2018 Kansas Legislative Report
The Kansas Legislature adjourned Sine Die its 90-day legislative session on Friday, May 4. Your government affairs staff worked day and night watching for your best interests in Topeka so you didn’t have to. Take a moment to recap on the highlights, victories, and a few defeats…
After days of debate and negotiation between House and Senate leaders during the Veto Session, lawmakers failed to pass a mega tax cut bill that would have returned an estimated $85 million back to Kansans. The Conference Committee Report on House Bill 2228 died on a 59-59 vote in the House, just four votes shy of the 63 needed for passage. The Senate passed it 21-19 just hours before.
In short, the bill would have allowed Kansas to decouple from several provisions of the federal Tax Cuts and Jobs Act, returning the “windfall” to both individual and corporate taxpayers rather than the state coffers. The main provisions of the tax cut package were:
- Permanent decoupling on repatriated foreign income, which has never been taxed in Kansas before.
- One-year decoupling on global intangible low-taxed income, interest expense limitations, capital contributions, and FDIC premiums.
- Allowing individual taxpayers the option to itemize on their state tax forms – even if they claim the standard deduction on the federal level – reducing their tax liability.
- Restoration of 100% deductions for medical expenses, property taxes, charitable contributions, and mortgage interest deductions.
Staff, along with other interested parties, is continuing discussions with the Governor’s office and the Department of Revenue asking for regulatory guidance on how repatriated income will or won’t be taxed in Kansas this year.
The Governor signed into law Senate Bill 423, which spends an additional $525 million on K-12 education over the next five years in response to the Kansas Supreme Court’s ruling that the current school finance formula is constitutionally inadequate. The Court is expected to rule on the Gannon vs. Kansas lawsuit by June 30, potentially forcing Governor Colyer to call a July special session should the judges rule the new money is still not enough.
If that is the case, expect to an organized push toward a constitutional amendment vote, House Concurrent Resolution 5029, which would remove the jurisdiction of the Kansas Supreme Court over whether the legislature has made “suitable financial provision for public education,” while retaining jurisdiction over the issue of equitable distribution of funds, protecting rural schools. A 2/3 majority of both legislative chambers is necessary before the question can be placed on the next state-wide election ballot.
Staff monitored the issue closely, as additional dollars toward K-12 education would most certainly come from an increase in property taxes, which are already burdensome on our industry.
Rules and Regulations Oversight
The Conference Committee Report on House Bill 2280 creates a new requirement for state agencies to submit an economic impact statement to the State Budget Office when proposing or amending any rule and regulation. The bill requires the economic impact statement to include a description of businesses that would be directly affected, the benefits of the proposed rule and regulation, and measures taken to minimize the impact on businesses and economic development. In addition, if the proposed regulation has an estimated economic impact of $3 million over two years, then the agency must hold a public hearing prior to adoption. This legislation as a way to ensure that agencies are considering all actual industry costs before passing new regulations.
Staff testified and lobbied strongly in support. The bill is awaiting the Governor’s signature into law.
The Conference Committee Report on House Bill 2577 amends the Kansas Emergency Planning and Community Right-to-Know Act by creating the Kansas Right-to-Know Fee Fund within the Kansas Department of Health and Environment (KDHE). Revenue from the fund, in the amount of $311,000, would be used to administer the Tier II hazardous chemicals inventory and train first responders on how to use the database. Currently, fees paid by the industry are deposited into the State General Fund, with only a portion being transferred to KDHE. Under this bill, all fees will go toward their intended purpose.
Staff testified and lobbied strongly in support. The bill has been signed into law.
The Conference Committee Report on House Bill 2583 gives authority to the Secretary of Agriculture – with input from an advisory committee on which the Kansas Agribusiness Retailers Association will have a seat – to designate a plant as noxious. Current authority lies with the Legislature, which can be a burdensome and time-consuming process. It also requires county weed directors to check an online specialty crop database prior to applying pesticides.
Staff testified and lobbied strongly in support, successfully amending the bill to ensure certain provisions caused no harm to the industry. The bill has been signed into law.
Industrial Hemp Research
Senate Bill 263 establishes the Alternative Crop Research Act and allows the Kansas Department of Agriculture – alone or in conjunction with a state higher education institution – to research, grow and cultivate industrial hemp in counties designated by the Secretary.
Staff lobbied to amend the bill, successfully removing the restriction of the pilot program to just two specified counties. The bill has been signed into law.
CDL Renewal Extension
The Conference Committee Report on House Bill 2606 extends from four years to five years the period of time before expiration of a commercial driver’s license. Extending the renewal period by one year is an easy, small step toward lowering the regulatory burden, reducing cost, and expediting the process of conducting agribusiness in Kansas. It will also put Kansas in compliance with the federal Transportation Security Administration’s hazmat endorsement, which is also renewed every five years.
Staff testified and lobbied in support. The bill has been signed into law.
Electronic Pesticide Records
House Bill 2619 recognizes electronic methods of communication as a valid form of record after a commercial pesticide application has occurred. Current law requires written notice be sent to the land owner within 30 days of an application. This bill allows for instant notification via email or text, if the customer agrees to receive it electronically.
Staff testified and lobbied in support. The bill has been signed into law.
The Conference Committee Report on Senate Bill 109 is adjustments to the biennial budget for fiscal years 2018 and 2019 that was approved last year. A few appropriated items of interest include $3.25 million toward the State Water Plan Fund and $100 thousand toward hemp crop research, both within the Kansas Water Office.
Staff monitored negotiations closely throughout the session to track funding for the state agencies that regulate our various industries. The bill is awaiting the Governor’s signature into law.
Scrap Metal Delay
The Conference Committee Report on Senate Bill 261 allows for a one-year extension to implement and fund through the Attorney General’s office the Scrap Metal Theft Reduction Act passed in 2015. It also requires a progress report to the Legislature by February 1, 2019.
Staff testified as neutral, understanding that while additional time may be needed, the industry strongly supports fighting scrap metal theft. The bill awaits the Governor’s signature into law.
Broadband Task Force
The Conference Committee Report on House Bill 2701 establishes the Statewide Broadband Expansion Planning Task Force to study and identify opportunities and potential funding sources to expand broadband infrastructure and services across Kansas, including rural areas. Final recommendations are due to the Legislature by January 15, 2020.
Staff monitored the issue closely in support of expanded broadband in rural Kansas. The bill has been signed into law.
Dicamba Informational Hearings
Staff, along with the Kansas Department of Agriculture, coordinated informational hearings on Dicamba in both the House and Senate Agriculture Committees. Representatives from manufacturing companies traveled to Topeka to educate legislators on Dicamba technology, changes made to the label for the upcoming season, and the new training requirements for applicators.
Staff lobbied strongly against further regulation of Dicamba, successfully preventing any spray drift legislation from being introduced this year.
Ad Astra Rural Jobs Act
The Conference Committee Report on Senate Bill 296 would have allowed tax credits on income, premiums, or privilege taxes for taxpayers who contribute capital to an approved investment company to fund a “rural business concern” with less than 500 employees, in counties with a population of less than 50,000. Businesses engaging in manufacturing, plant sciences, technology, or agricultural technology would have qualified for the program. Beginning in tax year 2020, 20% of the tax credit could have been claimed annually over a five-year period. The amount of tax credits claimed in any one fiscal year would have been limited to $10 million.
Staff testified and lobbied in support. The CCR passed the House 83-36 on the last day of the Veto Session, but the Senate adjourned before taking it up for a vote.
The Conference Committee Report on Senate Bill 296 would have extended 25% of unused High Performance Incentive Program (HPIP) tax credits beyond the current carryforward limit, from 16 years to 25 years, for those taxpayers who initially claimed an HPIP credit prior to January 1, 2018. In any tax year after the 16th year, the amount of tax credits used by a taxpayer would have been limited to 10% of the reduced amount. The HPIP provides a 10% income tax credit for eligible capital investments that exceed either $50 thousand in non-metropolitan counties or $1 million in the five metropolitan counties of Douglas, Johnson, Sedgwick, Shawnee, or Wyandotte.
Staff monitored the issue closely. The CCR passed the House 83-36 on the last day of the Veto Session, but the Senate adjourned before taking it up for a vote.