2019 Capitol Review – Week Two

Week Two Jan. 21 – Jan. 25, 2019

The second week of the 2019 Kansas Legislative Session kicked off on Tuesday, Jan. 22, following the observation of Martin Luther King, Jr. Day. Lawmakers continued to ease back into the swing of things, with many informational briefings taking place in committee meetings throughout the shorter-than-usual week. Kansas Agribusiness Retailers Association’s government affairs staff continued to monitor the happenings at the Statehouse affecting our industry.

Agricultural Chemical Remediation Reimbursement Program and Fund

On Wednesday, Kansas Agribusiness Retailers Association testified before the House Committee on Agriculture in support of House Bill 2001, a bill which would extend the sunset of the Kansas Ag Remediation program from July 1, 2020 to July 1, 2030. The bill also realigns the funding for the program by reducing environmental assessments on grain elevators and pesticides product registrants, and by increasing the current assessment on fertilizer product registrants, as a reflection of the part of the industry receiving most fund reimbursement. Finally, the bill reduces the maximum allowable fund balance from $5 million to $3 million. Kansas Grain and Feed Association, Kansas Cooperative Council and Kansas Department of Health and Environment also submitted testimony in support of the bill. Further discussion and committee action on this bill is scheduled for Wednesday, Jan. 30.

State Water Plan Fund

On Thursday, Jan. 24, 2019, the House Committee on Agriculture and Natural Resources Budget received a briefing on the State Water Plan Fund from the Kansas Water Office. The Water Office discussed the statutory funding mechanisms for the water plan and current budget priorities, including: water technology farms, blue-green algae issues, and stream-bank stabilization to address sedimentation. Funding mechanisms for the water plan include: municipal water use fees, clean drinking water fees, industrial water use fees, stock water use fees, pesticide product registration fees, fertilizer tonnage inspection fees, pollution fines and penalties, sand royalties receipts, annual transfers from the Economic Initiatives Development Fund (when authorized)., and the state general fund (when authorized).

Select Committee on Federal Tax Code Implementation

On Wednesday, Jan. 23, Senate President Susan Wagle appointed herself as Chair of the newly created Select Committee on Federal Tax Code Implementation. President Wagle created this special committee during the first week of session to specifically address Senate Bill 22, a bill which returns revenue to individual and corporate taxpayers that the state otherwise expects to gain from changes to the federal tax code following passage of the 2017 Federal tax cuts and jobs act. The committee will hold hearings on Senate Bill 22 next Tuesday and Wednesday, and is scheduled to take final committee action on the bill on Thursday. Senate Bill 22 includes the following provisions:

• Allows Kansas taxpayers to itemize deductions on their state tax returns when using the standard deduction on their federal returns
• Decouples from federal Repatriation provisions (IRC Section 965).
• Decouples from federal Global Intangible Low Tax Income (GILTI) provisions (IRC Section 951A), as well as Interest Expense Limitations (IRC Section 163(J), Capital Contributions (IRC Section 118), and FDIC Premiums (IRC Section 162(r).
  

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Utility Committees Continue Hearings on Electricity Rates

The House Committee on Utilities this week received a report from the Kansas Corporation Commission on the causes behind the increased rates for electricity in Kansas as compared to surrounding states, and an explanation for why Kansas energy rates increased substantially between 2008 and 2017. In addition, House Bill 2080 was introduced in the Committee, a bill which mirrors Senate Bill 24. Both of these bills would amend existing law concerning recovery by electric utilities of transmission-related costs. The bills would limit the return that a utility may recover to the actuarially assumed investment rate of return established by the Board of Trustees of the Kansas Public Employees Retirement System.  This limitation would not apply to costs to use transmission facilities not owned by the utility. The bill would also exclude the utility seeking to implement a transmission delivery charge from any other manner of cost recovery from its retail customers.

On Thursday, Jan. 25, 2019, a coalition of business and consumer groups, known as the Kansas Industrial Consumers Group, asked the state’s utilities to immediately reduce rates by 10 percent. The group, which has been working with lawmakers since last year to lower electric rates, asked the Legislature to commission a rate study separate from the one just completed by the Kansas Corporation Commission. The group wants a study that will provide solutions for reducing Kansas electricity rates to a level that is more competitive with neighboring states.

Kansas Public Employees Retirement System

On Tuesday, Jan. 22, 2019, the Senate Committee on Ways and Means held a hearing on SB 9, which would transfer $115 million from the state general fund into the state retirement system (KPERS) during FY 2019 to pay for reduced state contributions from prior years. In FY 2016, the legislature withheld $97.4 million in contributions from the KPERS system, to be repaid with interest in fiscal year 2018. However, the legislature did not make that payment. Governor Laura Kelly’s plan – released last week – would re-amortize the state’s liability to the state’s retirement system until 2048 in order to free up about $145 million to fund other state services now.

Local Impacts of the 2018 Farm Bill

On Thursday, Jan. 24, the Senate Committee on Ways and Means received briefings on the local impacts of the recently passed 2018 Federal Farm Bill. Presenting before the Committee were Mike Beam, Interim Secretary of Agriculture; Ernie Minton, Interim Dean of the KSU College of Agriculture; Marty Draper, Associate Dean of Research and Graduate Programs at KSU College of Agriculture; and Dr. Art Barnaby, Agricultural Economist with KSU Research and Extension. Some of the impacts mentioned during these presentations include the following:

• Commodity Title: outlines federal support for agricultural commodities including crop insurance and risk management tools.
• Conservation Title: includes the Conservation Reserve Program (CRP), the Environmental Quality Incentive Program (EQIP), and the Conservation Stewardship Program (CSP).
• Broadband: the 2018 Farm Bill adds $350 million in broadband-related funding over the next 5 years. In addition, a new program called the ReConnect Program offers loans and grants to facilitate broadband deployment in rural areas. USDA is hosting an informational program next month in Newton, KS.
• Nutrition Title: 75 percent of the Farm Bill budget is for the Supplemental Nutrition Assistance Program (SNAP) federal food assistance program.

Research Title (Title VII):

• Reauthorization of primary USDA research, education and extension authorities
• Reauthorization of Authorities for the Agricultural Research Service (ARS)
• Reauthorization of the Agricultural and Food Research Initiative (AFRI)
• Establishment of the Agricultural Advanced Research and Development Authority (AGARDA) pilot program
• Expands the agricultural genome initiative to include phenomena research which allows for a greater understanding of crop productivity
• Expands provisions related to biosecurity planning and response
• Builds upon hemp research pilot program and makes industrial hemp eligible for certain funding under existing research authorities
• Extends the section of the national ag, research, extension and teaching act which provides grants to land grant universities for research facilities
  

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House Rule Changes to Increase Transparency

On Wednesday, the Kansas House passed House Resolution 6004 which makes changes to chamber rules to require 70 votes to pull a bill out of committee or up for floor debate. This change would give the majority party more control over which bills are heard in committee, emerge from committee, get to the House calendar, and come up for floor debate. The House Resolution adopted other changes as well, as part of a transparency effort, including:  a change to require a sponsor’s name on all bills, where bills introduced at the request of special interests must be identified; and, adding a provision to require the identification of “gut and go” bills – those bills which have had their original contents entirely removed and then replaced with new language. passed on a final action vote.

Governor Appoints Education Task Force Panel

Governor Laura Kelly named a 45-member Governor’s Council on Education to advise her on education issues ranging from K-12 education to higher education and how best to serve the students and the state’s businesses.  The panel will be tasked with how to improve outcomes, ranging from fully funding schools to evaluating the education process and planning to improve outcomes from early childhood education to workforce issues.  She signed an executive order forming the council, which will start meeting next week.

Members of the Governor’s Education Task Force PanelTask Force:

Co-Chair: Dr. Cynthia Lane, retired, KCK Public Schools;
Co-Chair: Dr. Fred Dierksen, Dodge City Public Schools;
Ed O’Malley, Kansas Leadership Center; Alan Cobb, Kansas Chamber; Joe Reardon, Greater KC Chamber; Stephanie Harder, Textron Aviation; Coleen Tabor, Emprise Bank; Bob Kreutzer, Tatro Plumbing; Tom Jones, Hy-Plains Feedyard LLC; Barry Downing, Northrock Inc.; Dr. Craig Correll, Coffeyville Public Schools; Dr. Alicia Thompson, Wichita Public Schools; John Allison, Olathe Public Schools; George Leary, Moundridge Public Schools; Adrian Howie, Hugoton Public Schools; Bill Biermann, Goodland Public Schools; Dr. Steve Karlin, Garden City Public Schools; Marcella Clay, Kansas City, Kansas Public Schools retired;, Donna (Deeds) McDaniel, Ewing Marion Kauffman Foundation; Susan Wally, PREP-KC; Irene Caudillo, El Centro; Madai Rivera, Assistant Director Student Engagement; Cathy Harding, Wyandotte Health Foundation; Jeremy Anderson, Education Commission of States; Dr. Blake Flanders, Regents; Helen Van Etten, Regents Trustee; Daniel J. Thomas, Regents Trustee; Dr. Randy Watson, Department of Education; Kathy Busch, Kansas State Board of Education; Jim Porter, Kansas State Board of Education; G.A. Buie, United School Administrators; Mark Farr, KNEA; Mark Desetti, KNEA; Sylvia Ramirez-Koehn KNEA; Dana Nelson, KNEA; John Hiem, KASB; Ben Schears, Association of Technical Colleges; Linda Fund, Association of Community College Trustees; Matt Lindsey, Independent College Association; Monica Crowe, Kansas Parent Teacher Association; Annie McKay, Kansas Action for Children; Keith Lawing, Association of Workforce Boards; Laura Howard, Department for Children and Families; Delia Garcia Department of Labor; David Toland, Department of Commerce; and a representative to be named from Children’s Cabinet and Trust Fund.

House Rural Revitalization Committee

Through the first two weeks of the session, the House Rural Revitalization Committee is in the mode of gathering information from economic development experts before introducing any legislation to address assisting rural Kansas. Clare Gustin of Sunflower Electric Power Corporation and Heather Morgan, of Project 17, both agreed there is a link between the declining rural population and the inability to find sustainable jobs in those communities. Each presentation highlighted the need for local civic engagement, and an openness to accept federal funds for improving infrastructure. The rationale being, even if a newly-found business closes its doors a year after formation, the improved infrastructure of roads, and utilities still exists in the location for a new business to take its place.

Other bills we are watching:

· HB 2006: A bill requiring the Department of Commerce to create a database for the disclosure of economic development incentive program data, tax credit programs and certain property tax exemptions. A hearing on this bill is scheduled in the House Committee on Commerce Labor and Economic Development on Thursday, Jan. 31st at 1:30 pm in room 112-N.

· HB 2043: A bill concerning the review of tax credits, tax exemptions and economic development programs. A hearing on this bill is scheduled in the House Committee on Taxation on Wednesday, Jan. 30th at 3:30 pm in room 112-N.

· HB 2062: A bill relating to the applicability of conditions for operating recreational trails. A hearing on this bill is scheduled in the House Committee on Agriculture on Wednesday, Jan. 30th at 3:30 pm in room 582-N.

· HB2078: The Governor’s K-12 education finance bill – was introduced in the House on Thursday, Jan. 24th.