Panel backs rural investment tax credit proposal, with administrative clarifications urged
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Summary
House Bill 25-41 would create a Kansas Rural Business Growth tax credit program to certify private investment in rural funds, capped at $7.5 million per year in insurance premium credits; supporters said it channels capital to underserved rural businesses, while the Department of Commerce urged clearer rural definitions and stronger administrative safeguards.
A House committee on Feb. 20 heard proponent and neutral testimony on House Bill 25-41, which would establish a Kansas Rural Business Growth Program Act to attract private capital to rural communities by certifying investments that generate insurance premium tax credits.
The reviser summarized the bill: rural funds would apply to the Department of Commerce for certification; a $5,000 nonrefundable application fee would apply; certifications could be granted or denied within the department’s statutory review window; total credits would be limited to $7.5 million per year; credits would be nonrefundable, nontransferable and may be carried forward up to five tax years; the department may recapture credits if investments are not made or maintained.
Proponents, including Advantage Capital and Sutherland Capital, said similar programs in other states raise substantial private capital (examples cited: $50 million vehicles) and deploy that capital into rural businesses that otherwise cannot access growth financing. Alex Stepanek (Advantage Capital) said the program aims to fill capital gaps for capital‑intensive rural manufacturers and other small firms.
The Kansas Chamber and private investors supported the idea as a rural-focused alternative to other tax credits. Eric Stafford of the Kansas Chamber suggested pairing or sequencing this program with other incentive reforms under consideration.
Commerce officials (Joshua Jefferson, deputy secretary) said the department is neutral but recommended a number of changes to protect program goals: define rural area thresholds (recommended 50,000 or fewer population using 2020 census data), ensure at least 80% of investments benefit USDA-designated rural areas (a 20% carve-out for targeted urban investments is common), guard against concentration of investment where one business could receive a large share, and increase administrative capacity (the department requested two additional FTEs and asked for a 60‑day review period rather than 30). Jefferson warned that, as drafted, the bill’s broad discretion over what qualifies as "beneficial" might concentrate capital in larger regional hubs instead of small high-need communities.
What happens next: The committee received proponent and neutral testimony and asked technical follow-ups; the Department of Commerce offered to provide further detail on administrative costs and rural definitions. No committee vote was taken at the hearing.
