AGO 1989-085.

• Case Date: July 10, 1989
• Court: Kansas

Kansas Attorney General Opinions 1989. AGO 1989-085. July 10, 1989ATTORNEY GENERAL OPINION NO. 89-85Terry D. Hamblin Director of Property Valuation Kansas Department of Revenue Docking State Office Building Topeka, Kansas 66612 Re: Constitution of the State of Kansas--Finance and Taxation--System of Taxation; Classification; Exemption Synopsis: The definitions of "merchant," "manufacturer" and "inventory" in K.S.A.1988 Supp. 79-201m are drafted broadly enough to encompass coal and gas held by a public utility for resale or to use in generating electricity. Therefore, such property is eligible for a tax exemption as merchants' or manufacturers' inventory pursuant to article 11, section 1 of the Kansas Constitution. Cited herein: K.S.A.1988 Supp. 79-201m; 79-213; K.S.A. 79-5a01 et seq.; K.S.A.1988 Supp. 79-3602; K.S.A. 84-9-109; K.S.A. 79-1001 et seq. (repealed, L.1988, ch. 375, § 9); Kan. Const., Art. 11, § 1. * * * Dear Director Hamblin: You request our opinion regarding the classification amendment, Kan. Const., Art. 11, § 1, and certain exemptions found therein. Specifically your questions are as follows:

"1. Is it possible for a public utility as defined by K.S.A.1988 Supp. 79-5a01 to be a merchant and/or manufacturer as defined by K.S.A.1988 Supp. 79-201m?

"2. If yes, is 'gas stored in an underground storage facility' and/or 'coal' held by an electricity generating facility 'inventory' as defined by K.S.A.1988 Supp. 79-201m?

"3. If the answers to questions 1 and 2 are yes, then under Article 11, Section 1 of the Constitution of the State of Kansas (the 'Classification Amendment') are 'merchant's and manufacturer's inventories' owned by a public utility as defined by K.S.A.1988 Supp. 79-5a01 exempt from property taxation?"

You advise that as Director of Property Valuation you are responsible for determining eligibility for exemption of a public utility's merchants' and manufacturers' inventory. K.S.A.1988 Supp. 79-213(n); 79-5a01 et seq. Pursuant to this statutory authority, you have determined that a public utility may be a merchant or manufacturer and that gas stored in an underground storage facility and coal held by an electricity generating facility are inventory and that, therefore, such gas and coal are exempt from property taxes pursuant to article 11, section 1(b)(2) of the Kansas Constitution. You have...