09 Apr 2023 Kansas Capitol Review – Adjournment
April 3 – 6 was the final week of the regular portion of the 2023 Kansas legislative session. It was a busy four days of winding down legislative business with dozens of bills to monitor, punctuated by a marathon session of House and Senate floor debate on bills beginning in the morning on Thursday, April 6 and running overnight before adjourning around 4:45 a.m., on Friday, April 7. The legislature passed an adjournment resolution calling them back to Topeka on April 26 to begin a short Veto Session, where it is anticipated that final action will be taken on the omnibus budget and some tax bills.
Water Bank Participation in MYFA
Senate Bill 205 would amend the Kansas water banking act to authorize certain water rights in a water bank to temporarily participate in multi-year flex accounts. The proposed language would address an issue from a Kansas Attorney General’s opinion during the 2022 calendar year. The bill was necessary when the 2022 drought created challenges for water users within GMD5 who had utilized the water bank in prior years and had exceeded their water right’s authorized annual quantity. Those irrigators then filed applications to enroll into a multi-year flex account. After passing the Senate on a vote of 39-0, the House Water Committee amended the bill to remove criteria that a bankable water right must not currently be enrolled in an active MYFA. The amendment would allow a water right to be bankable even if the water right is currently enrolled in a MYFA. The House passed the bill, as amended, 39-0. The Senate concurred with the House amendments, and the bill now goes to Governor Laura Kelly for consideration.
Water Policy and New Reporting Requirements on GMDs
House Bill 2279 would amend the groundwater management district act to place new annual reporting and conservation action plan requirements on the GMDs. Kansas Agribusiness Retailers Association joined other stakeholders in successfully amending the bill in the House to make it more reasonable for the GMDs. The House passed the bill as amended 116-6. The Senate Committee on Agriculture and Natural Resources further amended the bill before passing it out of committee. Find a description of the Senate amendments here. The full Senate passed the bill, as amended, on a vote of 35-5. The bill was placed in a conference committee to discuss the differences between the House and Senate versions. This week, the Senate passed Conference Committee Report on HB 2279 on a vote of 34-6 and the House passed it 116-6. The bill now goes to Governor Laura Kelly for consideration.
State Water Plan Funding
House Bill 2302, as introduced, would have created a new funding mechanism for the state water plan fund (SWPF) by crediting 1.23 percent of state sales tax revenues (approximately $53 million) directly to the fund. The House passed the bill 119-3. The bill directs funds to two new programs for three years: $5M to a water technical assistance fund, and $15M to a water projects grant fund. Before passing it as Senate Substitute for House Bill 2302, the Senate amended the bill to pay off debt on two state reservoirs in fiscal year 2023 using a $52M transfer from state general funds (SGF). The Senate amendments removed the sales tax funding mechanism and replaced it with annual transfer of $35M to the SWPF from SGF. This transfer would be in addition to the $8M the SWPF currently receives from SGF and EDIF, and the $12M in fees collected annually from agricultural and municipal water users – providing for a total SWPF funding of $55M each year for five years. The bill will sunset in 5 years unless it is extended. The bill was placed in a conference committee to discuss the differences between the House and Senate versions. This week, the Senate passed Conference Committee Report on HB 2302 on a vote of bill 38-1, with Senator Tom Holland (D-Baldwin City) as the only opponent. The House passed the bill 122-1, with Rep. Trevor Jacobs (R-Fort Scott) as the only opponent. The bill now goes to Governor Laura Kelly for consideration.
Retailer Collection of Credit Card Fees
Kansas law prohibits the seller or lessor in a retail sales or lease transaction from imposing a surcharge on a person who elects to use a credit or debit card to make the purchase. House Bill 2133 would eliminate this prohibition and allow the imposition of the surcharge. Kansas Grain and Feed Association and Kansas Agribusiness Retailers Association supported the bill which passed the House on a vote of 87-35. The bill was referred to the Senate Committee on Financial Institutions and Insurance which had previously passed out a Senate companion bill Senate Bill 104 favorably. No further action was taken on these bills this year.
Prohibiting Foreign Ownership of Real Property
Senate Bill 283, as introduced, would prohibit the future conveyance of real property in Kansas to “foreign adversaries”, as the term is defined by federal law, beginning on July 1, 2023. This issue is a high priority item of new Kansas Attorney General Kris Kobach, who stood as a proponent to the bill. The Senate Judiciary Committee held a hearing on the bill and amended it before putting the contents of the bill into House Bill 2069, creating Senate Substitute for House Bill 2069. No further action was taken on the bill this year.
Kansas Promise Scholarship Expansion for CDL Training
House Bill 2132 would expand the Kansas Promise Scholarship Act to add new eligible fields of study, including transportation and commercial driver license training. Scholarships could total $8 million this academic school year, with the program likely reaching a statutory cap of $10 million next year as interest and demand for scholarships builds. The House Education Committee amended the bill before passing it out favorably. The full House passed the bill on a vote of 124-0. This week, the bill was placed into Conference Committee Report on SB 123 and passed by both chambers. The bill now heads to Governor Laura Kelly for consideration.
Apprenticeship Tax Credit
HB 2292 would establish a three-year Kansas apprenticeship tax credit to encourage the development of apprenticeship programs by participating businesses. The credit would be up to $2,500 for each apprentice so employed, and the tax credit may be awarded up to 20 apprentices per year. The program would be administered by the Kansas Department of Commerce. Kansas Grain and Feed Association and Kansas Agribusiness Retailers Association joined other stakeholders in support of the measure which passed the House on a vote of 115-7. The Senate amended the bill to place a cap on the amount of the grant provision per year and added a provision that any unused balance in the fund would be transferred to the state general fund. The Senate passed the bill on a vote of 30-7. This week, the bill was placed into Conference Committee Report on HB 2292 and passed by both chambers. The bill now heads to Governor Laura Kelly for consideration.
Third-Party Funded Litigation
Senate Bill 74 would provide for joint liability of costs for third-party funded litigants and also allow for sanctions on third-party funded litigants. The bill would also require certain discovery disclosures and payment of certain costs for nonparty subpoenas. The bill was heard in the Senate Judiciary Committee, but because it has not passed either chamber, it will not likely advance further this session.
Government Competition Property Tax Exemption
On a vote of 24-16, the Senate passed Senate Bill 252 to provide property and sales tax exemptions to certain businesses located in cities where a facility owned or operated by the government competes against an establishment. Businesses qualifying for the exemptions would be limited to child care centers, entertainment businesses, exercise businesses, health clubs, recreation businesses, or restaurants. In order to qualify for the exemptions, the competing government operation would be required to have begun after the business started using the real property for the qualifying purpose. The bill is the latest development in a longstanding debate over whether local governments are competing against the private sector. The language of the bill was amended to narrow its scope and then placed into Conference Committee Report on Senate Bill 8.
Comprehensive Tax Legislation
House Sub for Senate Bill 169 is the legislature’s major tax reduction bill this session, and makes various changes to income, sales, and property taxes. The bill creates a single 5.15 percent individual income tax rate, remove the state sales tax on food, lower the corporate income tax rate, increase the individual income tax standard deduction with a cost-of-living adjustment, remove the social security income tax cliff, lower the bank privilege tax, and increase the amount of appraised value of residential property exempt from the statewide 20 mill school finance levy. The bill decreases state revenues by $300 million in FY 2024, $570 million in FY 2025, and $480 million in FY 2026. On Thursday, the bill passed the House 85-38, and the Senate 24-13. The bill now goes to the Governor for consideration.
State and Local Tax Clarification
House Bill 2465 would clarify the determination of taxable income and the pass through of tax credits to electing pass-through entity owners for purposes of the state and local tax (SALT) parity act. The bill was introduced under the premise that the state department of revenue was not correctly applying the SALT parity act passed last year. The House passed the bill 124-0. The Senate Tax Committee passed out a companion bill in Senate Bill 313. The Tax Conference Committee placed the contents of HB 2465 into CCR on SB 8, which has not yet received final action in the Senate.
Property Tax Valuation Notice and Appeals
House Bill 2002 was introduced to extend reimbursement from the taxpayer notification costs fund for printing and postage costs for county clerks for 2024. The bill would also modify and prescribe the contents of the revenue neutral rate hearing notice. The House passed the bill 114-7. The Senate amended the bill to allow property owners to make payments under protest appeals even if the property owner taxpayer had previously appealed their property valuation through an informal equalization appeal. After passing the Senate 34-6, the bill was sent to a conference committee which added in the contents of around five other bills. On Friday, the Senate passed Conference Committee Report on HB 2002 on a vote of 37-0. However, the House did not take final action on the bill before adjourning on April 7. The legislature may still take final action on the bill during Veto Session on April 26.
Maximum Property Valuation Annual Increase
SCR 1610 would amend section 1 of article 11 of the Kansas Constitution to limit annual increases in real property valuations to 3 percent. The bill was introduced as a means to help control the increase in ad valorem property taxes. The bill would require a ballot question for voters to approve the measure during the next state-wide election. In a vote by the full Senate, the measure failed to garner the two-thirds majority required for passage of a proposed constitutional amendment and did not advance. This week, the Senate introduced SCR 1611, a bill similar to SCR 1610 that would allow a maximum annual valuation increase of 4 percent. The Senate passed the resolution on a vote of 28-11 and it is now with the House. Further action is anticipated when the legislature returns on April 26 for the Veto Session.
Short Line Rail Grant Program
In 2020, the legislature passed the Eisenhower Legacy Transportation Program which included a $15 million, three-year, cost-share grant program for qualified track maintenance and improvements to short line rail and rail siding. Kansas agribusinesses have greatly benefited from this program. This year, in coordination with KDOT, Kansas Grain and Feed Association introduced House Bill 2335 to restructure the Short Line Rail Improvement Fund program to combine it with KDOT’s Rail Service Improvement Fund Program. The bill dedicates $10 million annually from the state highway fund for the program. Under the bill, grain shippers and other owners of rail siding adjacent to short line rail would be able to apply for program funding. The measure passed the House 117-5. The Senate amended the bill and passed it 38-2, with only Senators Alicia Straub (R- Ellinwood) and Mark Steffen (R-Hutchinson) opposing. KGFA joined other shippers in successfully lobbying the legislature to ensure that provisions from SB 271 were not added to the bill. The bill now goes to Governor Laura Kelly for consideration, where it is anticipated that she will sign the bill.
Maximum Train Length and Minimum Set Back on Rolling Stock
Senate Bill 271 would limit the length of trains on any main line or branch line to 8,500 feet and establish a for minimum distance for stored rolling stock of 250 feet from a crossing. While the bill drew opposition from Class 1 rail and rail customers, the Senate Transportation Committee chairman testified as a proponent. The committee amended the bill to: (1) clarify that the 250-foot setback only applies at crossings without electronic warning signals, (2) remove KDOT’s duties under the bill, and (3) sunset the maximum train length provision on July 1, 2027. The Senate passed the bill 27-13, but the House did not hold a hearing on the bill. KGFA joined other shippers in stressing their opposition to the maximum train length provisions of the bill as they would disrupt the rail transportation network and that this must remain a federally regulated issue.
Transmission Delivery Charges on Energy Users
House Bill 2225 was introduced in an attempt to limit Evergy’s direct recovery of costs related to electric public utility transmission projects. The House Utilities Committee passed the bill out with an agreed amendment by Evergy and rate payer stakeholders. As amended, the bill (1) reduces Evergy’s authorized return on equity (ROE) on local transmission projects, (2) sets up a project review process at the KCC, and (3) requires Evergy to submit testimony on competitive rates and impacts on economic development during any rate case. The major consumer concession was allowing Evergy to continue to assess annual increases through its transmission delivery charge (TDC). The KCC estimates the bill will provide ratepayer savings of $40M to $45M over three years. That includes the cumulative impacts of about $10M/year in upfront savings and approximately $2M/year in annual savings from new projects at the lower ROE. The House passed the bill on a vote of 120-1, and this week, the Senate passed the bill on a vote of 37-2. The bill has been presented to Governor Laura Kelly for consideration.
Electric Utility Rates
Kansas has the highest energy rates in our region, and multiple bills have been introduced to address high electric utility rates while ensuring reliable service:
- House Bill 2154 would reform the Kansas Corporation Commission by allowing for the election of commissioners and establishing a utilities regulation division in the office of the attorney general to represent and protect the collective interests of utility customers in utility rate-related proceedings. A hearing was held on the bill, and the Senate Utilities Committee held a hearing on its companion bill, Senate Bill 88. Neither bill advanced this session.
- Senate Bill 68 would allow state energy producers a Right-of-First-Refusal to build out new electric transmission line assets in the state. Renew Kansas, Kansas Grain and Feed Association, and Kansas Agribusiness Retailers Association joined other commercial and residential utility rate payers in opposing the measure during multi-day hearings, arguing that the bill would remove competition from the build process and result in higher electric energy rates. The Senate Utilities Committee advanced the bill out of committee, but the bill has not been brought up for debate by the full Senate. This week, The Iowa Supreme Court upheld a temporary injunction against a similar law in that state finding that the law was likely to be found in violation of Iowa’s state constitution. The bill is likely to be discussed during an energy and utilities interim committee meeting this summer.
Scrap Metal Theft Reduction Act Extension
House Bill 2326 would extend the sunset date on the current scrap metal theft reduction act and clarify that catalytic converters are covered by the act. Kansas Grain and Feed Association, Kansas Agribusiness Retailers Association, and Renew Kansas Biofuels Association joined other affected industries in supporting the measure. Agribusiness groups supported the initial passage of the measure when it was passed five years ago. The House passed the bill 120-1. The Senate amended the bill and passed it 39-1. The House concurred with the Senate amendments and the bill is now headed to Governor Laura Kelly for consideration.
Cotton Bale Secure Load Requirements
HB 2160 would exempt the transport of cotton bales from certain secured load requirements. The House passed the bill on a vote of 121-3. The bill was then amended by the Senate Transportation Committee. The full Senate passed the bill, as amended, on a vote of 40-0. The House concurred with the Senate amendments and the bill is now headed to Governor Laura Kelly for consideration.
State Preemption of Local Plastic Regulations
House Bill 2446 would prohibit cities and counties from regulating plastic and other containers designed for the consumption, transportation, or protection of merchandise. The House amended the bill before passing it this week on a vote of 72-51, which is far short of the 83 votes necessary to override a potential veto from Governor Laura Kelly. The bill did not advance, and further action on the bill this year is unlikely.
State Preemption of Regulation Lawful Products or Services
House Bill 2447 would prohibit cities and counties from banning the sale of products or services otherwise allowed by state law. The House Commerce Committee held a hearing on the bill on March 13. The committee amended the bill to narrow its scope by excluding sales of services from the prohibition and to otherwise limit the prohibition as it relates to sales of products. The bill did not advance, and further action on the bill this year is unlikely.
Motor Carrier Independent Driver Status
House Bill 2020 was introduced to clarify that the employment status of a driver of a motor carrier does not change as a result of the inclusion of safety improvements made to the vehicle. The House passed the bill 122-0. The Senate Transportation Committee amended the bill to make it effective upon publication in the Kansas Register. The full Senate passed the bill, as amended, on a vote of 35-1. The House and Senate placed the bill into Conference Committee Report on HB 2020 before passing the bill and sending it to Governor Laura Kelly for consideration.
House Bill 2401, as introduced, would (1) define the “benefit year” and “temporary unemployment” in the employment security law, (2) require electronic filing of reports for employers with 25 or more employees, and (3) extend the time required for establishment of a new account due to a business acquisition. The House Commerce Committee amended the bill by adding in language from House Bill 2333 that would allow for extensions of temporary unemployment for up to 12 weeks. This week, the House passed the bill, as amended, on a vote of 119-4. It is thought that further action may still be taken on the bill this year through a proviso in the omnibus budget bill.
Workers Compensation Permanent Disability Benefit
On March 29, the Senate Commerce Committee held a hearing on Senate Bill 38, a bill that would increase the maximum Kansas workers compensation benefits payable by an employer for permanent total disability suffered by an injured employee. Under current law, the maximum workers compensation benefit that is payable by an employer to an employee for permanent total disability is $155,000. SB 38 would increase the amount to $350,000. The bill would take effect upon its publication in the Kansas Register. According to the Department of Administration, permanent total disability is paid out over time using an average weekly wage up to the statutory cap. Using the maximum average weekly wage, it would not reach $155,001 in either FY 2023 or FY 2024. It was understood that the bill was intended to initiate conversations between labor and industry and that further action on the bill would not be taken this year.
ADA Website Access Abusive Litigation
S Sub for House Bill 2016 would enact the Act Against Abusive Access Litigation to create a civil action for determining whether litigation that alleges any website access violation under the federal Americans with Disabilities Act (ADA) or similar law constitutes abusive litigation and authorize penalties for such abusive litigation. The House passed the bill on a vote of 122-0. This week, the full Senate debated and amended the bill before passing it on a vote of 33-5. This week, the House concurred with the Senate amendments. The bill is now headed to Governor Laura Kelly for consideration.
Eminent Domain Approval by County Commission
Senate Bill 312 would require the board of county commissioners prior to the exercise of the power of eminent domain by certain public utilities. The Senate Committee on Local Government held a hearing on the bill, where Kansas Farm Bureau and Kansas Livestock Association testified as proponents to the bill along with Representative Carrie Barth (R-Baldwin City) and many private citizens. Standing in opposition to the bill were ITC Great Plains, Polsinelli Energy Practice Group, and Kansas Power Alliance. While the bill is unlikely to advance further this year, it allowed the proponents to place themselves on the record as standing in strong opposition to any expansion of eminent domain powers in the state. In addition, this issue is likely to be discussed during an energy and utilities interim committee meeting this summer.
Prohibiting Mandatory ESG Criteria in State Contracts
As introduced, Senate Bill 291 would enact the Kansas public investments and contracts protection act concerning environmental, social and governance (ESG) criteria, prohibit the state and political subdivisions from giving preferential treatment to or discriminating against companies based on such ESG criteria in procuring or letting contracts, require KPERS fiduciaries to act solely in the financial interest of the participants and beneficiaries of the system, restrict state agencies from adopting ESG criteria or requiring any person or business to operate in accordance with such criteria, and direct registered investment advisers to provide ESG criteria notice to clients and providing for enforcement of such act by the attorney general. The Senate passed the bill 29-11, and the House passed a similar companion bill 85-38. The bill language was placed into Conference Committee Report on House Bill 2100, which passed both chambers and now goes to the Governor for consideration.
Municipal Fees on Vacant Properties
House Bill 2083 would the Kansas vacant property act to prohibit municipalities from imposing any fees or registration requirements on unoccupied commercial or residential property. The bill passed the House on a vote of 87-36. The bill was passed out of the Senate Local Government Committee and, this week, was debated by the full Senate before a motion was made and passed to send the bill back to committee. The bill is unlikely to advance further this session.
HB 2350 would establish the crime of human smuggling and aggravated human smuggling and creates penalties for such activities. The bill passed the House and then was amended and passed by the Senate. The bill was placed into Conference Committee Report on HB 2350 and then passed in both chambers. The bill now heads to Governor Laura Kelly for consideration.
Another Bill We Are Monitoring:
SCR 1606 establishing an initiative and referendum Constitutional Amendment. Did not receive a hearing.