01 Mar 2021 Kansas Capitol Review – Week Seven
Week Seven of the Kansas Legislative Session
This week marked the close of hearings on most bills in their chamber of origin. Next week is the Turnaround Day for bills, which means that the House and Senate will be busy most of the week with floor debate on bills that were advanced favorably from Committees. Any bill that is not passed by the full House or Senate will be dead for the year, unless it was introduced in one of a few select committees. This week was filled with high-profile issues, to include: the introduction of a constitutional amendment on executive agency regulatory powers; a legislative study report indicating up to $600 million in fraudulent payments from our state unemployment security fund last year; a proposal to prohibit businesses from requiring employees to receive vaccines; legislative discussion of the February 2021 natural gas price spikes of more than 300 percent; hearings on bills amending the Governor’s authority under the Kansas Emergency Management Act; and, the signing by Governor Kelly of a low-interest loan economic development bill.
Natural Gas Price Spike Discussed, Relief Bill Introduced
This week the Senate Utilities Committee received a briefing from the utilities industry on the issue of the natural gas price spike this month. Beginning after working hours on the evening of Friday, February 12, 2021, as a historically cold polar vortex began to settle over the Midwest, natural gas prices began to sharply increase. The increase continued over the weekend, ratcheting up more than 350 times the normal price $3/unit. This occurred after the municipalities had already locked in at index price plus 5-10 cents. They indicated that, although natural gas production did come to a halt for a couple of days due to the weather in certain areas, this was not the cause for most of the price hike. On Friday, a bill was introduced in the House Appropriations Committee to provide a tool to municipal utilities to shield their customers from the gas price hike. The bill would allow the municipalities to release 10-year bonds to help pay their gas bill over time. It was stated that one city in Kansas saw a monthly gas bill of more than $5.5 million, when its usual bill this time of year was around $110,000. Earlier this week, Governor Laura Kelly submitted a letter to the Federal Energy Regulatory Commission (FERC) urging it to take all necessary and possible steps to investigate the causes of the system failures during the recent extreme-weather event in Kansas and protect Kansans from natural gas and electricity price surges resulting from increased demand. Kansas Corporation Commission (KCC) Chair Andrew French, Commissioner Dwight D. Keen, and Commissioner Susan K. Duffy also signed onto the letter.
Associations Hold Virtual Meetings with Kansas Congressional Delegation
This week, staff and board members of the Kansas Agribusiness Retailers Association and Kansas Grain and Feed Association joined partners with Ag Retailers Association in virtual meetings with members of the Kansas Congressional Delegation and staff. Members shared priorities with our delegation, including: protecting U.S. production acreage; our need to continue to allow agribusiness tools such as pesticides, fertilizer, and biotechnology; the need for enhanced rural infrastructure including broadband, and hard assets such as roads, bridges and water infrastructure; reasonable regulations from federal agencies; common sense immigration reform; and a discussion on how to address the recent natural gas shortage and historic price spikes. Throughout the conversations, it was emphasized that KARA and KGFA are resources for our Congressional delegation to use when making informed decisions on agriculture policy.
Kansas Emergency Management Act (KEMA) Revisions
This week, both the House and Senate Judiciary Committees held hearings on bills which would amend the Governor’s powers under the Kansas Emergency Management Act when responding to a pandemic or natural disasters. House Bill 2416 and Senate Bill 273 would modify the procedure for declaring and extending a state of disaster emergency, limiting powers granted to the governor during a state of disaster emergency, authorizing the legislative coordinating council and the legislature to take certain action related to a state of disaster emergency, and prohibiting the governor or the state board of education from closing private schools during a state of disaster emergency. Find more details, Here.
Unemployment Fraud Audits Show Conflicting Reports
On Wednesday, February 24, legislative auditors announced their estimate of $600 million in fraudulent unemployment payments made during 2020 and the first two months of 2021. However, the Kansas Department of Labor challenged that report with its own estimate of $290 million in fraudulent payments. The legislative auditors’ estimate was made using the 157,000 potentially fraudulent cases and finding them to be 24% of all claims paid out in 2020. That rate was then used on the total state and federal benefits paid out in 2020. The department asked the auditors to withdraw their estimate, stating that the process did not consider the variation between state and federal unemployment programs or their operations during the pandemic. Legislative auditors said they stand by their estimate until further data is brought forward. Both the House and Senate Commerce Committees have continued hearings this week on bills (House Bill 2196 and Senate Bill 177) addressing this issue. The bills would hold Kansas employers harmless for fraudulent unemployment payments, and would use money from either the state general fund, or federal CARES act funding, to reimburse the Kansas’ Unemployment Insurance Trust Fund. The actual amount to be transferred from SGF would be determined following the certification of all fraudulent claims.
Governor Kelly signs Economic Recovery Linked Deposit Loan Program
On Friday, Governor Kelly signed Senate Bill 15, creating a new Economic Recovery Linked Deposit Loan Program for businesses in response to the economic downturn caused by the COVID-19 pandemic. This 10-year program, which will be administered by the office of the State Treasurer, will make up to $60 million available for low-interest (2% below market rate) loans to business. Renew Kansas Biofuels Association joined with other stakeholders in supporting the legislation.
Constitutional Amendment on Agency Regulations Announced
This week, Attorney General Derek Schmidt and GOP statehouse leadership announced a proposed constitutional amendment that would give the Legislature the power to veto administrative rules and regulations. According to Schmidt, the proposed constitutional amendment is intended to give the Legislature “real and meaningful oversight over how regulatory agencies use the power entrusted to them by law.” Rules and regulations of state agencies have the force and effect of law. Currently, in Kansas, the Legislature does not have the lawful authority to veto state agency regulations. The proposed constitutional amendment, if approved by two-thirds of the Legislature, would still need to be approved by Kansas voters during the November 2022 election.
Employment Vaccine Bill
This week, the Senate Commerce Committee held a hearing on Senate Bill 213, which would prohibit employers from mandating vaccinations for their employees. Nursing home facilities in other states have required employees to get the vaccine because of their work with high-risk individuals. Senator Mark Steffen, R-Hutchinson, who authored Senate Bill 213, has framed it as a way of preserving the decision-making process for individual employees. At least 23 states have considered similar requirements, although none have advanced in the legislative process. Kansas may be the first state to impose such a requirement through this bill. Both Governor Kelly and the Kansas Chamber have recorded their opposition to this legislation, stating that this legislation is unnecessary.
Net Operating Loss Bill Advanced
This week, the House Tax Committee amended, and passed out favorably, House Bill 2239. As amended, the bill would allow Kansas income taxpayers to carry forward net operating losses, indefinitely, beginning with losses incurred in tax year 2018. The bill will allow would taxpayers to better account for business expenses and remove a competitive disadvantage for job creation and capital investments in Kansas. Kansas Grain and Feed Association, Kansas Agribusiness Retailers Association, and Renew Kansas Biofuels Association joined other stakeholders in supporting the bill.
Employer Sponsored Retirement Plans
This week the Senate Tax Committee held a hearing on Senate Bill 46, a bill which would allow the amounts received by retired individuals under employer-sponsored retirement plans to be subtracted from Kansas income tax income beginning in tax year 2021. The bill was amended to include all retirement funds, not just employer-sponsored, which increased the bill’s fiscal note to over $213 million. The bill passed favorably from the committee, as amended.
Business Liability Exemption for Work-Based Learning
On Monday, February 22, the House Commerce Committee held a hearing on House Bill 2351, a bill which would exempt any business that accepts a secondary student in a work-based learning program from certain claims arising from a student’s negligent act as a result of participating in the program at the business or work site. Except for incidents arising from gross negligence or willful misconduct, a student’s school district would be solely responsible for civil liability for these claims. The bill would allow school districts to purchase insurance contracts to insure against liability claims and increase school districts’ exposure to liability for students participating in work-based learning programs. The bill was supported by multiple business interests, including: Kansas Grain and Feed Association, Kansas Agribusiness Retailers Association, Renew Kansas Biofuels Association, Kansas Cooperative Council, and the Kansas Chamber.
State Energy Plan and Task Force Bill
On Thursday, February 25, the House Utilities Committee took final action on House Bill 2381, a bill which would establish a state energy plan with stated energy objectives. The bill would also create a new energy task force made up of three House Utilities Committee Members, three Senate Utilities Committee members, and 10 industry members of which Renew Kansas Biofuels Association was granted a seat. This task force would develop the state energy plan to accomplish the statewide strategies defined by the bill. Renew Kansas supported the bill and proposed an amendment to include reference to biofuels in a section concerning electric vehicle infrastructure. The amendment was adopted and the bill was passed favorably from committee.
Property Tax Bills
The Senate Tax Committee passed SB 23 out favorably. This bill would allow the owner of property that has been destroyed or substantially destroyed by a declared disaster to apply to the county commission for a property tax abatement or credit. The bill was supported by Kansas Grain and Feed Association, Kansas Agribusiness Retailers Association, and Renew Kansas Biofuels Association.
The Senate Tax Committee heard, and passed out favorably, SB 98. This bill would ensure that, in a hearing before a Kansas District Court, the county retains the burden of proof on the county appraiser’s valuation and classification. The bill also extends the time a state board of tax appeals member may continue to serve after such member’s term expires. In addition, the bill would allow the Governor to temporarily appoint former board members as necessary. Kansas Grain and Feed Association and Renew Kansas Biofuels Association were proponents to the bill.
The Senate Tax Committee heard, and passed out favorably, SB 119. The bill, explained in greater detail Here, includes many changes to the Kansas property tax system that were included in a handful of bills last year – all of which had been passed unanimously by the Senate. Kansas Grain and Feed Association and Renew Kansas Biofuels Association testified as proponents.
The Senate Tax Committee heard, and passed out favorably, SB 72. Beginning July 1, 2022, the bill would require appraisal courses necessary to qualify for the registered mass appraiser designation, and all continuing education courses, to be approved by the Real Estate Appraisal Board. The bill would require the Director of the Property Valuation Division at the Department of Revenue to only accept appraisal courses approved by the Real Estate Appraisal Board as alternatives to the courses required to be conducted by the Director. Kansas Grain and Feed Association, Renew Kansas Biofuels Association, and Kansas Agribusiness Retailers Association were proponents.
The House Tax Committee held a hearing on House Bill 2272, a bill which would amend Kansas property tax law to ensure that taxes paid under protest are not budgeted for expenditure by local taxing authorities. The bill would prohibit a county treasurer from distributing any portion of a tax payer’s residential or commercial property taxes when those taxes exceed the preceding year’s taxes (by $500 for residential, and $5,000 for commercial), and those taxes are paid under protest. The bill requires the escrowing of those taxes during protests concerning proper classification and valuation. These protest payments would be placed into an escrow account until such time as the tax appeal is final. Proponents argued that the bill represents a reasonable and necessary change to the current property tax system. The bill, which was supported by Kansas Grain and Feed Association, Kansas Agribusiness Retailers Association, and Renew Kansas Biofuels Association, will be taken up for action following legislative turn around.
Bill Removes Secured Load Requirements for Forage
On Tuesday, February 23, the Senate Committee on Agriculture took final action on Senate Bill 89, a bill that would amend existing law to exempt trucks, trailers or semi-trailers hauling agricultural forage commodities from the place of production to storage or market from the secured loads statute. The bill would not exempt hay bales or other packaged/bundled forage commodities from being secured for transport. The bill passed favorably and was placed on the Senate consent calendar.
Asbestos Remediation Fund Bills Advanced
This week, House and Senate Committees heard testimony, and passed out favorably, bills which would establish an asbestos remediation fund within the Kansas Department of Health and Environment. The bills (Senate Bill 261 and House Bill 2203) would allow the department to retain fees collected for the Kansas asbestos control program, and would end an historic practice of annually transferring money from the – unrelated – Air Quality Fee Fund to cover the asbestos program budget. This transfer from the Air Quality Fee Fund to the asbestos program was viewed by industry as an inappropriate use of fee funds. For that reason, Kansas Grain and Feed Association, Kansas Agribusiness Retailers Association, and Renew Kansas Biofuels Association testified in support of the legislation.
Underground Petroleum Storage Tank Funds Bill Approved
This week, the House passed Senate Bill 27 on a final action vote of 123-0. This bill extends the sunset on the state’s underground petroleum storage tank (UST) fund and redevelopment fund. These funds, managed by the Kansas Dept. of Health and Environment, can be utilized by fuel retailers when replacing single-walled fuel storage tanks with double-walled tanks, and when remediating petroleum from soil. The bill extends the life of the funds, and increases the maximum fund reimbursement. Kansas Grain and Feed Association and Kansas Agribusiness Retailers Association supported the bill.
Kansas Promise Scholarship
On Tuesday, the Senate Education Committee passed out Substitute for Senate Bill 43. This bill would create the Kansas Promise Scholarship Act. Administered by the Board of Regents, the Act would make this new scholarship available to students attending any Kansas community college, technical college, or two-year associate degree program or career and technical education program offered by a private postsecondary educational institution accredited by the Higher Learning Commission with its primary location in Kansas. Kansas Grain and Feed Association, Kansas Agribusiness Retailers Association, and Renew Kansas Biofuels Association testified as proponents on the House companion bill House Bill 2287.
Credit Card Surcharge Bill
On Monday, the House Tax Committee held a hearing on House Bill 2316, a bill which would remove the current prohibition on sellers from assessing a surcharge to customers that use a credit or debit card to make a purchase. Kansas is now only one of four states that prohibits retailers from charging such a surcharge. Proponents included the petroleum and convenience store association, Kansas Restaurant and Hospitality Association, and others.
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