
for the purpose of constructing, equipping, reconstructing, maintaining, repairing, enlarging,
furnishing or remodeling facilities for any political subdivision of the state, the total cost of
which is paid from funds of such political subdivision and which would be exempt from
taxation under the provisions of this act if purchased directly by such political subdivision.
Nothing in this subsection or in the provisions of K.S.A. 12-3418 and amendments thereto,
shall be deemed to exempt the purchase of any construction machinery, equipment or tools
used in the constructing, equipping, reconstructing, maintaining, repairing, enlarging, fur-
nishing or remodeling facilities for any political subdivision of the state. As used in this
subsection, K.S.A. 12-3418 and 79-3640, and amendments thereto, ``funds of a political
subdivision'' shall mean general tax revenues, the proceeds of any bonds and gifts or grants-
in-aid. Gifts shall not mean funds used for the purpose of constructing, equipping, recon-
structing, repairing, enlarging, furnishing or remodeling facilities which are to be leased to
the donor. When any political subdivision of the state, public or private nonprofit hospital
or public hospital authority, public or private elementary or secondary school or public or
private nonprofit educational institution shall contract for the purpose of constructing,
equipping, reconstructing, maintaining, repairing, enlarging, furnishing or remodeling fa-
cilities, it shall obtain from the state and furnish to the contractor an exemption certificate
for the project involved, and the contractor may purchase materials for incorporation in
such project. The contractor shall furnish the number of such certificate to all suppliers
from whom such purchases are made, and such suppliers shall execute invoices covering
the same bearing the number of such certificate. Upon completion of the project the con-
tractor shall furnish to the political subdivision, hospital or public hospital authority, school
or educational institution concerned a sworn statement, on a form to be provided by the
director of taxation, that all purchases so made were entitled to exemption under this sub-
section. As an alternative to the foregoing procedure, any such contracting entity may apply
to the secretary of revenue for agent status for the sole purpose of issuing and furnishing
project exemption certificates to contractors pursuant to rules and regulations adopted by
the secretary establishing conditions and standards for the granting and maintaining of such
status. All invoices shall be held by the contractor for a period of five years and shall be
subject to audit by the director of taxation. If any materials purchased under such a certif-
icate are found not to have been incorporated in the building or other project or not to have
been returned for credit or the sales or compensating tax otherwise imposed upon such
materials which will not be so incorporated in the building or other project reported and
paid by such contractor to the director of taxation not later than the 20th day of the month
following the close of the month in which it shall be determined that such materials will not
be used for the purpose for which such certificate was issued, the political subdivision,
hospital or public hospital authority, school or educational institution concerned shall be
liable for tax on all materials purchased for the project, and upon payment thereof it may
recover the same from the contractor together with reasonable attorney fees. Any contractor
or any agent, employee or subcontractor thereof, who shall use or otherwise dispose of any
materials purchased under such a certificate for any purpose other than that for which such
a certificate is issued without the payment of the sales or compensating tax otherwise im-
posed upon such materials, shall be guilty of a misdemeanor and, upon conviction therefor,
shall be subject to the penalties provided for in subsection (g) of K.S.A. 79-3615, and amend-
ments thereto;

    (e) all sales of tangible personal property or services purchased by a contractor for the
erection, repair or enlargement of buildings or other projects for the government of the
United States, its agencies or instrumentalities, which would be exempt from taxation if
purchased directly by the government of the United States, its agencies or instrumentalities.
When the government of the United States, its agencies or instrumentalities shall contract
for the erection, repair, or enlargement of any building or other project, it shall obtain from
the state and furnish to the contractor an exemption certificate for the project involved, and
the contractor may purchase materials for incorporation in such project. The contractor
shall furnish the number of such certificates to all suppliers from whom such purchases are
made, and such suppliers shall execute invoices covering the same bearing the number of
such certificate. Upon completion of the project the contractor shall furnish to the govern-
ment of the United States, its agencies or instrumentalities concerned a sworn statement,
on a form to be provided by the director of taxation, that all purchases so made were entitled
to exemption under this subsection. As an alternative to the foregoing procedure, any such
contracting entity may apply to the secretary of revenue for agent status for the sole purpose
of issuing and furnishing project exemption certificates to contractors pursuant to rules and
regulations adopted by the secretary establishing conditions and standards for the granting
and maintaining of such status. All invoices shall be held by the contractor for a period of
five years and shall be subject to audit by the director of taxation. Any contractor or any
agent, employee or subcontractor thereof, who shall use or otherwise dispose of any ma-
terials purchased under such a certificate for any purpose other than that for which such a
certificate is issued without the payment of the sales or compensating tax otherwise imposed
upon such materials, shall be guilty of a misdemeanor and, upon conviction therefor, shall
be subject to the penalties provided for in subsection (g) of K.S.A. 79-3615 and amendments
thereto;

    (f) tangible personal property purchased by a railroad or public utility for consumption
or movement directly and immediately in interstate commerce;

    (g) sales of aircraft including remanufactured and modified aircraft, sales of aircraft
repair, modification and replacement parts and sales of services employed in the remanu-
facture, modification and repair of aircraft sold to persons using directly or through an
authorized agent such aircraft and aircraft repair, modification and replacement parts as
certified or licensed carriers of persons or property in interstate or foreign commerce under
authority of the laws of the United States or any foreign government or sold to any foreign
government or agency or instrumentality of such foreign government and all sales of aircraft,
aircraft parts, replacement parts and services employed in the remanufacture, modification
and repair of aircraft for use outside of the United States;

    (h) all rentals of nonsectarian textbooks by public or private elementary or secondary
schools;

    (i) the lease or rental of all films, records, tapes, or any type of sound or picture tran-
scriptions used by motion picture exhibitors;

    (j) meals served without charge or food used in the preparation of such meals to em-
ployees of any restaurant, eating house, dining car, hotel, drugstore or other place where
meals or drinks are regularly sold to the public if such employees' duties are related to the
furnishing or sale of such meals or drinks;

    (k) any motor vehicle, semitrailer or pole trailer, as such terms are defined by K.S.A.
8-126 and amendments thereto, or aircraft sold and delivered in this state to a bona fide
resident of another state, which motor vehicle, semitrailer, pole trailer or aircraft is not to
be registered or based in this state and which vehicle, semitrailer, pole trailer or aircraft will
not remain in this state more than 10 days;

    (l) all isolated or occasional sales of tangible personal property, services, substances or
things, except isolated or occasional sale of motor vehicles specifically taxed under the pro-
visions of subsection (o) of K.S.A. 79-3603 and amendments thereto;

    (m) all sales of tangible personal property which become an ingredient or component
part of tangible personal property or services produced, manufactured or compounded for
ultimate sale at retail within or without the state of Kansas; and any such producer, manu-
facturer or compounder may obtain from the director of taxation and furnish to the supplier
an exemption certificate number for tangible personal property for use as an ingredient or
component part of the property or services produced, manufactured or compounded;

    (n) all sales of tangible personal property which is consumed in the production, man-
ufacture, processing, mining, drilling, refining or compounding of tangible personal prop-
erty, the treating of by-products or wastes derived from any such production process, the
providing of services or the irrigation of crops for ultimate sale at retail within or without
the state of Kansas; and any purchaser of such property may obtain from the director of
taxation and furnish to the supplier an exemption certificate number for tangible personal
property for consumption in such production, manufacture, processing, mining, drilling,
refining, compounding, treating, irrigation and in providing such services;

    (o) all sales of animals, fowl and aquatic plants and animals, the primary purpose of
which is use in agriculture or aquaculture, as defined in K.S.A. 47-1901, and amendments
thereto, the production of food for human consumption, the production of animal, dairy,
poultry or aquatic plant and animal products, fiber or fur, or the production of offspring for
use for any such purpose or purposes;

    (p) all sales of drugs, as defined by K.S.A. 65-1626 and amendments thereto, dispensed
pursuant to a prescription order, as defined by K.S.A. 65-1626 and amendments thereto,
by a licensed practitioner;

    (q) all sales of insulin dispensed by a person licensed by the state board of pharmacy to
a person for treatment of diabetes at the direction of a person licensed to practice medicine
by the board of healing arts;

    (r) all sales of prosthetic and orthopedic appliances prescribed in writing by a person
licensed to practice the healing arts, dentistry or optometry. For the purposes of this sub-
section, the term prosthetic and orthopedic appliances means any apparatus, instrument,
device, or equipment used to replace or substitute for any missing part of the body; used
to alleviate the malfunction of any part of the body; or used to assist any disabled person in
leading a normal life by facilitating such person's mobility; such term shall include acces-
sories attached or to be attached to motor vehicles, but such term shall not include motor
vehicles or personal property which when installed becomes a fixture to real property;

    (s) all sales of tangible personal property or services purchased directly by a groundwater
management district organized or operating under the authority of K.S.A. 82a-1020 et seq.
and amendments thereto, which property or services are used in the operation or mainte-
nance of the district;

    (t) all sales of farm machinery and equipment or aquaculture machinery and equipment,
repair and replacement parts therefor and services performed in the repair and maintenance
of such machinery and equipment. For the purposes of this subsection the term ``farm
machinery and equipment or aquaculture machinery and equipment'' shall include machin-
ery and equipment used in the operation of Christmas tree farming but shall not include
any passenger vehicle, truck, truck tractor, trailer, semitrailer or pole trailer, other than a
farm trailer, as such terms are defined by K.S.A. 8-126 and amendments thereto. Each
purchaser of farm machinery and equipment or aquaculture machinery and equipment
exempted herein must certify in writing on the copy of the invoice or sales ticket to be
retained by the seller that the farm machinery and equipment or aquaculture machinery
and equipment purchased will be used only in farming, ranching or aquaculture production.
Farming or ranching shall include the operation of a feedlot and farm and ranch work for
hire and the operation of a nursery;

    (u) all leases or rentals of tangible personal property used as a dwelling if such tangible
personal property is leased or rented for a period of more than 28 consecutive days;

    (v) all sales of food products to any contractor for use in preparing meals for delivery
to homebound elderly persons over 60 years of age and to homebound disabled persons or
to be served at a group-sitting at a location outside of the home to otherwise homebound
elderly persons over 60 years of age and to otherwise homebound disabled persons, as all
or part of any food service project funded in whole or in part by government or as part of
a private nonprofit food service project available to all such elderly or disabled persons
residing within an area of service designated by the private nonprofit organization, and all
sales of food products for use in preparing meals for consumption by indigent or homeless
individuals whether or not such meals are consumed at a place designated for such purpose;

    (w) all sales of natural gas, electricity, heat and water delivered through mains, lines or
pipes: (1) To residential premises for noncommercial use by the occupant of such premises;
(2) for agricultural use and also, for such use, all sales of propane gas; (3) for use in the
severing of oil; and (4) to any property which is exempt from property taxation pursuant to
K.S.A. 79-201b Second through Sixth. As used in this paragraph, ``severing'' shall have the
meaning ascribed thereto by subsection (k) of K.S.A. 79-4216, and amendments thereto;

    (x) all sales of propane gas, LP-gas, coal, wood and other fuel sources for the production
of heat or lighting for noncommercial use of an occupant of residential premises;

    (y) all sales of materials and services used in the repairing, servicing, altering, maintain-
ing, manufacturing, remanufacturing, or modification of railroad rolling stock for use in
interstate or foreign commerce under authority of the laws of the United States;

    (z) all sales of tangible personal property and services purchased directly by a port
authority or by a contractor therefor as provided by the provisions of K.S.A. 12-3418 and
amendments thereto;

    (aa) all sales of materials and services applied to equipment which is transported into
the state from without the state for repair, service, alteration, maintenance, remanufacture
or modification and which is subsequently transported outside the state for use in the trans-
mission of liquids or natural gas by means of pipeline in interstate or foreign commerce
under authority of the laws of the United States;

    (bb) all sales of used mobile homes or manufactured homes. As used in this subsection:
(1) ``Mobile homes'' and ``manufactured homes'' shall have the meanings ascribed thereto
by K.S.A. 58-4202 and amendments thereto; and (2) ``sales of used mobile homes or man-
ufactured homes'' means sales other than the original retail sale thereof;

    (cc) all sales of tangible personal property or services purchased for the purpose of and
in conjunction with constructing, reconstructing, enlarging or remodeling a business or retail
business which meets the requirements established in K.S.A. 74-50,115 and amendments
thereto, and the sale and installation of machinery and equipment purchased for installation
at any such business or retail business. When a person shall contract for the construction,
reconstruction, enlargement or remodeling of any such business or retail business, such
person shall obtain from the state and furnish to the contractor an exemption certificate for
the project involved, and the contractor may purchase materials, machinery and equipment
for incorporation in such project. The contractor shall furnish the number of such certificates
to all suppliers from whom such purchases are made, and such suppliers shall execute
invoices covering the same bearing the number of such certificate. Upon completion of the
project the contractor shall furnish to the owner of the business or retail business a sworn
statement, on a form to be provided by the director of taxation, that all purchases so made
were entitled to exemption under this subsection. All invoices shall be held by the contractor
for a period of five years and shall be subject to audit by the director of taxation. Any
contractor or any agent, employee or subcontractor thereof, who shall use or otherwise
dispose of any materials, machinery or equipment purchased under such a certificate for
any purpose other than that for which such a certificate is issued without the payment of
the sales or compensating tax otherwise imposed thereon, shall be guilty of a misdemeanor
and, upon conviction therefor, shall be subject to the penalties provided for in subsection
(g) of K.S.A. 79-3615 and amendments thereto. As used in this subsection, ``business'' and
``retail business'' have the meanings respectively ascribed thereto by K.S.A. 74-50,114 and
amendments thereto;

    (dd) all sales of tangible personal property purchased with food stamps issued by the
United States department of agriculture;

    (ee) all sales of lottery tickets and shares made as part of a lottery operated by the state
of Kansas;

    (ff) on and after July 1, 1988, all sales of new mobile homes or manufactured homes to
the extent of 40% of the gross receipts, determined without regard to any trade-in allowance,
received from such sale. As used in this subsection, ``mobile homes'' and ``manufactured
homes'' shall have the meanings ascribed thereto by K.S.A. 58-4202 and amendments
thereto;

    (gg) all sales of tangible personal property purchased in accordance with vouchers issued
pursuant to the federal special supplemental food program for women, infants and children;

    (hh) all sales of medical supplies and equipment purchased directly by a nonprofit skilled
nursing home or nonprofit intermediate nursing care home, as defined by K.S.A. 39-923,
and amendments thereto, for the purpose of providing medical services to residents thereof.
This exemption shall not apply to tangible personal property customarily used for human
habitation purposes;

    (ii) all sales of tangible personal property purchased directly by a nonprofit organization
for nonsectarian comprehensive multidiscipline youth development programs and activities
provided or sponsored by such organization, and all sales of tangible personal property by
or on behalf of any such organization. This exemption shall not apply to tangible personal
property customarily used for human habitation purposes;

    (jj) all sales of tangible personal property or services, including the renting and leasing
of tangible personal property, purchased directly on behalf of a community-based mental
retardation facility or mental health center organized pursuant to K.S.A. 19-4001 et seq.,
and amendments thereto, and licensed in accordance with the provisions of K.S.A. 75-3307b
and amendments thereto. This exemption shall not apply to tangible personal property
customarily used for human habitation purposes;

    (kk) on and after January 1, 1989, all sales of machinery and equipment used directly
and primarily for the purposes of manufacturing, assembling, processing, finishing, storing,
warehousing or distributing articles of tangible personal property in this state intended for
resale by a manufacturing or processing plant or facility or a storage, warehousing or dis-
tribution facility:

    (1) For purposes of this subsection, machinery and equipment shall be deemed to be
used directly and primarily in the manufacture, assemblage, processing, finishing, storing,
warehousing or distributing of tangible personal property where such machinery and equip-
ment is used during a manufacturing, assembling, processing or finishing, storing, ware-
housing or distributing operation:

    (A) To effect a direct and immediate physical change upon the tangible personal property;

    (B) to guide or measure a direct and immediate physical change upon such property
where such function is an integral and essential part of tuning, verifying or aligning the
component parts of such property;

    (C) to test or measure such property where such function is an integral part of the
production flow or function;

    (D) to transport, convey or handle such property during the manufacturing, processing,
storing, warehousing or distribution operation at the plant or facility; or

    (E) to place such property in the container, package or wrapping in which such property
is normally sold or transported.

    (2) For Notwithstanding the manner in which machinery and equipment is treated by
a taxpayer for federal income tax purposes, for purposes of this subsection ``machinery and
equipment used directly and primarily'' shall include, but not be limited to:

    (A) Mechanical machines or major components thereof contributing to a manufacturing,
assembling or finishing process;

    (B) molds and dies that determine the physical characteristics of the finished product
or its packaging material;

    (C) testing equipment to determine the quality of the finished product;

    (D) computers and related peripheral equipment that directly control or measure the
manufacturing process or which are utilized for engineering of the finished product; and

    (E) computers and related peripheral equipment utilized for research and development
and product design.

    (3) ``Machinery and equipment used directly and primarily'' shall not include:

    (A) Hand tools;

    (B) machinery, equipment and tools used in maintaining and repairing any type of ma-
chinery and equipment;

    (C) transportation equipment not used in the manufacturing, assembling, processing,
furnishing, storing, warehousing or distributing process at the plant or facility;

    (D) office machines and equipment including computers and related peripheral equip-
ment not directly and primarily used in controlling or measuring the manufacturing process;

    (E) furniture and buildings; and

    (F) machinery and equipment used in administrative, accounting, sales or other such
activities of the business;

    (ll) all sales of educational materials purchased for distribution to the public at no charge
by a nonprofit corporation organized for the purpose of encouraging, fostering and con-
ducting programs for the improvement of public health;

    (mm) all sales of seeds and tree seedlings; fertilizers, insecticides, herbicides, germi-
cides, pesticides and fungicides; and services, purchased and used for the purpose of pro-
ducing plants in order to prevent soil erosion on land devoted to agricultural use;

    (nn) except as otherwise provided in this act, all sales of services rendered by an ad-
vertising agency or licensed broadcast station or any member, agent or employee thereof;

    (oo) all sales of tangible personal property purchased by a community action group or
agency for the exclusive purpose of repairing or weatherizing housing occupied by low
income individuals;

    (pp) all sales of drill bits and explosives actually utilized in the exploration and produc-
tion of oil or gas;

    (qq) all sales of tangible personal property and services purchased by a nonprofit mu-
seum or historical society or any combination thereof, including a nonprofit organization
which is organized for the purpose of stimulating public interest in the exploration of space
by providing educational information, exhibits and experiences, which is exempt from fed-
eral income taxation pursuant to section 501(c)(3) of the federal internal revenue code of
1986;

    (rr) all sales of tangible personal property which will admit the purchaser thereof to any
annual event sponsored by a nonprofit organization which is exempt from federal income
taxation pursuant to section 501(c)(3) of the federal internal revenue code of 1986;

    (ss) all sales of tangible personal property and services purchased by a public broad-
casting station licensed by the federal communications commission as a noncommercial
educational television or radio station;

    (tt) all sales of tangible personal property and services purchased by or on behalf of a
not-for-profit corporation which is exempt from federal income taxation pursuant to section
501(c)(3) of the federal internal revenue code of 1986, for the sole purpose of constructing
a Kansas Korean War memorial;

    (uu) all sales of tangible personal property and services purchased by or on behalf of
any rural volunteer fire-fighting organization for use exclusively in the performance of its
duties and functions;

    (vv) all sales of tangible personal property purchased by any of the following organiza-
tions which are exempt from federal income taxation pursuant to section 501 (c)(3) of the
federal internal revenue code of 1986, for the following purposes, and all sales of any such
property by or on behalf of any such organization for any such purpose:

    (1) The American Heart Association, Kansas Affiliate, Inc. for the purposes of providing
education, training, certification in emergency cardiac care, research and other related serv-
ices to reduce disability and death from cardiovascular diseases and stroke;

    (2) the Kansas Alliance for the Mentally Ill, Inc. for the purpose of advocacy for persons
with mental illness and to education, research and support for their families;

    (3) the Kansas Mental Illness Awareness Council for the purposes of advocacy for per-
sons who are mentally ill and to education, research and support for them and their families;

    (4) the American Diabetes Association Kansas Affiliate, Inc. for the purpose of elimi-
nating diabetes through medical research, public education focusing on disease prevention
and education, patient education including information on coping with diabetes, and pro-
fessional education and training;

    (5) the American Lung Association of Kansas, Inc. for the purpose of eliminating all
lung diseases through medical research, public education including information on coping
with lung diseases, professional education and training related to lung disease and other
related services to reduce the incidence of disability and death due to lung disease;

    (6) the Kansas chapters of the Alzheimer's Disease and Related Disorders Association,
Inc. for the purpose of providing assistance and support to persons in Kansas with Alzhei-
mer's disease, and their families and caregivers; and

    (ww) all sales of tangible personal property purchased by the Habitat for Humanity for
the exclusive use of being incorporated within a housing project constructed by such organ-
ization.

    (xx) all sales of tangible personal property and services purchased by a nonprofit zoo
which is exempt from federal income taxation pursuant to section 501 (c)(3) of the federal
internal revenue code of 1986, or on behalf of such zoo by an entity itself exempt from federal
income taxation pursuant to section 50 (c)(3) of the federal internal revenue code of 1986
contracted with to operate such zoo and all sales of tangible personal property or services
purchased by a contractor for the purpose of constructing, equipping, reconstructing, main-
taining, repairing, enlarging, furnishing or remodeling facilities for any nonprofit zoo which
would be exempt from taxation under the provisions of this section if purchased directly by
such nonprofit zoo or the entity operating such zoo. Nothing in this subsection shall be
deemed to exempt the purchase of any construction machinery, equipment or tools used in
the constructing, equipping, reconstructing, maintaining, repairing, enlarging, furnishing or
remodeling facilities for any nonprofit zoo. When any nonprofit zoo shall contract for the
purpose of constructing, equipping, reconstructing, maintaining, repairing, enlarging, fur-
nishing or remodeling facilities, it shall obtain from the state and furnish to the contractor
an exemption certificate for the project involved, and the contractor may purchase materials
for incorporation in such project. The contractor shall furnish the number of such certificate
to all suppliers from whom such purchases are made, and such suppliers shall execute in-
voices covering the same bearing the number of such certificate. Upon completion of the
project the contractor shall furnish to the nonprofit zoo concerned a sworn statement, on a
form to be provided by the director of taxation, that all purchases so made were entitled to
exemption under this subsection. All invoices shall be held by the contractor for a period of
five years and shall be subject to audit by the director of taxation. If any materials purchased
under such a certificate are found not to have been incorporated in the building or other
project or not to have been returned for credit or the sales or compensating tax otherwise
imposed upon such materials which will not be so incorporated in the building or other
project reported and paid by such contractor to the director of taxation not later than the
20th day of the month following the close of the month in which it shall be determined that
such materials will not be used for the purpose for which such certificate was issued, the
nonprofit zoo concerned shall be liable for tax on all materials purchased for for the project,
and upon payment thereof it may recover the same from the contractor together with rea-
sonable attorney fees. Any contractor or any agent, employee or subcontractor thereof, who
shall use or otherwise dispose of any materials purchased under such a certificate for any
purpose other than that for which such a certificate is issued without the payment of the
sales or compensating tax otherwise imposed upon such materials, shall be guilty of a mis-
demeanor and, upon conviction therefor, shall be subject to the penalties provided for in
subsection (g) of K.S.A. 79-3615, and amendments thereto;
    (yy) all sales of tangible personal property and services purchased by a parent-teacher
association or organization, and all sales of tangible personal property by or on behalf of
such association or organization;
    (zz) all sales of machinery and equipment purchased by over-the-air, free access radio
or television station which is used directly and primarily for the purpose of producing a
broadcast signal or is such that the failure of the machinery or equipment to operate would
cause broadcasting to cease. For purposes of this subsection, machinery and equipment shall
include, but not be limited to, that required by rules and regulations of the federal com-
munications commission, and all sales of electricity which are essential or necessary for the
purpose of producing a broadcast signal or is such that the failure of the electricity would
cause broadcasting to cease;
    (aaa) all sales of tangible personal property and services purchased by a religious or-
ganization which is exempt from federal income taxation pursuant to section 501 (c)(3) of
the federal internal revenue code, and used exclusively for religious purposes; and
    (bbb) all sales of food for human consumption by an organization which is exempt from
federal income taxation pursuant to section 501 (c)(3) of the federal internal revenue code
of 1986, pursuant to a food distribution program which offers such food at a price below
cost in exchange for the performance of community service by the purchaser thereof.

    Sec. 34. K.S.A. 79-3633 is hereby amended to read as follows: 79-3633. As used in
K.S.A. 79-3620 and 79-3632 to 79-3639 and amendments thereto, unless the context clearly
indicates otherwise:

    (a) ``Income'' means the sum of adjusted gross income determined under the Kansas
income tax act, maintenance, support money, cash public assistance and relief (not including
relief granted under this act or refunds granted under the provisions of article 45 of chapter
79 of the Kansas Statutes Annotated), the gross amount of any pension or annuity (including
all monetary retirement benefits from whatever source derived, including but not limited
to railroad retirement benefits, all payments received under the federal social security act
and veterans disability pensions), all dividends and interest from whatever source derived
not included in adjusted gross income, workmen's compensation and the gross amount of
``loss of time'' insurance. It does not include gifts from nongovernmental sources or surplus
food or other relief in kind supplied by a governmental agency.

    (b) ``Household'' means a claimant, a claimant and spouse or a claimant and one or
more individuals not related as husband and wife and all other persons for whom a personal
exemption is claimed who together occupy a common residence.

    (c) ``Household income'' means all income received by all persons of a household in a
calendar year while members of such household.
    (d) ``Claimant'' means a person who has filed a claim for a refund or credit under the
provisions of this act and was, during the entire calendar year preceding the year in which
the claim was filed for relief under this act, domiciled in this state, was a member of a
household having a household, had income of not more than $13,000 $25,000 in the calendar
year for which a claim is filed and was: (1) A person having a disability; (2) a person other
than a person included under (1), who has attained 55 years of age in the calendar year for
which a claim is filed or (3) a person other than a person included under (1) or (2) having
one or more dependent children under 18 years of age residing at the person's homestead
during the calendar year for which a claim is filed.

    (e) (d) ``Head of household'' means the person filing a claim under the provisions of
this act.

    (f) (e) ``Disability'' means (1) inability to engage in any substantial gainful activity by
reason of any medically determinable physical or mental impairment which can be expected
to result in death or has lasted or can be expected to last for a continuous period of not less
than 12 months, and an individual shall be determined to be under a disability only if the
physical or mental impairment or impairments are of such severity that the individual is not
only unable to do the individual's previous work but cannot, considering age, education and
work experience, engage in any other kind of substantial gainful work which exists in the
national economy, regardless of whether such work exists in the immediate area in which
the individual lives or whether a specific job vacancy exists for the individual, or whether
the individual would be hired if application was made for work. For purposes of the pre-
ceding sentence (with respect to any individual), ``work which exists in the national economy''
means work which exists in significant numbers either in the region where the individual
lives or in several regions of the country; for purposes of this subsection, a ``physical or
mental impairment'' is an impairment that results from anatomical, physiological or psy-
chological abnormalities which are demonstrable by medically acceptable clinical and lab-
oratory diagnostic techniques; or

    (2) blindness and inability by reason of blindness to engage in substantial gainful activity
requiring skills or abilities comparable to those of any gainful activity in which the individual
has previously engaged with some regularity and over a substantial period of time.

    (g) (f) ``Blindness'' means central visual acuity of 20/200 or less in the better eye with
the use of a correcting lens. An eye which is accompanied by a limitation in the fields of
vision such that the widest diameter of the visual field subtends an angle no greater than
20 degrees shall be considered for the purpose of this paragraph as having a central visual
acuity of 20/200 or less.

    Sec. 35. K.S.A. 79-3635 is hereby amended to read as follows: 79-3635. (a) (1) A claim-
ant shall be entitled to a refund of retailers' sales taxes paid upon food during the calendar
year 1997 1998 and each year thereafter in the amount hereinafter provided. For households
having a household income of less than $5,000, a refund in the amount of $40 shall be
allowed for the head of household and a refund of $30 shall be allowed for each additional
member of the household. For households having a household income of at least $5,000
but less than $10,000, a refund in the amount of $30 shall be allowed for the head of
household and a refund of $25 shall be allowed for each additional member of the household.
For households having a household income of at least $10,000 but not more than $13,000,
a refund in the amount of $20 shall be allowed for the head of household and a refund of
$15 shall be allowed for each additional member of the household. There shall be allowed
for each member of a household of a claimant having income of $25,000 or less, an amount
equal to $42. An additional $42 amount shall be allowed for any claimant who qualifies as
a head of household pursuant to K.S.A. 79-32,121, and amendments thereto. All such claims
shall be paid from the sales tax refund fund upon warrants of the director of accounts and
reports pursuant to vouchers approved by the director of taxation or by a person or persons
designated by the director.

    (2) As an alternative to the procedure described by paragraph 1, for all taxable years
commencing after December 31, 1997, there shall be allowed as a credit against the tax
liability of a resident individual imposed under the Kansas income tax act an amount equal
to $42 for each member of a household. If the amount of such tax credit exceeds the claimant's
income tax liability for such taxable year, such excess amount shall be refunded to the claim-
ant.

    (b) A head of household shall make application for refunds for all members of the same
household upon a common form provided for the making of joint claims. All claims paid to
members of the same household shall be paid as a joint claim by means of a single warrant.

    (c) No claim for a refund of taxes under the provisions of K.S.A. 79-3632 et seq. shall
be paid or allowed unless such claim is actually filed with and in the possession of the
department of revenue on or before April 15 of the year next succeeding the year in which
such taxes were paid. The director of taxation may: (1) Extend the time for filing any claim
under the provisions of this act when good cause exists therefor; or (2) accept a claim filed
after the deadline for filing in the case of sickness, absence or disability of the claimant if
such claim has been filed within four years of such deadline.

    New Sec. 36. (a) Any business firm which employs on a full-time basis a person with a
developmental disability or who is seriously and persistently mentally ill and who is engaged
for a period of eight months or more in the performance of duties in connection with the
operation of such firm, shall be allowed a credit against the tax imposed by the Kansas
income tax act, the tax on net income of national banking associations, state banks, trust
companies or savings and loan associations imposed under article 11 of chapter 79 of the
Kansas Statutes Annotated, or the premiums tax upon insurance companies imposed pur-
suant to K.S.A. 40-252, and amendments thereto. The amount of the credit allowed shall
be $500 for each such person employed, except that no more than $50,000 may be claimed
for credit in any one taxable year.

    (b) As used in this section:

    (1) ``Business firm'' means any business entity authorized to do business in the state of
Kansas which is subject to the state income tax imposed by the provisions of the Kansas
income tax act, any national banking association, state bank, trust company or savings and
loan association paying an annual tax on its net income pursuant to article 11 of chapter 79
of the Kansas Statutes Annotated, or any insurance company paying a premium tax pursuant
to K.S.A. 40-252, and amendments thereto; and

    (2) ``person with a developmental disability or who is seriously and persistently mentally
ill'' means any person who meets the criteria established for mental retardation or devel-
opmental disability or serious and persistent mental illness by the division of mental health
and retardation services of the department of social and rehabilitation services, and who is
recommended for employment by a business firm, by a community mental health center or
facility for the mentally retarded established pursuant to K.S.A. 19-4001 et seq., or by any
entity which any such center or facility has contracted with to provide mental health services
or services for the mentally retarded, or both.

    (c) The provisions of this section shall be applicable to all taxable years commencing
after December 31, 1997.

    Section 37. K.S.A. 79-3235 is hereby amended to read as follows: 79-3235. If any tax
imposed by this act or any portion of such tax is not paid within 60 days after it becomes
due, the secretary or the secretary's designee shall issue a warrant under the secretary's or
the secretary's designee's hand and official seal, directed to the sheriff of any county of the
state, commanding the sheriff to levy upon and sell the real and personal property of the
taxpayer found within the sheriff's county for the payment of the amount thereof, with the
added penalties, interest and the cost of executing the warrant and to return the warrant to
the secretary or the secretary's designee and pay to the secretary or the secretary's designee
the money collected by virtue of it not more than 60 days from the date of the warrant. The
sheriff, within five days after the receipt of the warrant, shall file with the clerk of the district
court of the county a copy thereof, and thereupon the clerk shall either enter in the ap-
pearance docket the name of the taxpayer mentioned in the warrant, the amount of the tax
or portion of it, interest and penalties for which the warrant is issued and the date such
copy is filed and note the taxpayer's name in the general index. No fee shall be charged for
either entry. The amount of such warrant so docketed shall thereupon become a lien upon
the title to and interest in the real property of the taxpayer against whom it is issued. The
sheriff shall proceed in the same manner and with the same effect as prescribed by law with
respect to executions issued against property upon judgments of a court of record and shall
be entitled to the same fees for services to be collected in the same manner.

    The court in which the warrant is docketed shall have jurisdiction over all subsequent
proceedings as fully as though a judgment had been rendered in the court. In the discretion
of the secretary or the secretary's designee a warrant of like terms, force and effect may be
issued and directed to any officer or employee of the secretary, and in the execution thereof
such officer or employee shall have all the powers conferred by law upon sheriffs, and the
subsequent proceedings thereunder shall be the same as provided where the warrant is
issued directly to the sheriff. The taxpayer shall have the right to redeem the real estate
within a period of 18 months from the date of such sale. If a warrant is returned, unsatisfied
in full, the secretary or the secretary's designee shall have the same remedies to enforce the
claim for taxes as if the state of Kansas had recovered judgment against the taxpayer for the
amount of the tax. No law exempting any goods and chattels, lands and tenements from
forced sale under execution shall apply to a levy and sale under any such warrant or upon
any execution issued upon any judgment rendered in any action for income taxes. Except
as provided further, the secretary or the secretary's designee shall have the right at any time
after a warrant has been returned unsatisfied or satisfied only in part, to issue alias warrants
until the full amount of the tax is collected.

    If execution is not issued within 10 years from the date of the docketing of any such
warrant, or if 10 years shall have intervened between the date of the last execution issued
on such warrant, and the time of issuing another writ of execution thereon, such warrant
shall become dormant, and shall cease to operate as a lien on the real estate of the delinquent
taxpayer. Such dormant warrant may be revived in like manner as dormant judgment under
the code of civil procedure.

    Sec. 38. K.S.A. 79-3617 is hereby amended to read as follows: 79-3617. Whenever any
taxpayer liable to pay any sales or compensating tax, refuses or neglects to pay the tax, the
amount, including any interest or penalty, shall be collected in the following manner. The
secretary of revenue or the secretary's designee shall issue a warrant under the hand of the
secretary or the secretary's designee and official seal directed to the sheriff of any county
of the state commanding the sheriff to levy upon and sell the real and personal property of
the taxpayer found within the sheriff's county to satisfy the tax, including penalty and inter-
est, and the cost of executing the warrant and to return such warrant to the secretary or the
secretary's designee and pay to the secretary or the secretary's designee the money collected
by virtue thereof not more than 90 days from the date of the warrant. The sheriff shall,
within five days, after the receipt of the warrant file with the clerk of the district court of
the county a copy thereof, and thereupon the clerk shall either enter in the appearance
docket the name of the taxpayer mentioned in the warrant, the amount of the tax or portion
of it, interest and penalties for which the warrant is issued and the date such copy is filed
and note the taxpayer's name in the general index. No fee shall be charged for either such
entry. The amount of such warrant so docketed shall thereupon become a lien upon the
title to, and interest in, the real property of the taxpayer against whom it is issued. The
sheriff shall proceed in the same manner and with the same effect as prescribed by law with
respect to executions issued against property upon judgments of a court of record, and shall
be entitled to the same fees for services.

    The court in which the warrant is docketed shall have jurisdiction over all subsequent
proceedings as fully as though a judgment had been rendered in the court. A warrant of
similar terms, force and effect may be issued by the secretary or the secretary's designee
and directed to any officer or employee of the secretary or the secretary's designee, and in
the execution thereof such officer or employee shall have all the powers conferred by law
upon sheriffs with respect to executions issued against property upon judgments of a court
of record and the subsequent proceedings thereunder shall be the same as provided where
the warrant is issued directly to the sheriff. The taxpayer shall have the right to redeem the
real estate within a period of 18 months from the date of such sale. If a warrant is returned,
unsatisfied in full, the secretary or the secretary's designee shall have the same remedies to
enforce the claim for taxes as if the state of Kansas had recovered judgment against the
taxpayer for the amount of the tax. No law exempting any goods and chattels, land and
tenements from forced sale under execution shall apply to a levy and sale under any of the
warrants or upon any execution issued upon any judgment rendered in any action for sales
or compensating taxes. Except as provided further, the secretary or the secretary's designee
shall have the right at any time after a warrant has been returned unsatisfied, or satisfied
only in part, to issue alias warrants until the full amount of the tax is collected. No costs
incurred by the sheriff or the clerk of the court shall be charged to the secretary or the
secretary's designee.

    If execution is not issued within 10 years from the date of the docketing of any such
warrant, or if 10 years shall have intervened between the date of the last execution issued
on such warrant, and the time of issuing another writ of execution thereon, such warrant
shall become dormant, and shall cease to operate as a lien on the real estate of the delinquent
taxpayer. Such dormant warrant may be revived in like manner as dormant judgments under
the code of civil procedure.

    Sec. 39. K.S.A. 79-213 is hereby amended to read as follows: 79-213. (a) Any property
owner requesting an exemption from the payment of ad valorem property taxes assessed,
or to be assessed, against their property shall be required to file an initial request for ex-
emption, on forms approved by the board of tax appeals and provided by the county ap-
praiser.

    (b) The initial exemption request shall identify the property for which the exemption is
requested and state, in detail, the legal and factual basis for the exemption claimed.

    (c) The request for exemption shall be filed with the county appraiser of the county
where such property is principally located.

    (d) After a review of the exemption request, and after a preliminary examination of the
facts as alleged, the county appraiser shall recommend that the exemption request either
be granted or denied, and, if necessary, that a hearing be held. If a denial is recommended,
a statement of the controlling facts and law relied upon shall be included on the form.

    (e) The county appraiser, after making such written recommendation, shall file the
request for exemption and the recommendations of the county appraiser with the board of
tax appeals.

    (f) Upon receipt of the request for exemption, the board shall docket the same and
notify the applicant and the county appraiser of such fact.

    (g) After examination of the request for exemption, and the county appraiser's recom-
mendation related thereto, the board may fix a time and place for hearing, and shall notify
the applicant and the county appraiser of the time and place so fixed. In any case where a
party to such request for exemption requests a hearing thereon, the same shall be granted.
Hearings shall be conducted in accordance with the provisions of the Kansas administrative
procedure act. In all instances where the board sets a request for exemption for hearing,
the county shall be represented by its county attorney or county counselor.

    (h) In the event of a hearing, the same shall be originally set not later than 90 days after
the filing of the request for exemption with the board.

    (i) During the pendency of a request for exemption, no person, firm, unincorporated
association, company or corporation charged with real estate or personal property taxes
pursuant to K.S.A. 79-2004 and 79-2004a, and amendments thereto, on the tax books in the
hands of the county treasurer shall be required to pay the tax from the date the request is
filed with the county appraiser until the expiration of 30 days after the board issued its order
thereon and the same becomes a final order. In the event that taxes have been assessed
against the subject property, no interest shall accrue on any unpaid tax for the year or years
in question nor shall the unpaid tax be considered delinquent from the date the request is
filed with the county appraiser until the expiration of 30 days after the board issued its order
thereon. In the event the board determines an application for exemption is without merit
and filed in bad faith to delay the due date of the tax, the tax shall be considered delinquent
as of the date the tax would have been due pursuant to K.S.A. 79-2004 and 79-2004a, and
amendments thereto, and interest shall accrue as prescribed therein.

    (j) In the event the board grants the initial request for exemption, the same shall be
effective beginning with the date of first exempt use except that, with respect to property
the construction of which commenced not to exceed 24 months prior to the date of first
exempt use, the same shall be effective beginning with the date of commencement of con-
struction.

    (k) In conjunction with its authority to grant exemptions, the board shall have the au-
thority to abate all unpaid taxes that have accrued from and since the effective date of the
exemption. In the event that taxes have been paid during the period where the subject
property has been determined to be exempt, the board shall have the authority to order a
refund of taxes for a period not to exceed three years.

    (l) The provisions of this section shall not apply to: (1) Farm machinery and equipment
exempted from ad valorem taxation by K.S.A. 79-201j, and amendments thereto; (2) personal
property exempted from ad valorem taxation by K.S.A. 79-215, and amendments thereto;
(3) wearing apparel, household goods and personal effects exempted from ad valorem tax-
ation by K.S.A. 79-201c, and amendments thereto; (4) livestock; (5) hay and silage exempted
from ad valorem taxation by K.S.A. 79-201d, and amendments thereto; (6) merchants' and
manufacturers' inventories exempted from ad valorem taxation by K.S.A. 79-201m and
amendments thereto; (7) grain exempted from ad valorem taxation by K.S.A. 79-201n, and
amendments thereto; (8) property exempted from ad valorem taxation by K.S.A. 79-201a
Seventeenth and amendments thereto, including all property previously acquired by the
secretary of transportation or a predecessor in interest, which is used in the administration,
construction, maintenance or operation of the state system of highways. The secretary of
transportation shall at the time of acquisition of property notify the county appraiser in the
county in which the property is located that the acquisition occurred and provide a legal
description of the property acquired; (9) property exempted from ad valorem taxation by
K.S.A. 79-201a Ninth, and amendments thereto, including all property previously acquired
by the Kansas turnpike authority which is used in the administration, construction, main-
tenance or operation of the Kansas turnpike. The Kansas turnpike authority shall at the time
of acquisition of property notify the county appraiser in the county in which the property is
located that the acquisition occurred and provide a legal description of the property ac-
quired; (10) aquaculture machinery and equipment exempted from ad valorem taxation by
K.S.A. 79-201j, and amendments thereto. As used in this section, ``aquaculture'' has the
same meaning ascribed thereto by K.S.A. 47-1901, and amendments thereto; (11) Christmas
tree machinery and equipment exempted from ad valorem taxation by K.S.A. 79-201j, and
amendments thereto; (12) property used exclusively by the state or any municipality or
political subdivision of the state for right-of-way purposes. The state agency or the governing
body of the municipality or political subdivision shall at the time of acquisition of property
for right-of-way purposes notify the county appraiser in the county in which the property is
located that the acquisition occurred and provide a legal description of the property ac-
quired; (13) machinery, equipment, materials and supplies exempted from ad valorem tax-
ation by K.S.A. 79-201w, and amendments thereto; (14) vehicles owned by the state or by
any political or taxing subdivision thereof and used exclusively for governmental purposes;
and (15) property used for residential purposes which is exempted pursuant to K.S.A. 79-
201x from the property tax levied pursuant to K.S.A. 1997 Supp. 72-6431, and amendments
thereto; and (16) motor vehicles exempted from taxation by subsection (e) of K.S.A. 79-5107,
and amendments thereto.

    (m) The provisions of this section shall apply to property exempt pursuant to the pro-
visions of section 13 of article 11 of the Kansas constitution.

    (n) The provisions of subsection (j) and (k) as amended by this act shall be applicable
to all taxable years commencing after December 31, 1995.

    Sec. 40. K.S.A. 79-3619 is hereby amended to read as follows: 79-3619. (a) For the
purposes of more efficiently securing the payment, collection and accounting for the taxes
provided for under this act, agreements between competing retailers or the adoption of
appropriate rules and regulations by organizations or associations of retailers to provide
uniform methods for adding and collecting the full amount of the tax imposed by this act,
or an amount equal as nearly as possible or practicable to the average equivalent thereof,
and which do not involve price-fixing agreements otherwise unlawful, and which shall first
have the approval of the director of taxation, are expressly authorized and shall be held not
to be in violation of any antitrust laws of this state. It shall be the duty of the director of
taxation to cooperate with such retailers, organizations, or associations in formulating such
agreements, rules and regulations. The secretary of revenue shall adopt rules and regulations
for adding and collecting such tax, or an amount equal as nearly as possible or practicable
to the average equivalent thereof, by providing different methods applying uniformly to
retailers within the same general classification for the purpose of enabling such retailers to
add and collect, as far as practicable, the amount of such tax.

    (b) The secretary of revenue may adopt rules and regulations to provide for the issuance
of permits to certain businesses which grant direct payment authority that allows certain
purchases to be made without the payment of retailers' sales or use tax to the vendor or
service provider and requires the permit holder to self-accrue any state and local tax that is
due and pay such tax directly to the department of revenue. The secretary shall be accorded
broad discretion in establishing qualification standards for direct pay authority, in entering
into agreement with permit holders that fix accounting and reporting requirements, in grant-
ing and canceling the direct pay privilege, and in establishing other requirements for ad-
ministration of this section.

    Sec. 41. K.S.A. 79-201t, 79-201w, 79-201x, 79-213, 79-1537, 79-1537b, 79-1537c, 79-
1537e, 79-1537f, 79-1538, 79-1538a, 79-1539, 79-1540, 79-1541, 79-1541a, 79-1541b, 79-
1542, 79-1542a, 79-1543, 79-1545, 79-1547, 79-1548, 79-1549, 79-1550, 79-1551, 79-1552,
79-1553, 79-1554, 79-1555, 79-1556, 79-1557, 79-1557a, 79-1559, 79-1560, 79-1561,
79-1562, 79-1563, 79-1563a, 79-1564, 79-1565, 79-1566, 79-1567, 79-1567a, 79-1568, 79-
1569, 79-1570, 79-1571, 79-1572, 79-1573, 79-1574, 79-1575, 79-1576, 79-1579, 79-1580,
79-1584, 79-1584a, 79-1584b, 79-1584c, 79-1585, 79-1586, 79-1587, 79-3235, 79-32,110,
79-32,117, 79-32,117h, 79-32,117i, 79-32,119, 79-32,121, 79-3602, 79-3603, 79-3606, as
amended by section 27 of 1998 Senate Bill No. 373, 79-3617, 79-3619, 79-3633, 79-3635
and 79-4217 and K.S.A. 1997 Supp. 72-6431 are hereby repealed.

    Sec. 42. This act shall take effect and be in force from and after its publication in the
statute book.'';

    In the title, in line 12, by striking all after ``ACT''; by striking all in lines 13 through 16
and inserting, ``enacting the Kansas Tax Reduction and Reform Act of 1998; amending
K.S.A. 79-201t, 79-201w, 79-201x, 79-213, 79-1541a, 79-1541b, 79-1542, 79-1564, 79-1569,
79-1570, 79-1571, 79-1572, 79-1574, 79-1575, 79-1576, 79-1579, 79-1580, 79-1587, 79-
3235, 79-32,110, 79-32,117, 79-32,117h, 79-32,119, 79-32,121, 79-3602, 79-3603, 79-3606,
as amended by section 27 of 1998 Senate Bill No. 373, 79-3617, 79-3619, 79-3633, 79-3635
and 79-4217 and K.S.A. 1997 Supp. 72-6431 and repealing the existing sections; also re-
pealing K.S.A. 79-1537, 79-1537b, 79-1537c, 79-1537e, 79-1537f, 79-1538, 79-1538a, 79-
1539, 79-1540, 79-1541, 79-1542a, 79-1543, 79-1545, 79-1547, 79-1548, 79-1549, 79-1550,
79-1551, 79-1552, 79-1553, 79-1554, 79-1555, 79-1556, 79-1557, 79-1557a, 79-1559,
79-1560, 79-1561, 79-1562, 79-1563, 79-1563a, 79-1565, 79-1566, 79-1567, 79-1567a, 79-
1568, 79-1573, 79-1584, 79-1584a, 79-1584b, 79-1584c, 79-1585, 79-1586 and 79-32,117i.''
and the bill be passed as amended.

MESSAGES FROM THE SENATE
 Announcing passage of SB 108; Sub. SB 322; SB 375, 501, 581; Sub. SB 675.

 Announcing passage of HB 2732, 2760, 2783.

 Also, announcing passage of HB 2534, as amended; HB 2626, as amended; Sub. HB
2640, as amended; HB 2685, as amended; HB 2743, as amended.

 The Senate concurs in House amendments to SB 149.

 The Senate concurs in House amendments to SB 270.

 Also, announcing passage of SB 603.

 Announcing passage of HB 2621.

 Also, announcing passage of HB 2126, as amended; HB 2584, as amended; HB 2590,
as amended; HB 2627, as amended; HB 2676, as amended; HB 2678, as amended; HB
2689, as amended; HB 2792, as amended; HB 2933, as amended.

 The Senate adopts conference committee report on HB 2289.

INTRODUCTION OF SENATE BILLS AND CONCURRENT RESOLUTIONS
 The following Senate bills were thereupon introduced and read by title:

 SB 108; Sub. SB 322; SB 375, 501, 581, 603; Sub. SB 675.

INTRODUCTION OF ORIGINAL MOTIONS
 On emergency motion of Rep. Jennison, pursuant to House Rule 2311, SB 493 was
advanced to Final Action on Bills and Concurrent Resolutions, subject to amendment, de-
bate and roll call.

FINAL ACTION ON BILLS AND CONCURRENT RESOLUTIONS
 Committee report to SB 493 was adopted.

 SB 493, An act enacting the Kansas Tax Reduction and Reform Act of 1998; amending
K.S.A. 79-201t, 79-201w, 79-201x, 79-213, 79-1541a, 79-1541b, 79-1542, 79-1564, 79-1569,
79-1570, 79-1571, 79-1572, 79-1574, 79-1575, 79-1576, 79-1579, 79-1580, 79-1587, 79-
3235, 79-32,110, 79-32,117, 79-32,117h, 79-32,119, 79-32,121, 79-3602, 79-3603, 79-3606,
as amended by section 27 of 1998 Senate Bill No. 373, 79-3617, 79-3619, 79-3633, 79-3635
and 79-4217 and K.S.A. 1997 Supp. 72-6431 and repealing the existing sections; also re-
pealing K.S.A. 79-1537, 79-1537b, 79-1537c, 79-1537e, 79-1537f, 79-1538, 79-1538a, 79-
1539, 79- 1540, 79-1541, 79-1542a, 79-1543, 79-1545, 79-1547, 79-1548, 79-1549, 79-1550,
79-1551, 79-1552, 79-1553, 79-1554, 79-1555, 79-1556, 79-1557, 79-1557a, 79-1559,
79-1560, 79-1561, 79-1562, 79-1563, 79-1563a, 79-1565, 79-1566, 79-1567, 79-1567a, 79-
1568, 79-1573, 79- 1584, 79-1584a, 79-1584b, 79-1584c, 79-1585, 79-1586 and 79-32,117i,
was considered on final action.

 On roll call, the vote was: Yeas 124; Nays 0; Present but not voting: 0; Absent or not
voting: 1.

 Yeas: Adkins, Alldritt, Allen, Aurand, Ballard, Ballou, Beggs, Benlon, Boston, Burroughs,
Campbell, Carmody, Compton, Cook, Correll, Cox, Crow, Dahl, Dean, Dillon, Dreher,
Edmonds, Empson, Faber, Farmer, Feuerborn, Findley, Flaharty, Flora, Flower, Franklin,
Freeborn, Garner, Geringer, Gilbert, Gilmore, Glasscock, Grant, Gregory, Haley, Hayzlett,
Helgerson, Henderson, Henry, Holmes, Horst, Howell, Huff, Humerickhouse, Hutchins,
Jennison, Johnson, Johnston, Kejr, Kirk, Klein, Phil Kline, Phill Kline, Krehbiel, Kuether,
Landwehr, Lane, Larkin, M. Long, P. Long, Mason, Mayans, Mays, McClure, McCreary,
McKechnie, McKinney, Minor, Mollenkamp, Morrison, Myers, Neufeld, Nichols,
O'Connor, O'Neal, Osborne, Packer, Palmer, Pauls, E. Peterson, J. Peterson, Phelps, Pot-
torff, Powell, Powers, Presta, Ray, Reardon, Reinhardt, Ruff, Samuelson, Sawyer, Schwartz,
Shallenburger, Sharp, Shore, Showalter, Shriver, Shultz, Sloan, Spangler, Stone, Storm,
Swenson, Tanner, Thimesch, Toelkes, Tomlinson, Toplikar, Vickrey, Vining, Wagle, Weber,
Weiland, Wells, Welshimer, Wempe, Wilk, Wilson.

 Nays: None.

 Present but not voting: None.

 Absent or not voting: Lloyd.

 The bill passed, as amended.

INTRODUCTION OF ORIGINAL MOTIONS
 There being no objection, the following remarks by Rep. Helgerson are spread upon the
Journal:

 A September 1981 internal memo at Philip Morris warned about a Federal report con-
cluding that raising taxes would significantly reduce smoking among youths. The memo
about the National Bureau of Economic Research report was written by Myron Johnston,
a company economist, to his boss, Harry G. Daniel, who at the time was manager of research
on smoking by teen-agers.

 ``(The authors) calculate that . . . a 10 percent increase in the price of cigarettes would
lead to a decline of 12 percent in the number of teen-agers who would otherwise begin to
smoke. . . .

 Among teen-agers the prevalence of cigarette smoking is highly correlated with income
(from either allowances or working) while there is no similar correlation between smoking
prevalence and income among adults . . . it is clear that price has a pronounced effect on
the smoking prevalence of teen-agers . . .''

 What is amazing is this internal document is not only that Philip Morris agreed that raising
the price of cigarettes will decrease the number of teen-agers who would otherwise begin
to smoke, or that Philip Morris has been lying, but rather that they had a manager of research
on smoking by teen-agers.

 Tobacco companies targeted your children and your constituent's children by dumping
billions of dollars in advertizing targeted at kids but by manipulating the addictive ingredi-
ents so once they start smoking, it's harder to stop.

 I started in the legislature in 1983 and over the years I have heard many a whopper told
by the tobacco companies and lobbyists.

 They have said in our committee rooms:

 * (tri-stars)at cigarettes do not cause cancer

 * (tri-stars)ey are not a health risk

 * (tri-stars)at we don't target our advertizing at children

 * (tri-stars)ey do not manipulate the chemical agents to keep people addicted

 * (tri-stars)at there is no correlation between the 420,000 people that die because of tobacco
related illness and tobacco products.

 Tobacco is unique in the number of people it kills. Each year nearly 420,000 Americans
die from smoking. That's 1,100 Americans each day, one every 75 seconds. Nearly one of
every five deaths in the U.S.-and in Kansas-are caused by tobacco. Tobacco kills half of all
long-term users, and half of these deaths occur in middle age.

 This year 11,000 children will start smoking in Kansas . . . a number that is growing
and with more of those kids starting at a younger age. One third of those children--excuse
me, our children and our friends children will eventually die because of their addiction that
was cultivated and manipulated by the tobacco companies.

 Congressional subpoenas and state courts have forced the tobacco companies to release
some of their confidential, in-house documents. Today, there shouldn't be any controversy
about tobacco and its health effects; that tobacco companies have targeted kids; manipulated
ingredients to keep people addicted; and, have lied for the last thirty years. So the question
is why haven't you done anything. If any other industry had so consistently lied to the
legislature you wouldn't give them the time of day.

 Many of us regularly try to do what our constituents want, and in the past many of you
would vote against tax increases because the majority of constituents don't believe in tax
increases, even on tobacco products.

 Well, I am here to tell you that you the majority of Kansans want to increase taxes on
tobacco products and want that money for children's health and education issues. The ma-
jority of Kansans (77%) support raising taxes for children's health care programs. Even 60%
of smokers agree on this. So why don't you do what the majority of your districts want?

 Let's talk about the other issue . . . money. My Dad told me when I was growing up
you never get something for nothing. Each year tobacco lobbyists and the industry are near
the top in wining, dining and giving to legislators. They're not stupid; they know that just
like the products they push, the dinners at the North Star or the basketball or football tickets
or the big contribution they give to both parties and PACS . . . (tri-stars)at's why they have such
influence in these halls.

 I heard of one recent story where an elected official reversed his position because he
wanted tobacco money for his golf tournament. Kids' lives for a golf tournament!

 Tomorrow you have a chance to clearly state what you believe in. Chair Kline was gracious
enough to allow a hearing on HB 2994 that raises $.50 on a pack of cigarettes. This would
raise $78 million and would be dedicated for children's health and education. However, the
bill has not come up for a vote. I am asking for your help.

 I want to debate the merits of a tax increase on the house floor. Hey for many of you it
is a dream come true--if the bill gets to the floor you get to vote against a tax increase.
Others of you can say that you voted yes because you believe in kids and health programs.
All I am asking for is the chance to debate this issue and let the House vote on the bill up
or down. Therefore Mr. Chairman for the children of this state, their parents and their
health and in accordance with subsection (b) of House Rule 1309, Rep. Helgerson moved
that HB 2994 be withdrawn from Committee on Taxation and be placed on the calendar
under the order of business General Orders.

 (The Chief Clerk of the House of Representatives is requested to read this motion and
cause it to be printed in the Calendar of March 26, 1998, under the order of business
``Consideration of Motions and House Resolutions Offered on a Previous Day'' as provided
by House Rule 1309(b).)

REPORT ON ENGROSSED BILLS
 HB 2999 reported correctly engrossed March 24, 1998.

 Also, HB 2828 reported correctly engrossed March 25, 1998.

 Also, HB 2025 reported correctly re-engrossed March 25, 1998.

 On motion of Rep. Jennison, the House adjourned until 9:00 a.m., Thursday, March 26,
1998.

CHARLENE SWANSON, Journal Clerk. 
JANET E. JONES, Cheif Clerk.