19 Feb 2023 Kansas Capitol Review – Week 06
Most committee work for the first half of the 2023 Kansas legislative session wrapped up this week. Some committees will still meet Monday, Feb. 20 and Tuesday, Feb. 21, before legislators finish out the week debating bills on the floor. This week saw advancement of a water policy bill and a water funding bill from the House Water Committee. Next week, the House and Senate Utilities committees look to take final action on multiple bills seeking to provide lower costs of electric utilities.
Water Policy Bill Placing New Requirements on GMDs
This week, the House Committee on Water took final action on House Bill 2279, a bill amending the Groundwater Management District act that was introduced by Ranking Member Rep. Lindsay Vaughn (D-Overland Park). The bill would place new annual reporting and conservation action plan requirements on the groundwater management districts. Following the hearing, the Kansas Agribusiness Retailers Association joined other stakeholders in requesting amendments to the bill to make it more user-friendly and practical for the districts. This week, the committee amended the bill before passing it out of committee favorably. Find the amended version of the bill HERE. Rep. Vaughn’s amendment to the bill was described as doing the following:
- Financial reporting gap waiver for GMDs
- The amount of reduced consumptive use was added to the annual report
- Action plan: striking repetitive sections to fit better within the GMD Act
- Addition of word ‘priority’ to the phrase ‘areas of concern’ to make it ‘priority areas of concern’
- Established separate Action Plan and Management Plan, where the action plan is reviewed every five years and updated as necessary
- Chief engineer creates action plans and implements action plans
- Current LEMAs are granted extra consideration and categorized as already in compliance with the first phase of the action plans
- Grants assistance to Kansas Water Authority from state agencies
Water Funding Bill
This week, the House Committee on Water also took final action on House Bill 2302, a bill introduced by Chairman Jim Minnix (R-Scott City) focusing on long-term funding of the state water plan fund and water conservation efforts. The bill would credit 1.231 percent of the state sales tax revenue (approximately $53 million) to the state water plan fund. It would also modify the distribution of current moneys into the state water plan fund, create a water technical assistance fund and a water projects grant fund for water infrastructure projects. Dedicated revenue from the state sales tax would be added to the current fees on the agriculture sector and municipal water users. The bill would sunset in five years. If it were not extended, then the sales tax funding piece would be removed, and the previous state funding mechanisms would be re-installed. The committee amended the bill before passing it out of committee favorably. The amendments were described as technical for purposes of clarification based on conferee feedback. Find the amended version of the bill HERE, and specific amendments made to the bill HERE. Specifically, the bill would set aside the following funds from the state water plan fund for three years: $5,000,000 to the water technical assistance fund, $15,000,000 to the water projects grant fund, and $15,000,000 to the retirement of water supply storage debt for two state reservoirs.
State Preemption of Plastic Container Regulations
Senate Bill 47 would prohibit cities and counties from regulating plastic and other containers designed for the consumption, transportation or protection of merchandise, food, or beverages. The Senate Commerce Committee held a hearing on the bill. The bill did not make it out of committee, but a substitute bill is being drafted to alleviate certain expressed concerns.
Retailer Collection of Credit Card Fees
Kansas law prohibits the seller or lessor in a retail sales or lease transaction, or any credit or debit card issuer, 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 such a surcharge. The House Committee on Financial Institutions and Pensions passed the bill out of committee favorably. Kansas Grain and Feed Association and Kansas Agribusiness Retailers Association supported the bill. The Senate companion bill, Senate Bill 104, was heard this week in the Senate Committee on Financial Institutions and Insurance, where KGFA and KARA testified in support. The bill is scheduled for final committee action next week.
Retailer Credits
Senate Bill 41 would provide a credit for Kansas retailers, up to $300 per month, to help offset, to some degree, the administrative expenses accrued by retailers in collecting and remitting state sales and compensating use taxes for the state. Kansas Agribusiness Retailers Association testified that these administrative costs on behalf of the state are real expenses for Kansas retailers that are not currently compensated. The Senate Tax Committee advanced the bill out of committee with a favorable recommendation.
Prohibiting Foreign Ownership of Real Property
This week, the House Committee on Agriculture held a hearing on House Bill 2397, a bill which would have prohibited the conveyance of real property in Kansas to foreign adversaries. Following the hearing, it did not appear the bill would be taken up for further action. Senate Bill 100, a similar bill, was introduced in the Senate but did not receive a hearing.
Electric Utility Rates
Kansas has the highest energy rates in our region. In recent years, legislation was introduced to reduce rates while ensuring reliable service. This year, multiple bills have been introduced which focus on various ways to address high electric utility rates in our state:
- House Bill 2227 would authorize solar power purchase agreements with renewable energy suppliers, exempt the sales of electricity pursuant to power purchase agreements from public utility regulation, and require electric public utilities to enter parallel generation contracts with certain (non-industrial) customers of the utility. Kansas Grain and Feed Association and Renew Kansas Biofuels Association supported the measure during a hearing in the House Utilities Committee. The committee will take final action on the bill this week.
- Senate Bill 54, allowing a 0 percent sales tax rate on commercial utilities, was passed out favorably by the Senate Tax Committee. House Bill 2221 is the House companion bill.
- House Bill 2225 would limit cost recovery for electric public utility transmission-related costs. The House Utilities Committee will take final action on the bill in the upcoming week.
- House Bill 2228 would increase the capacity limitation of the total amount of net-metered generation systems that may operate within the service territory of an investor-owned electric utility and remove the load-size limitations on certain customers’ net-metered systems. The House Utilities Committee will take final action on the bill in the upcoming week.
- House Bill 2154 would seek to 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 it has been referred to an exempt committee to keep it alive for the rest of the legislative session. The Senate Utilities Committee held a hearing on its companion bill – Senate Bill 88.
- Senate Bill 78 and House Bill 2155 would require the state corporation commission to review the regional rate competitiveness of an electric utility’s rates in electric utility rate proceedings. The bills did not receive a hearing.
- Senate Bill 214 would prohibit public utilities from recovering dues or contributions to a charitable organization through rates. The bill did not receive a hearing.
- House Bill 2310 would increase the number of commissioners on the state corporation commission. The bill did not receive a hearing.
- 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. Despite steady objection, the Senate Utilities Committee advanced the bill out of committee favorably.
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 KDOT set aside a percentage of the $5 million program funds specifically for rail siding projects. This funding has greatly benefited Kansas agribusiness infrastructure. A few weeks ago, in coordination with KDOT, KGFA 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 would make it easier to administer this cost-share grant program and would dedicate $10 million annually from the state highway fund to this program. Under the bill, grain shippers and other owners of rail siding adjacent to short line rail, would be able to directly apply for the program. The House Transportation Committee held a hearing on the bill on Tuesday, where the Kansas Grain and Feed Association joined the Kansas Agribusiness Retailers Association and the Kansas Cooperative Council in supporting the measure. On Thursday, the Committee passed the bill out favorably.
Corporate Income Tax Apportionment
House Bill 2110 would allow certain taxpayers, based on NAICS codes included in the bill, to elect to use a single-factor apportionment formula, based on sales in the state, to determine corporate income tax liability. The bill is estimated to have a cost to the state of approximately $20 million. The House Tax Committee held a hearing on the bill on Tuesday. Kansas Grain and Feed Association joined the Kansas Chamber as the only proponents on the bill. The committee will likely take final action on the bill next week.
Cotton Bale Secure Load Requirements
HB 2160 would exempt the transport of cotton bales from the secured load requirements. On Thursday, the House Committee on Agriculture amended the bill to remove mileage restrictions before passing the bill out favorably as amended.
Kansas 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 for up to 20 apprentices per year. The program would be administered by the Kansas Department of Commerce. The House Commerce Committee held a hearing on the bill, where Kansas Grain and Feed Association and Kansas Agribusiness Retailers Association joined other stakeholders in support of the measure. Having been passed favorably from the House Commerce committee, the bill was considered by the House Committee of the Whole which passed the bill favorably on a vote of 116-4. The bill now moves to the Senate for consideration.
Tax Withholding Requirements for Employees in Multiple States
This week, the Kansas Chamber requested introduction of House Bill 2420, a bill which would establish withholding tax requirements for employers with certain employees who work in multiple states. The bill was referred to the House Committee on Taxation.
Third-Party Funded Litigation
Senate Bill 74 concerns litigation funding by third parties. The bill provides for joint liability of costs and also allows for sanctions in third-party funded litigation. It would also require certain discovery disclosures and payment of certain costs for nonparty subpoenas. The bill was heard in the Senate Judiciary Committee on February 2. Stakeholders are currently working on tweaking language to address specific concerns.
Scrap Metal 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. The House Judiciary Committee held a hearing on the bill on Thursday, Feb. 16, where Kansas Grain and Feed Association, Kansas Agribusiness Retailers Association and Renew Kansas Biofuels Association testified in support of the measure. Agribusiness groups supported the initial passage of the measure when it was passed five years ago. There were no opponents to the bill, and the Committee will likely take it up for final action next week.
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. The House Committee on Education held a hearing on the bill on February 7, and this week passed the bill out of committee favorably. 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.
Hemp Grain
House Bill 2168 , introduced earlier in the year, would amend the definition of grain to include industrial hemp seed. It is uncertain at this point what other impacts this designation might have, but the Kansas Department of Agriculture is currently reviewing the bill. Agriculture associations are likely to oppose the bill as no hemp ingredients are currently approved through the animal feed ingredient review pathways, and more data is needed to understand whether hemp ingredients are safe for animals and can be utilized as a source of nutrition when consumed for extended periods of time. These questions should be fully answered before hemp is used for commercial feed purposes to ensure the safety of the public, our animals and the agricultural industry. This week, the bill was referred to an exempt committee ensuring it will remain a live bill for the rest of the 2023 legislative session.
Cannabis Legislation
The following cannabis bills have been introduced this year to legalize marijuana in some fashion, but are not currently scheduled for hearing:
Senate Bill 135 would create the Medical Cannabis Regulation Act to regulate the cultivation, processing, distribution, sale and use of medical cannabis.
Senate Bill 171 would create the Veterans First Medical Cannabis Act to regulate the cultivation, distribution, sale, possession and use of medical cannabis.
House Bill 2367 would establish the Adult Use Cannabis Regulation Act to allow for the lawful cultivation, manufacture, possession, and sale of cannabis in this state.
House Bill 2417 creating the Medical Cannabis Regulation Act to regulate the cultivation, processing, distribution, sale and use of medical cannabis.
Other Bills We Are Monitoring:
SB 79 authorizing counties to impose a county earnings tax. Scheduled for Hearing in the Senate Tax Committee on Monday, Feb. 20
SB 166 requiring public disclosure of a transmission line siting permit under KCC jurisdiction. The Senate Utilities Committee held a hearing this week
SCR 1606 establishing an initiative and referendum Constitutional Amendment
HB 2192 creating a Kansas Secretary of State website for grants, applications, and awards
HB 2222 prohibiting enforcement of federal regulations and enforcement of state regulations to carry them out
HB 2368 enacting the making work pay act to increase the Kansas minimum wage
HB 2388 regarding interstate occupational licensing regulations and requiring licensing bodies to provide electronic credentials. Hearing in the House Commerce Committee
HB 2424 establishing a refundable income tax credit for direct payments by employers to qualified employee student loans