31 Mar 2023 Kansas Capitol Review – Week 12
The House and Senate debated dozens of bills over three days this week at the Kansas statehouse. A few bills received final approval from both chambers and are on their way to the Governor, but most of the bills still being debated will be referred to conference committees next week to discuss their potential content and passage. The legislature will continue its work through Thursday, April 6, before taking its first adjournment. Also, this week, the Governor signed four mostly non-controversial bills. There is much work left to be done for lawmakers as they deliberate on bills concerning the state budget, rail infrastructure, personal and commercial tax policy, public health, and much more.
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. In a Senate Agriculture Committee hearing, Big Bend GMD5 testified that the proposed language in Section 1 would address an issue from a Kansas Attorney General’s opinion during the 2022 calendar year, and that language in Section 2 of the bill worked to partially address the issue from the AG’s opinion. 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 held a hearing on the bill. During the hearing, the Kansas Dept. of Agriculture testified in support, indicating that the bill would allow for a one-time fix for irrigators enrolled in the Central Kansas Water Bank by allowing them to enroll unused portions of their authorized water into a multi-year flex account. Big Bend GMD#5 also testified as a proponent. 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. This week, the House passed the bill on a vote of 39-0. Next week, the bill will be returned to the Senate where the chamber can either concur with the House amendments or refer the bill to a Conference Committee of members of the House Water Committee and the Senate Committee on Agriculture and Natural Resources.
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. This week, the full Senate passed the bill, as amended, on a vote of 35-5. The bill will now be returned to the House where the chamber is likely to not concur with the Senate amendments and then refer the bill to a House and Senate Conference Committee for debate on the final contents of the bill.
State Water Plan Funding Bill
House Bill 2302, as introduced, would enhance funding for the state water plan fund by crediting 1.23 percent of current state sales tax revenues (approximately $53 million) directly to the fund. The bill would also modify the distribution of revenue into the fund and create a water technical assistance fund and a water projects grant fund for water infrastructure projects. The dedicated state sales tax revenue would be added to the current fees collected from agricultural and municipal water users. The bill would sunset in 5 years. As introduced and passed by the House, the bill would also direct certain state water plan funds to two new programs for three years: $5M to a water technical assistance fund, $15M to a water projects grant fund, and at least $15M to retire debt on two state reservoirs. The House passed the bill 119-3. The Senate Committee on Agriculture and Natural Resources further amended the bill before passing it out favorably as Senate Substitute for House Bill 2302. The Senate amendments to the bill would pay off the reservoir debt up front in fiscal year 2023 using state general funds rather than state water plan funds. The amendments also removed the sales tax funding mechanism for the state water plan and replaced it with $35M annual transfers from state general funds to the state water plan each year for five years. This week, the full Senate passed the bill on a vote of 39-1, with Senator Tom Holland (D-Baldwin City) as the only opponent. The bill will now be returned to the House where the chamber is likely to not concur with the Senate amendments and then refer the bill to a House and Senate Conference Committee to debate its final contents.
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.
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. These bills may be considered in a House and Senate Financial Institutions Conference Committee next week.
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. The bill was not passed by the full Senate, and because House Bill 2069 is not an “exempt” bill, it is unlikely to advance further this session.
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. On March 29, the full House passed the bill on a vote of 124-0. Because the bill has passed at least one chamber, it can be considered by a Conference Committee of members of the House and Senate Education Committees.
Apprenticeship Tax Credit Act
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 Commerce Committee 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. This week, the full Senate passed the bill on a vote of 30-7. Next week, the bill will be returned to the House where the chamber can either concur with the Senate amendments or refer the bill to a House and Senate Commerce Conference Committee to debate the bill’s final contents.
Comprehensive Tax Legislation
This week, the House amended Senate Bill 169 as House Substitute for Senate Bill 169 and then passed the bill favorably on a vote of 94-30. The bill – estimated to reduce taxes by around $500 million in state fiscal years 2024, 2025, and 2026 – makes various changes to state sales tax, income tax, and property tax. The bill creates a flat percentage individual income tax, removes the state sales tax on food and food ingredients, lowers the corporate income tax rate, increases the individual income tax standard deduction, increases the residential property tax exemption, removes the social security income tax cliff, and lowers the bank privilege tax. The Senate had previously passed three separate tax bills addressing these issues that, together, would have provided more than $1.1 billion in tax reductions. House Sub for Senate Bill 169 – the House’s response to the Senate tax bills – will now be returned to the Senate, where the chamber will likely refer the bill to a House and Senate Tax Conference Committee to debate its final contents.
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 SALT parity act. The bill was introduced under the premise that the state department of revenue was not correctly applying the state and local tax (SALT) parity bill that was passed last year. This week, the House passed the bill on a vote of 124-0, and the bill was advanced to the Senate. The Senate Tax Committee has already considered a Senate companion bill in Senate Bill 313, and passed the bill out of committee favorably. Both bills will likely be discussed further in a House and Senate Tax Conference Committee.
Property Tax Valuation and Notice
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 on a vote of 114-7. The Senate Tax Committee amended the bill and then passed it out of committee. The full Senate Committee further 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. The Senate passed the bill, as amended, on a vote 34-6. The bill now returns to the House, where the chamber will likely refer the bill to a House and Senate Tax Conference Committee to debate its final contents.
Maximum Property Valuation Annual Increase
SCR 1610 was introduced by Senator Caryn Tyson (R-Parker), Chair of the Senate Committee on Assessment and Taxation. The resolution would amend section 1 of article 11 of the Kansas Constitution to limit annual increases in real property valuations to no more than 3 percent. The bill was introduced as a means to help control the increase in ad valorem property taxes. If passed, the bill would have required a ballot question for voters to approve the measure during the next state-wide election. In a vote by the full Senate this week, however, the measure failed to garner the two-thirds majority required for passage of a proposed constitutional amendment and will not advance further this year.
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. In 2020, 2021, and 2022 the Kansas Dept. of Transportation (KDOT) set aside a percentage of the $5 million program funds specifically for rail siding projects. Kansas agribusiness infrastructure has 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 makes it easier to administer the cost-share grant program and would dedicate $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. KGFA joined Renew Kansas Biofuels Association, Kansas Agribusiness Retailers Association, and the Kansas Cooperative Council in supporting the measure which passed the House 117-5. The Senate Transportation Committee made a technical amendment to the bill before, and this week, the full Senate passed the bill on a vote of 38-2, with only Senators Alicia Straub (R- Ellinwood) and Mark Steffen (R-Hutchinson) opposing. Next week, the bill will be returned to the House where the chamber can either concur with the Senate amendment or refer the bill to a Conference Committee of members of the House and Senate Transportation Committees. If the bill is referred to a conference committee, language from other transportation bills could be amended in.
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. During the Senate Transportation Committee hearing on the bill, the committee chairman testified as a proponent. There was significant committee discussion on whether, and to what extent, this area of law might be preempted by federal regulations. The committee amended the bill to: (1) clarify that the 250-foot setback only applies at crossings without electronic warning signals, (2) remove the Kansas Dept. of Transportation duty to enforce the requirements of the bill, and (3) sunset the maximum train length provision on July 1, 2027. This week, the Senate passed the bill on a vote of 27-13. Because it has passed at least on chamber, the bill can be discussed in a House and Senate Transportation Conference Committee where, if the House agrees, then language from SB 271 could be included into a different bill in conference. It is understood that House leadership is not supportive of the maximum train length provisions of the bill. The bill continues to draw opposition from Class 1 rail and rail customers.
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 now goes to the Governor for consideration.
Government Competition Property Tax Exemption
This week, 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. Because the bill has passed at least one chamber, it can be considered by a Conference Committee of members of the House and Senate Tax Committees.
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. Because neither chamber has passed the bill, it will not likely advance further 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 and will not likely advance further this session. 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.
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.
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 Judiciary Committee amended the bill with technical amendments. The full Senate passed the bill, as amended, on a vote of 39-1. Next week, the bill will be returned to the House where the chamber can either concur with the Senate amendments or refer the bill to a Conference Committee of members of the House and Senate Judiciary Committees to debate the bill’s final contents.
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. Next week, the bill will be returned to the House where the chamber can either concur with the Senate amendments or refer the bill to a House and Senate Conference Committee to debate the bill’s final contents.
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 has been referred to the Senate Commerce Committee for consideration. Because the bill has passed at least one chamber, it can be considered by a Conference Committee of members of the House and Senate Commerce Committees.
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 non-concurred with the Senate amendments to the bill and then sent the bill to a Conference Committee of members of the House and Senate Transportation Committees.
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. The bill has advanced to the Senate Commerce Committee. Because the bill has passed at least one chamber, it can be considered by a Conference Committee of members of the House and Senate Commerce Committees.
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. Next week, the bill will return to the House where the chamber can either concur with the Senate amendments or refer the bill to a Conference Committee of members of the House and Senate Judiciary Committees.
Eminent Domain Approval
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.
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.
Other Bills We Are Monitoring:
HB 2350 establishing the crime of human smuggling. Passed House, passed Senate as amended.
HB 2388 requiring licensing bodies to provide electronic credentials. Passed the House, to Senate.
HB 2436 prohibiting public contracts from giving preferential treatment based on ESG criteria. Passed the House 85-38, to Sen Fed and State.
SCR 1606 establishing an initiative and referendum Constitutional Amendment. Did not receive a hearing.