Senate committee trims affordable-housing tax credit, passes House bill 2119 as amended

The Kansas Senate Commerce Committee on a voice vote on March 12 approved an amendment to House Bill 2119 that would eliminate state support for the 4% affordable-housing tax credits while preserving 9% credits, and then voted to pass the bill out of committee as amended.

House Bill 2119, as described to the committee, would discontinue the Kansas Affordable Housing Tax Credit Act on July 1, 2025, with exceptions for allocations already made. The bill also clarifies that the tax credit period and any applicable carry-forward periods continue to apply for allocations that were made, and it provides that no allocation of credit shall be awarded by the Kansas Housing Resources Corporation (KHRC) pursuant to the act after the 2025 Qualified Allocation Plan. The bill previously passed the Kansas House on Feb. 20 by an 85–36 vote.

The amendment, introduced by Senator Owens, “reduces it to only allow for the 9% credits, and stop[s] the funding of the 4% tax credits.” Owens told the committee that the change would reduce the fiscal impact to the state by about 70 percent. Senator Blue seconded the amendment; several senators voiced support, including Senator Reichman, who called it “a nice compromise.”

Senator Titus asked for a reminder about the difference between the 9% and 4% credits; Owens explained that the 4% credit is lower because projects using it typically have tax-exempt bond financing available, while the 9% credit is a larger, standalone federal-style tax credit, both claimed over 10 years. Senator Keyson asked whether the amendment imposed a ceiling or sunset; Owens said it did not impose a new sunset, it only restricts future allocations and would cut roughly 70 percent of the program’s fiscal exposure going forward.

Opponents raised concerns about long-term state spending. Senator Tyson said she was “concerned about our spending in the out years” and said the program creates obligations that could limit future opportunities for tax relief; she described out-year exposures in the bill’s projections and said she would prefer a sunset or cap. Supporters countered that the amendment was preferable to repealing the entire program and that conference committee negotiations could consider caps or other changes.

After the amendment carried, Senator Owens moved that the committee pass HB 2119 as amended; Senator Blue seconded. The committee agreed and passed the bill as amended out of committee.

The bill’s core provisions refer to the Kansas Affordable Housing Tax Credit Act, allocations made by the Kansas Housing Resources Corporation, and an interaction with Section 42 low-income housing tax credit allocations for federal tax credit parity beginning with tax year 2023. The committee did not provide a roll-call tally for the final committee vote on the bill; the House passage record (85–36) was noted in committee testimony.