Senate Commerce hears bill to establish film tax credits, sales-tax exemptions

Amelia Kovar Donahue, assistant reviser, told the Kansas Senate Commerce Committee that Senate Bill 52 would "create the Kansas Film and Digital Media Production Development Act" and provide tax incentives for projects produced in Kansas.

The bill would be administered by the Secretary of Commerce with assistance from the Kansas Creative Arts Industries Commission and would "commence 07/01/2025," Donahue said. Under the proposal, eligible production and postproduction expenditures made in Kansas could qualify for an income tax credit and for a sales-tax exemption; sales-tax exemptions for projects would not apply to expenditures made on or after Jan. 1, 2035, the draft language says.

Supporters at the hearing described the incentives as a tool to keep film and digital-media production in Kansas and to retain locally trained workers. Stewart Little of Little Government Relations, testifying for Grow Kansas Film, said the proposal is modeled on incentives in other states: "This is essentially based on ... the fundamental tax credit that exists in 40 other states." Kiki Busch, a Kansas-born actor who moved back to rural Kansas, told the committee, "It would be much easier to leave, but this is my home." Justin Rohrbaum, director of the School of Digital Arts and Shocker Studios at Wichita State University, said, "We do not have regular film and television production opportunities," and said incentives could create on-the-job training for students.

Key provisions summarized in the briefing and during questions include: a base income tax credit equal to 30% of qualified production or postproduction expenditures; additional credits of up to 5% for certified multi-film deals, eligible television series, high-impact productions, contributions to infrastructure or workforce development, and for projects that hire 50% or more Kansas-based crew or above-the-line personnel. A repeat claimant provision can add up to 5% for certified projects that previously received the credit. The draft also includes a special 25% credit for a Kansas-based production company that incurs at least $25,000 in qualified expenditures. The maximum cumulative credit to a production company for a certified project in a tax year is capped at 40% of qualified expenditures.

The bill sets an aggregate limit on income tax credits of $10,000,000 per tax year, with 10% of that total reserved for Kansas-based production companies. Donahue also explained that credits are transferable, may be carried forward (subject to limits), and that excess credits may carry forward up to 10 years for the transferee. Claims must be filed within one year of the date of the last eligible expenditure, and the Secretary of Commerce must examine expenditures and notify the production company and Secretary of Revenue of qualified expenditures or disqualifications.

Application and oversight requirements in the draft require production companies to apply for certification and approval before a project's principal photography begins, provide evidence of adequate financing and general liability insurance, and submit an economic-impact statement. Approved projects would enter into an agreement with the Secretary of Commerce and must cooperate with audits; that agreement may include repayment terms and termination of credits or exemptions if requirements are not met.

Committee members asked about fiscal and competitive effects. Senator Reichen asked whether the state has a record of what incentives other states offer; Donahue suggested the committee research staff could compile that information. The committee discussed a fiscal-note estimate cited in materials that showed a Department of Revenue estimate of a General Fund decrease of roughly $10 million in each future year; committee members also confirmed the $10 million annual cap applies to the income tax credit only and that the bill contains no explicit legislative cap on the sales-tax exemption, though the Secretary of Commerce retains authority to limit approvals for exemptions.

Five proponents gave in-person testimony and several written proponents submitted material; the committee received one written neutral statement. No committee vote was taken at the hearing, and the committee adjourned after questions.

Ending: The bill will proceed through the committee process; the hearing record includes detailed written testimony and requests for comparative research on neighboring states' incentives. No formal committee action was recorded at this session.