09 Mar Kansas Legislature Update – Week Nine
With daily news of COVID-19 marching across the country, and concerns of a shortened Kansas legislative session, the pace of legislative activity quickened this week. Committees in the House and Senate each passed out bills on the base budget and on the state’s next transportation plan. Though gone for the weekend, legislators will consider these measures when they return on Monday. Next week will bring more quick work during the final days of activity for non-exempt committees this session.
Here are some of the highlights from this week:
Committees Advance Budget Bills
On Thursday, March 12, the Senate Committee on Ways and Means passed out the FY 2020 and 2021 base budget bill Senate Bill 386. The bill contains appropriations for various state agencies, and includes funding for the State Water Plan Fund.
On Friday, March 13, the House Appropriations Committee passed out the FY 2020 and 2021 base budget bill House Bill 2597. The bill, which contains appropriations for various state agencies, was amended by the committee multiple times. One amendment would limit the regulatory authority of the Kansas Department of Health and Environment from increasing fees it imposes on industries to fund its Bureau of Air Quality. The agency had previously stated its intention to increase these fees on Class I and Class 2 air emitters up to an additional $1.7 million in 2020.
FORWARD Transportation Plan Advances in House and Senate
This week, House (House Bill 2588) and Senate (Senate Bill 375) Committees each amended, and passed out favorably, the KDOT “FORWARD” transportation plan. Each plans will be considered by the respective chamber before heading to a conference committee for final work.
Amendments by the House Appropriations Committee would change the name of the plan from “Forward” to the “Eisenhower Legacy” plan, and do the following:
- Include a $5 million for a new grant program for short line rail and industry siding improvements. This would be a 70/30 cost share grant program.
- Require all legacy T-WORKS projects to be let by 2022, instead of 2023, and prohibit other projects from being let until all T-WORKS projects are let.
- Place sales tax revenue for the transportation plan in a “lockbox”.
- Requires all new bonds issued for the program to be backed by sales tax revenues.
- Requires investment ranges to be established for all six KDOT districts.
- Limit “alternative delivery procurement” methods to those using federal grants.
The Senate Ways and Means Committee amendments to the plan would do the following:
- Protect preservation projects.
- Create additional assurances on the timing and distribution of transportation funds around the state.
- Limiting alternative delivery to projects that cost at least $100M.
- Limiting the use of alternative delivery to three toll projects, in addition to the cap which has been set at up to 5% of the construction projects in the program.
Public Utilities Income Tax Exemption
On Tuesday, March 10, the House Committee on Utilities held a hearing on Senate Bill 126. The bill would exempt certain public utilities from paying an income tax and also exclude the utility from factoring the cost of this income tax in setting their utility rates. The income tax exemption under the bill would be a permanent exemption. The purpose of the bill is to lower utility rates and make Kansas more competitive. According to conferees on the bill, the measure could save over 2 million Kansas residential and industrial rate payers between $40 and $50 million every year in lower energy rates. The bill, which previously passed the Senate on a vote of 40-0, was supported by was supported by the Kansas Grain and Feed Association, Kansas Agribusiness Retailers Association, and Renew Kansas Biofuels Association.
Utility Securitization Bill Receives Hearing
On Thursday, March 12, the Senate Utilities Committee held a hearing on SB 437, a bill which would create the Kansas Electricity Bill Reduction Bonds Act (K-EBRA). The bill would give the Kansas Corporation Commission the authority to authorize the issuance of ratepayer-backed securitized bonds in order to finance the retirement of existing generating assets in the state, as well as any replacement generation facilities necessary to replace the lost capacity and energy from the retired generation facility. The overall goal of the bill would be to allows for the lowering of utility rates by Kansas rate payers. Proponents of the bill included the Kansas Sierra Club, Kansas Industrial Consumers Group, and Climate and Energy Project. Opponents of the bill included the Kansas Corporation Commission, and Every. Opponents argued that they supported the idea of securitization, but this specific bill needs more work.
Eminent Domain Extended to CO2 Pipelines
On Tuesday, March 10, the Senate Utilities Committee held a hearing on SB 395, a bill which would allow the exercise of eminent domain for the purpose of conducting carbon dioxide (CO2) in pipelines. Kansas law does not currently allow CO2 pipelines to be built expeditiously like it does for oil, natural gas, and water. SB 395 would add eminent domain for these CO2 pipelines. This would support the Kansas oil industry. Proponents of the bill included Kansas Geological Survey and Renew Kansas Biofuels Association. Caron Dioxide Capture, Utilization and Storage (CCUS) has been studied in Kansas and regionally. CCUS projects provide the desirable environmental benefit of reducing greenhouse gas emissions by securely storing CO2 underground, as well as producing trapped oil more efficiently and improving Kansas oil production. The IEA estimates a large potential for geologic storage. When an oil field is flooded with CO2, a large portion of the CO2 remains underground. Kansas is able to store up to 750 megatonnes of CO2. The Federal Tax incentive 45Q was expanded in 2018, which provides a tax incentive for CO2 injection/sequestration. According to Kansas Geological Survey, Occidental Petroleum (Oxy) has announced its intent to lay a pipeline to connect CO2 sources in the northern states and Midwest to oilfields in West Texas. Oxy will use the CO2 to stimulate oil production while securing long-term storage. CO and OK have shown interest in becoming a CO2 hub for such a pipeline, so there is an urgency to bring local projects online before these planned CO2 pipeline routes bypass Kansas. Kansas oil fields are amenable to CO2 injection, but Kansas lacks sufficient sources of CO2 for cheap implementation. CO2 delivered to oil fields in Kansas could increase Kansas oil production by 10 million barrels of oil per year (28% increase).
Underground Injection Program Fees
On Monday, March 9, the House Agriculture Committee held a hearing on SB 152. The bill, which authorizes the secretary of health and environment to collect underground injection control program fees and redirect water well license program fees, had previously passed the Senate on a vote of 35-4.
KDHE Chemical Spill Notification Bill
On Monday, March 9, the House Agriculture Committee held a hearing on SB 153. The bill would authorize KDHE to establish reportable threshold quantities of chemical spills in rules and regulations. The bill would also allow the agency to provide technical guidance during a clean-up response, and permit cost-recovery from the responsible party for any state expenses for response to a release. The bill would also provide KDHE the ability to levy penalties for illegal dumping, the refusal of the responsible party to clean up a release, or the lack of timely reporting of a release. Stakeholders – including, Kansas Grain and Feed Association, Kansas Agribusiness Retailers Association, and Renew Kansas Biofuels Association – worked with the agency to amend the bill to limit the effect of agriculture chemicals, and limit the total amount of civil penalty authority.
Property Tax Relief Following Natural Disaster
On Thursday, March 12, the House Tax Committee passed HB 2517 out of committee favorably. The bill would allow a property tax abatement following a Governor-declared natural disaster when that natural disaster causes substantial or total loss to the property. Current law provides the tax abatement to residential property owners. Following a request by the Kansas Grain and Feed Association, the bill was amended to extend the tax abatement to owners of commercial property as well. The bill now moves to the full House for consideration.
Property Tax Bill Action
- On Wednesday March 11, the House Tax Committee held a hearing on SB 262, a bill which would change the time in which aggrieved parties may request a full and complete opinion from the State Board of Tax Appeals (BOTA) from 14 days following the receipt of a summary decision from BOTA to 21 days following service of a summary decision from BOTA. Service would be defined according to the Kansas Administrative Procedures Act (KAPA).
- On Wednesday March 11, the House Tax Committee held a hearing on SB 265, a bill which would require the State Board of Tax Appeals (SBOTA) to serve orders and notices via electronic means to parties and their attorneys who have requested and consented to such electronic service. Any service by electronic means would be deemed complete upon transmission. Kansas Grain and Feed Association, Kansas Agribusiness Retailers Association, and Renew Kansas Biofuels Association were proponents to the bill.
- On Wednesday, March 11, the Senate Tax Committee held a hearing on SB 457, a bill which would require the county appraiser to utilize the U.S. Department of Agriculture Natural Resources Conservation Service’s web soil survey dated September 16, 2019, for identification and delineation of soil map units for land devoted to agricultural use. Proponents of the bill included the Kansas Association of Counties. The Kansas Grain and Feed Association, Kansas Agribusiness Retailers Association, and Renew Kansas Biofuels Association joined other Ag stakeholders in submitting Neutral testimony identifying concerns with the proposal.
Sales Tax Exemptions Given a Look
On Thursday, March 12, the House Tax Committee held a hearing on HB 2727, a bill which would require the Legislature to repeal, or suspend, an existing sales tax exemption of equal or greater fiscal liability in order to enact any new sales tax exemption that goes into effect after July 1, 2021. In addition, the bill would require sales taxes to be assessed and collected on various personal services, such as haircuts, nail services, tattoos, facials, diet services, hair removal, ear piercing, hair replacement, tanning salons, massage, etc.
Payroll Withholding Tax Reviewed
On Tuesday, March 10, the House Tax Committee passed House Bill 2722 out of committee favorably. This bill would exempt employees who perform employment duties in more than one state from income tax withholding unless the earnings occurred in the state of the employee’s residence, or in a state that the employee performed employment duties for more than 30 days during the calendar year.
New Kansas Promise Scholarship Act
On Monday, March 9, the Senate Committee on Education held a hearing on HB 2515, a bill which would establish the Kansas Promise Scholarship Act to provide scholarships for students to attend community or technical colleges, the Washburn Institute of Technology, or any two-year associate degree program or technical certificate program offered by a private postsecondary educational institution that has its primary location in Kansas. The bill, which passed the House on a vote of 116-6, was supported by the Kansas Grain and Feed Association, Kansas Agribusiness Retailers Association, and Renew Kansas Biofuels Association.
Vocational Training Liability Bill Advances
On Thursday, March 12, the Senate Commerce Committee held a hearing on House Bill 2507, and then passed the bill out favorably. This bill limits a business’ exposure to liability from injury to a student participant in a school-sponsored vocational programs at the business’ worksite. The intent of the bill is to cover students during these vocational training activities in the same manner as they would be covered during school-sponsored sports activities. The bill, which now moves to the full Senate for consideration, is supported by the Kansas Grain and Feed Association, Kansas Agribusiness Retailers Association, and Renew Kansas Biofuels Association.
Net Operating Loss Carry Forward Bill Advanced
On Wednesday, March 11, the House Committee of the Whole passed HB 2490 on a vote of 118 to 2. This bill would extend the net operating loss carried forward period to 20 years (currently 10 years) beginning in tax year 2018. The bill now moves to the Senate for consideration.
High Performance Incentive Program Amendments
On Friday, March 13, the Senate Commerce Committee held a hearing on HB 2702, a bill which would decouple the High Performance Incentive Program tax credit from the requirement to participate in either the Kansas Industrial Training (KIT) or Kansas Industrial Retraining (KIR) workforce training programs. The Division of the Budget states the bill would give the Department flexibility in using dollars from both the KIT and KIR programs. It is assumed that there would be an increase in those who qualify for the HPIP investment tax credit since there is no longer a training requirement and only the wage standard requirement. The Department of Commerce determines who would be qualified for the High Performance Incentive Program.
Resolution on Rattlesnake Creek Sub-Basin
On Tuesday, March 10, the House Committee on Agriculture heard and then took favorably action on SCR 1614. This Resolution supports Kansas farmers in the Rattlesnake Creek sub-basin in their ongoing effort to protect their water rights and livelihood through a collaborative solution to the region’s water impairment issue. Multiple agricultural stakeholders testified in support of this measure, including the Kansas Grain and Feed Association, Kansas Agribusiness Retailers Association, and Renew Kansas Biofuels Association. The resolution now moves to the full House for consideration.
Multi-Year Flex Account for Water
On Wednesday, March 11, the House Agriculture Committee held a hearing on SB 270, a bill which allows water rights that were certified after 2009 to be placed in multi-year flex accounts, or MYFA’s. These tools, which were initially passed in 2011, allow farmers to conserve water in wet years to be used in more dry years over a five year period.
Underground Storage Tank Funds
On Thursday, March 12, the House Committee on Agriculture held a hearing on Senate Bills 285, 286 and 287. The Committee took final action on the bills, placed the contents of SB 286 and SB 287 into House Substitute for SB 285, and then passed House Sub for SB 285 out of committee favorably. Kansas Grain and Feed Association, Kansas Agribusiness Retailers Association, and Renew Kansas Biofuels Association were proponents. As amended, House Sub for SB 285 would: extend the existence of the UST redevelopment fund and compensation advisory board to 2032; amend the Kansas storage tank act by extending the sunset of the aboveground fund and the underground fund and increase the maximum reimbursement; and, amend the Kansas storage tank act by extending the expiration of certain reimbursement provisions to 2030 and increase the underground storage tank replacement reimbursement maximum.
Broadband Deployment Grant Program
On Wednesday, March 11, the Senate Utilities Committee held a hearing on HB 2618, a bill which would establish the state broadband deployment grant program in the department of commerce to encourage the deployment of broadband in the state. The bill was introduced following multiple meetings of a legislative broadband task force in 2019. Funding for this cost-share grant program would be included in KDOT’s transportation plan. The bill had previously passed the House on a vote of 120-5.
Local Government Consolidation Bill
On Tuesday, March 10, the Senate Committee on Ethics, Elections and Local Government held a hearing on House Bill 2510. The bill would establish a procedure for a city or county to assume the powers, responsibilities, and duties of any special district located within the city’s corporate limits or county’s boundaries and dissolve such a special district if approved by a joint resolution adopted by the city or county and the special district. The bill was supported by the Kansas Grain and Feed Association, Kansas Agribusiness Retailers Association, and Renew Kansas Biofuels Association. On Thursday, the Committee passed the bill out favorably.
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