08 Mar 2024 Kansas Statehouse Insider – Week Nine
During the ninth week of the 2024 legislative session, Senate Republicans introduced a new comprehensive tax bill and have already set it for hearing next week. Likewise, House leadership is discussing another attempt at comprehensive tax legislation, and it looks like they might use Governor Laura Kelly’s tax bill as the vehicle. The extent of any such tax package is likely to be scaled back a bit as this week it was announced that the state had missed its revenue projections for the fifth consecutive month.
Also, this week, the Senate finished committee work on its version of the budget bill. Full Senate debate on the budget could begin soon. This is the first step toward pulling the loose ends of the session together. Both the House and Senate included nearly $90 million in their budget bills to address healthcare issues, and this week the Senate included nearly $16 million in its budget bill to cover the cost of sending Kansas National Guard troops to the Texas border to fight drug and human trafficking.
Of note this week, while the Senate’s bill on foreign adversary land ownership is stalled in committee, the House held a packed, two-day hearing on its bill. Multiple amendments are being discussed on the bill which is scheduled to see final committee action next Wednesday.
In addition, on a vote of 82-36, the House passed legislation advocated for by business groups that would give the Legislature additional oversight of regulations proposed by state agencies. The bill would require additional legislative steps to ratify proposed rules if the anticipated compliance costs of the rule exceed $1 million over the first five years of implementation.
Next week, committees will continue to work feverishly through bills as most committees, other than tax and budget committees, have only two weeks remaining to get through bills.
Key 2024 Legislative Deadlines
- March 22 – Last day that non-exempt committees can meet
- March 28 – Last day for activity on non-exempt bills in either Chamber
- April 5 – First Adjournment (Drop Dead Day)
- April 29 – Veto Session begins
Budget Bills
On Thursday, the Senate Committee on Ways and Means amended, and then passed out, the Senate Budget bill SB 514. The bill makes supplemental appropriations for fiscal years 2024 and 2025 and appropriations for fiscal years 2025 and 2026 for various state agencies. An updated note on the budget bill was not available as of Friday morning. An amendment by Senator Mike Fagg adds $1M to a water project grant program being administered by the Kansas Water Office. The amendment increases the $12 million transfer from the state water plan fund to $13 million. Meanwhile, the House Appropriations Committee continues to work on finalizing its version of the budget bill, HB 2802.
Kansas Agricultural Remediation Reimbursement
House Bill 2477 seeks to amend the agricultural chemical environmental remediation reimbursement program by increasing the maximum reimbursement from the fund from $200,000 to $300,000 for each eligible facility. The House passed the bill on a vote of 110-1. Status: This week, the Senate Committee on Agriculture held a hearing on the bill, which is likely to receive final committee action on Wednesday, March 13.
Comprehensive Tax Proposals
In an attempt to revive comprehensive tax legislation this session, the Senate has introduced Senate Bill 539. The bill is described as simplifying income tax rates for individuals, increasing the standard deduction and the Kansas personal exemption, increasing the income limit for an income tax subtraction modification for social security income, increasing the extent of property tax exemption for residential property from the statewide school levy, decreasing the privilege tax normal tax rate and establishing a 0 percent state rate for sales and use taxes for sales of food and food ingredients on July 1, 2024. Also, Republican House leadership has referred the Governor’s comprehensive tax bill, HB 2586, back to the House Tax Committee where they are likely to heavily amend the bill with their own comprehensive tax plan. Status: A hearing on SB 539 is scheduled for Tuesday, March 12 in the Senate Committee on Assessment and Taxation.
Single Sales Factor Apportionment
The Kansas Dept. of Revenue (KDOR) introduced HB 2796 and SB 507 to require corporate taxpayers to use a single-sales factor apportionment formula beginning Jan. 1, 2025. KDOR estimates that its bills are essentially revenue neutral to the state. Alternatively, the Kansas Chamber introduced HB 2798 which would allow for a two-year phase in of the single-sales factor apportionment formula. It includes provisions that offset potential increases in tax liability for some companies, such as a “New Jersey model” tax credit for deferred tax liability. The estimated fiscal cost to the state for the Kansas Chamber’s bill was $162 million in 2025, $87 million in 2026, and $8 million in 2027. Most of this cost is due to the delayed adoption and deferred corporate tax deduction provision. All three bills include provisions on market-based sourcing. Status: This week, the House Tax Committee held hearings on HB 2796 and HB 2798. The Senate Tax Committee had scheduled a hearing on SB 507, but that hearing was delayed until Wednesday, March 13.
Property Tax Relief
Property tax relief is a top priority of the Governor, and Republican and Democrat legislators in both the House and Senate. Much of that relief is likely to be specifically focused on residential property owners. While multiple bills have been introduced offering various proposals for residential property tax relief, none of those bills have advanced from committee. This week, House Concurrent Resolution 5025 was introduced that would propose an amendment to the Kansas Constitution to determine valuations of residential property based on the average fair market value of the 10 prior years. In addition, HB 2815 was introduced in the House to repeal the local ad valorem tax reduction fund. Status: A hearing on HB 2815 has been scheduled for Wed., March 13 in the House Tax Committee.
Nuisance Abatement
Senate Bill 52 was enacted in 2021 to grant the Sedgwick County Commission authority to order the abatement of nuisances in unincorporated areas of the county, and to recover any costs incurred from the landowner. KGFA and KARA successfully amended that bill to exclude agribusiness facilities. The Senate passed Senate Bill 362 which removes a sunset provision in the Sedgwick County law. In addition, the Senate passed Senate Bill 162 which would create a similar nuisance abatement authority in Riley County and Crawford County. This bill includes the agribusiness exemption in the Sedgwick County law and an amendment strengthening that exemption. This week, the House Committee on Local Government held a hearing on SB 362. Status: A hearing on SB 162 is scheduled for Monday, March 11 in the House Committee on Local Government.
Utility Legislation
- Kansas’ largest energy generating company, Evergy, introduced HB 2527 to make significant changes concerning its cost recovery. The changes would have negatively affected ratepayers. Following negotiations between Evergy and ratepayer groups, an agreed amendment was reached between Every and ratepayers organizations. Status: This week, the Committee amended the bill with the compromise amendment and passed the bill out of committee favorably for passage. It is thought that various amendments will be offered on the House floor next week.
- HB 2588 would, among other things, increase the capacity limitation for the total amount of facilities subject to “net metering” that may operate within the service territory of investor-owned electric utilities. Find more information on the bill here. The House passed the bill on a unanimous vote. Status: The Senate Utilities Committee held a hearing on the bill this week and then discussed an amendment. The committee will continue discussion on the bill next week.
- SB 455 would authorize electric public utilities to retain certain electric generating facilities in the utility’s rate base. The bill includes language from SB 456 establishing a rebuttable presumption against retirement of fossil fuel-fired electric generating units. The Senate passed SB 455 on a vote of 28-9. Status: The House Committee on Energy and Utilities will hold a hearing on the bill on Thursday, March 14, where various unfriendly amendments are likely be offered.
Personal Property Tax Renditions
Senate Bill 8 would reduce penalties for the late filing, or failure to file, personal property renditions annually to the county appraiser. The bill would allow county appraisers to waive late penalties, and to set penalties aside if the machinery and equipment was previously classified as real property. The House Tax Committee placed the contents of the bill into House Sub for SB 127 and passed the bill out of committee. Status: The bill is on the House calendar pending action.
Credit Card Surcharge and Notice Requirements
S Sub HB 2247 would, among other things, allow retailers to collect a surcharge on a customer who elects to use a credit card as payment if the retailer discloses the amount of such surcharge through a clear and conspicuous notice to the customer in advance of the transaction either at the point of sale or point of entry. The Senate passed the bill 33-6. Status: The bill is scheduled for hearing on Monday, March 11 in the House Committee on Financial Institutions and Pensions.
Train Legislation
Last year the Senate passed Senate Bill 271, which would create a maximum train length (8500 feet) in Kansas, and require railroads to maintain a minimum distance of 250 feet between a near-edge railroad crossing and stored railroad rolling stock at crossings. The bill was referred to the House Transportation Committee with Chairman Shannon Francis (R-Liberal). Status: no further action has been taken on this bill.
Two-Man Train Crews
In 2023, the Kansas department of transportation (KDOT) passed a regulation requiring at least two crew members in each lead locomotive operated in Kansas. In response, SB 402 was introduced to prohibit KDOT from regulating crew sizes for class II and class III railroads. Status: no action has been taken on this bill.
CDL Military Training Waiver
SB 462 and HB 2679 were introduced to waive the knowledge and skills test for a commercial driver’s license applicant when the applicant qualifies for the military even exchange program. Status: The House passed HB 2679 on a vote of 120-0, and the bill was referred to the Senate Committee on Transportation. Similarly, the Senate passed SB 462 unanimously, and the bill was referred to the House Transportation Committee.
Prohibiting Foreign Ownership of Real Property
Multiple bills have now been introduced to prohibit the conveyance of real property in Kansas to “foreign adversaries.” Senate Bill 446, heard in the Senate Committee on Federal and State Affairs, would prohibit foreign countries from acquiring land after July 1, 2024, unless authorized by a new state land council. No further action has been taken on this bill. HB 2766 would prohibit principals from countries of concern from holding or acquiring, any interest in real property in this state within 150 miles of a military installation. This week, the House Commerce Committee held a two-day hearing on the bill where various amendments were proposed. Status: Final committee action is scheduled for the bill on Wednesday, March 13.
Drone Technology Critical Components
This week, Majority Leader Chris Croft introduced House Bill 2820 which would prohibit the acquisition of critical components of drone technology from countries of concern and requiring the divesture of such technology.
Animal and Ag Facilities Protection
Animal ag stakeholders introduced HB 2816 to amend the law to apply to physical trespass or making a false statement on an employment application to gain entry. The bill was introduced in response to the 10th Circuit U.S. Court of Appeals decision which found unconstitutional parts of a law intended to keep undercover investigators off the property of animal facilities with the intent of exposing certain activities at the facility. A companion bill in the Senate failed to advance out of committee. Status: This week, the House Agriculture Committee held a hearing on HB 2816 and passed the bill out favorably.
Conservation District Funding
House Bill 2800 would amend current law pertaining to conservation districts. The bill would increase the cap on the amount of funding disbursed to conservation districts from $25,000, to $50,000, beginning in FY 2025. Additionally, the bill would provide an increased matching basis for state funding disbursed to conservation districts ($2 state funding to $1 county funding) based on amounts allocated by the board of county commissioners. Status: This week, the House Agriculture Committee held a hearing on the bill and passed it out favorably.
Workers Compensation Benefits
Senate Bill 430 was introduced to provide comprehensive amendments to the workers compensation law and is presented as a compromise bill between industry and labor stakeholders. Among other things, the bill would increase lifetime benefit maximums and modernize elements of the administrative process. Find more specific information here. The Senate passed the bill on a unanimous vote. The House Commerce Committee passed the bill out of committee. Status: The bill is on the House Calendar pending action. It is rumored that many amendments to the bill will be offered on the House floor.
Unemployment Insurance
House Bill 2570 would make comprehensive changes to the Kansas employment security law, including defining “benefit year”, “temporary unemployment” and other terms. It would also require electronic filing for certain employers, establish qualifications for employment security board of review candidates, extend the deadline for new accounts following business acquisitions, make certain changes to the employer rate schedules, enable employers to report claimant work search issues, confirm legislative coordinating council oversight for the new unemployment insurance information technology system implementation, authorize the secretary to grant temporary unemployment, require the secretary to annually publish certain data, and abolish the employment security interest assessment fund. The House passed the bill on a unanimous vote. Find a detailed summary of the substitute bill here. Status: On March 7, the Seante Commerce Committee held a hearing on the bill, which will need further amendments to address an issue concerning the proposed forgiveness of companies with large negative balances.
Remote Worker Grace Period
House Bill 2420 would allow a grace period for remote workers regarding paycheck withholding requirements, establish withholding requirements for employees who work in multiple states, and determine employer penalties for not complying with these requirements. The bill would exempt certain employees who perform employment duties in more than one state from income tax withholding and reporting requirements unless the earnings occurred in the state of the employee’s residence, or in a state that the employee performed employment duties for more than 30 days during the calendar year. Status: The House Tax Committee held a hearing on the bill. The bill will likely be placed into a tax conference committee report with similar bills.
Rules and Regulations
House Bill 2648 was introduced to revise the rules and regulations procedure for state agencies to increase protections for industry against burdensome, restrictive, and expensive regulations, or regulations which exceed legislative intent. The bill requires agencies proposing new regulations with an economic impact greater than $1 million over the first five years to introduce, and pass, a bill by the full legislature. The full House passed the bill on a vote of 82-36. Status: This week, the bill was referred to the Senate Commerce Committee and will receive a hearing soon.
Underground Petroleum Storage Tank Permits
Senate Bill 336 would remove the requirement for underground storage tank operating permits to be renewed annually. The Senate passed the bill 40-0. Status: The House Committee on Agriculture passed the bill out favorably and placed it on the House Consent Calendar.
Economic Development Programs
This week, Senate Tax Committee Chair Senator Caryn Tyson introduced a bill that, as explained, would repeal income tax deductions for companies enrolled in long-standing economic development programs – HPIP and PEAK – that are administered by the state department of commerce. The bill would use the savings from the repeal of the programs to buy down the state corporate income tax rate. As of Friday, the bill language had not been released and the bill had not been officially introduced in the Senate.
House Water Committee Update
Next week, the House Water Committee is not scheduled to meet on Tuesday. It is scheduled to meet on Thursday, but an agenda has not been released.
LEMA Corrective Controls
House Bill 2634 would allow MYFA-like flexibility in an IGUCA or LEMA that is established or amended by an order of the Chief Engineer. Such flexibility is currently only allowed in water conservation areas (WCA). The bill would provide an additional corrective control provision for the chief engineer to consider when issuing orders of designations for local enhanced managements areas and intensive groundwater use control areas. The House passed the bill on a unanimous vote. Status: The bill is scheduled for hearing in the Senate Committee on Agriculture and Natural Resources on Wed., March 13.
Water Structure Licensing Fees
The Kansas Dept. of Agriculture requested introduction of HB 2526 which would install graduated agency inspections of dams, based on hazard level, and provide KDA civil penalty authority for non-compliance. The bill would also allow KDA to assess registration fees and increase permit fees. Status: The bill is scheduled for hearing in the House Appropriations Committee on Thursday, March 14.
Private Pesticide Applicator Certification
Introduced by the Kansas Dept. of Agriculture (KDA), HB 2607 is a 20-page bill amending the Kansas pesticide law following changes made by the EPA to their agency pesticide applicator regulations which Kansas is now also required to adopt to maintain authority to regulate the industry. Failure to receive EPA’s ongoing approval of KDA’s proposed updates to the Kansas pesticide law could jeopardize the agency’s authority to regulate pesticide applications in the state. The bill would, among other things, establish new training requirements and supervision requirements for pesticide applicators of restricted use pesticides. The bill would also grant KDA civil and criminal penalty authority on commercial applicators and private applicators. The House Agriculture Committee amended the bill multiple times. One amendment reduced the agency’s maximum civil penalty authority on businesses and individuals to $500 per violation. The House passed the bill on a vote of 118-1. Status: This week, the Senate Committee on Agriculture held a hearing on the bill, which brought multiple proponents and no opponents. The hearing was held over for next Tuesday, March 12.
Retailer Sales Tax Collection Tax Credit
SB 41 would create a sales and use tax remittance credit for retailers. The bill is intended to compensate retailers, in part, for their work in collecting and remitting sales taxes to the state. The credit would be an amount equal to 1.5 percent of the amount of sales and use tax being remitted by the retailer, with a monthly cap of $300 per retailer. Status: The bill is on the Senate Calendar pending action.
Third-Party Funded Litigation
House Bill 2510 was introduced to require disclosure of third parties that fund litigation and allow for joint liability of costs and sanctions against third-party funded litigants. It would also require certain discovery disclosures and payment of certain costs for nonparty subpoenas. The House Judiciary Committee amended the bill and passed it out of committee favorably. The amendment was described as exempting nonprofit 3rd parties from the requirements of the bill. Status: The bill now moves to the full House for consideration.
Defining Lead-Free Pipes and Amending Solid Waste Management Fund
Senate Bill 331 would also amend the solid waste management fund, administered by KDHE, to allow it to be used to reimburse counties or cities who conduct programs for the collection of “agricultural pesticide wastes” along with other household hazardous wastes. The Senate passed SB 331 unanimously. Status: This week, the House Water Committee held a hearing on the bill and passed it out of committee favorably.
Other Bills of Interest
SB 376 extends the single city port authority income tax credit. Hearing in Senate Tax
SB 459 disqualifying commercial vehicle driving privileges when person violates drug & alcohol clearinghouse requirements
SB 468 prohibiting local govs that grant property tax exemptions from exceeding their revenue neutral rates for property tax
SB 470 allowing Wichita technical institute to participate in Kansas promise scholarship act
SB 474 eliminating the administrative ordinance restriction in the city initiative statute
SB 478 defining benefit year, temporary unemployment and other terms in the employment security law
SB 484 Providing property tax exemptions for off-road vehicles
SB 486 Changing fee charged by the department of commerce for applications for certain economic development programs
SB 516 Exempting elevators owned by nonprofit organizations with a maintenance service contract for the elevator from the annual elevator safety act inspection
HB 2681 updating the definition of gross truck weight
HB 2682 disqualifying commercial vehicle driving privileges when person violates drug & alcohol clearinghouse requirements
HB 2684 authorizing cities to propose an earnings tax for ballot question
HB 2767 Requiring entities subject to the administrative procedure act to confirm receipt of service of an order prior to the imposition of fines or penalties
HB 2768 Providing a property tax exemption for certain new electric generation facilities and sunsetting current property tax exemptions for such facilities
HB 2774 Creating the Kansas workforce pathway act
HB 2775 Changing application fee for economic development programs from a flat fee to a certain percentage of the total economic development incentive
HB 2788 requiring cities, counties to report local eco devo program information to the secretary of commerce and posted on website
HB 2795 excluding the state mandated 20 mills levied by a school district from the revenue neutral rate
HB 2797 full transferability of tax credits for investments in certain qualified business facilities
HB 2802 Making supplemental appropriations for fiscal years 2024 and 2025 and appropriations for fiscal years 2025 and 2026 for various state agencies
HCR 5017 constitutional amendment to grant counties home rule powers
HCR 5021 constitutional amendment to reduce ad valorem residential property assessment to 9 percent
HCR 5022 constitutional amendment classifying all-terrain vehicles for tax purposes
HCR 5024 constitutional amendment reserving the power of initiative to the people of Kansas
HCR 5025 constitutional amendment creating a ten year average for determining fair market value of residential properties