29 Mar 2024 Kansas Statehouse Insider – week 12
With Friday, March 28 being the last day for activity on most bills, the 2024 Kansas legislature has only one week of regular session remaining.
The Legislature is in recess over the Easter weekend and will reconvene on Monday, April 1 for one final week of action. After-which, the Legislature will break until April 29 when they will reconvene to consider any bills vetoed by Governor Laura Kelly. Leadership in both the House and Senate have stated their intention for final adjournment on April 30.
Next week, the Legislature will focus on finalizing the budget, major tax bills, and conferencing to discuss final language on specific bills. As this year is the second year of our state’s two-year legislative biennium, any bill which does not become law this year will no longer be a live bill.
This week, after strong debate, the House passed a comprehensive tax relief bill on a rare unanimous vote. The bill is similar to the bill passed by the Senate, except the House bill does not include the controversial single individual income tax rate provision, and the estimated cost of the House version is substantially lower than the Senate’s. Senate leadership, however, immediately rejected the House bill and sent it to committee. A final agreed bill will essentially be compiled next week through a Tax Conference Committee – a joint committee consisting of the House and Senate Tax Chairs, Vice Chairs, and Ranking Minority Member.
Key 2024 Legislative Deadlines
April 5 – First Adjournment
April 29 – Veto Session Begins
April 30 – Anticipated End of Veto Session
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. The Senate amended the bill and passed it on a vote of 39-1. Status: This week, the House concurred with the Senate amendments. The bill will now be sent to Governor Laura Kelly for consideration.
Comprehensive Tax Relief
Senate: Last week, the Senate passed Senate Bill 539 which would set a single income tax rate for individuals, increase the standard deduction and the personal exemption, exempt social security income from taxation, increase the residential property tax exemption from the statewide school levy (from $40k to $100k), and establish a 0 percent sales tax on food beginning on July 1, 2024. The bill would reduce taxes by $1.86 billion over the next three years. Governor Kelly vetoed a previous tax bill that contained the single income tax rate provision and is likely to do so again on any similar legislation sent to her. House: The House amended and passed House Substitute for Senate Bill 300 on a unanimous vote. The bill would lower individual income tax rates, increase the standard deduction and personal exemption, completely exempt Social Security income, increase the residential property tax exemption from the statewide school levy (first $100k in valuation), decrease the ad valorem mills collected for schools (to 18 mills, currently 20 mills), and abolish the local ad valorem tax reduction fund. As it left the House Tax Committee, the bill was estimated to reduce taxes by $1.27 billion over three years. Status: A joint tax conference committee between the House and the Senate will soon meet to discuss the contents of any agreed tax relief package.
Single Sales Factor Apportionment
The state department of revenue (KDOR) introduced two bills this year (HB 2796 and SB 507) that would have required corporate taxpayers to use a single-sales factor apportionment formula beginning Jan. 1, 2025. These bills included market-based sourcing provisions and were essentially revenue neutral to the state. Industry stakeholders had introduced an alternative bill in HB 2798 which would have allowed for a two-year “election phase-in” of the single-sales factor apportionment formula. The bill also included provisions to offset potential increases in tax liability for some companies, such as a “New Jersey model” tax credit for deferred tax liability. The estimated cost to the state for this 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 and the tax liability off-set provision. The Senate Tax Committee held a hearing on SB 507, and the House Tax Committee held hearings on HB 2796 and HB 2798. Status: While neither committee ultimately took final action on these bills, stakeholders were encouraged by the Tax Committee Chairs to pursue new legislation next year.
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 House passed the bill on a vote of 82-36, and the Senate passed the bill on a vote of 27-13. Status: The bill now goes to Governor Laura Kelly for consideration.
CDL Military Training Waiver
SB 462 and HB 2679 would authorize the director of vehicles to waive the knowledge and skills test for driving a commercial vehicle for an applicant that provides evidence that such applicant qualifies for the military even exchange program for commercial driver’s licenses. The House passed HB 2679 on a vote of 120-0, and the Senate passed SB 462 unanimously. The House Transportation Committee then amended SB 462 to add in the contents of HB 2682, a bill that would disqualify a person’s commercial vehicle driving privileges when such person is in noncompliance with the federal motor carriers safety administration’s drug and alcohol clearinghouse. The House passed SB 462, as amended, 122-1. Status: The Senate did not concur with the House amendments, and the bill was referred to a Transportation Conference Committee to further discuss the contents of the bill.
Elevator Safety Act
HB 2826 would amend the Elevator Safety Act. The bill would amend the definition of elevator, licensure requirements, inspection and testing requirements and adoption of rules and regulations. The House Commerce Committee held a hearing on the bill. The committee amended the bill and placed the contents of the bill into Senate Bill 143, creating House Substitute for Senate Bill 143, before passing it out of committee. The bill, as amended, did not impact the existing exemption for elevators within grain elevators and biofuel facilities. Status: The House passed the bill on a vote of 107-15 and will now go to the Senate for a motion to concur or nonconcur. If the Senate does not concur with the House amendments, the bill go to a joint conference committee for further consideration.
Nuisance Abatement
In 2021, Senate Bill 52 was enacted 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. That law specifically excludes agribusiness facilities. This year, the Senate passed Senate Bill 362 which removes a sunset provision in the Sedgwick County law. Following passage by the Senate, the House Committee on Local Government passed SB 362 without amendment. Senate Bill 162 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. Status: This week, the House passed SB 362, which now goes to Governor Laura Kelly for consideration. While the House did not take action on SB 162, the bill could be given further consideration in a conference committee next week.
Utility Legislation
- HB 2527 would make significant changes concerning Evergy’s cost recovery to prepare for the planned construction of a new natural gas energy generating facility. The bill would authorize the electric public utility to recover certain expenses from depreciation and construction work in progress. It would also authorize economic development electric rates for certain large electric customers, limit the time that such rates may be implemented, and extend the timeline for the state corporation commission to make a ratemaking determination and treatment prior to the utility constructing or acquiring a stake in a transmission or electric generation facility. The House adopted an agreed amendment between Evergy and ratepayer groups. The Senate amended the bill to prohibit utilities from recovering reduced revenues from ratepayers. The Senate passed the bill on a vote of 35-2. Status: The bill now goes to the House for a motion to concur or non-concur with the Senate amendments.
- 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 Senate amended the bill and passed it on a vote of 32-6. Status: The bill now goes to the House for a motion to concur or non-concur with the Senate amendments.
- 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 presumption against retirement of fossil fuel-fired electric generating units. The Senate passed the bill 28-9. The House amended the bill to include a presumption for nuclear power generation. The House passed the bill on a vote of 107-16. Status: The bill now goes to the Senate for a motion to concur or non-concur with the House amendments.
- This week, the House Energy Committee received an informational hearing on the issue of high, and growing, transmission delivery costs for renewable energy. Individuals from the Kansas Corporation Commission, the Southwest Power Pool, Midwest Energy, and Kansans for Lower Electric Rates presented. Find a recording of the hearing here: Kansas State Legislature.
SALT Parity
HB 2465 would amend the SALT Parity Act to clarify the determination of taxable income of an electing pass-through entity, and to provide for the passing-through of tax credits to electing pass-through entity owners. The bill clarifies that an electing pass-through entity would be subject to tax equal to 5.7 percent of the sum of each resident and nonresident electing pass-through entity’s income attributable to Kansas; and each resident electing passthrough entity owner’s pro rata or distributive share of the electing pass-through entity’s income not attributable to Kansas. The changes would be applied retroactively to tax year 2022. The Senate passed the bill 38-2. Status: The bill may be given further consideration in a joint tax conference committee.
Net Operating Loss Subtraction Modification
HB 2465 would create a subtraction modification allowing taxpayers who carried back federal net operating losses in tax years 2018 through 2020 pursuant to the federal Coronavirus Aid, Relief, and Economic Security (CARES) Act to subtract such amounts from their income for purposes of determining Kansas adjusted gross income. Taxpayers would be permitted to carry forward such net operating loss for up to 20 years if the amount exceeds the Kansas adjusted gross income of the taxpayer. The bill would extend the deadline for eligible taxpayers to file amended returns for tax years 2018 through 2020 until April 15, 2025.The Senate passed the bill out on a vote of 38-2. Status: The bill may be given further consideration in a tax conference committee.
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 and may receive further action during a tax conference committee.
Foreign Ownership of Real Property
The legislature has considered multiple bills this year to increase oversight of “foreign adversaries” or “countries of concern” in Kansas. The Senate Committee on Federal and State Affairs was unable to advance its bill, SB 446, out of committee. This week, on a vote of 84-39, the House passed House Sub for SB 172, a bill that 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. As amended, the bill exempts individuals and properties previously verified by the federal interagency Committee on Foreign Investment in the United States. Status: The bill now heads to the Senate for a motion to concur or nonconcur with the House amendments. If the Senate non-concurs, then the bill will be sent to a joint conference committee to discuss the final bill language.
Drone Technology Critical Components
Hse Sub for SB 271 would prohibit the acquisition of critical components of drone technology from countries of concern and require the divesture of such technology. The bill would prohibit a government agency from purchasing, acquiring, or otherwise using any drone or any related services or equipment if the critical components were produced in any country of concern or produced or owned by any foreign principal. The bill includes a new drone rehabilitation reimbursement fund to help government agencies replace their current drones. The bill impacts ariel drones only and not ground drones. This week, the House passed the bill on a vote of 83-40. Status: The bill now heads to the Senate for a motion to concur or nonconcur with the House amendments. If the Senate non-concurs, then the bill will be sent to a joint conference committee to discuss the final bill language.s
Commercial Property Valuations Under IRC 1031
SB 311 would require that the sale price or value at which a property sells or transfers ownership in a federal Internal Revenue Code Section 1031 exchange would not be considered an indicator of fair market value or as a factor in arriving at fair market value for property tax valuation purposes. Federal Internal Revenue Code Section 1031 exchange transactions would not be used as comparable sales for valuation purposes or as valid sales for purposes of sales ratio studies conducted by the Director of Property Valuation at the Department of Revenue. Proponents argued that commercial properties should be valued at fair market value and not on the amount of potential income the property can generate. The Senate Tax Committee held a hearing on the bill during the 2023 legislative session. The Senate passed the bill on a vote of 21-19. Status: The bill may receive further consideration during a tax conference committee.
Budget Bills
The House and Senate have each passed budget bills for fiscal years ending 2024, 2025, 2026, and 2027. The Senate Budget bill, SB 514, includes expenditures totaling $25.1 billion, including $10.2 billion in state general funds (SGF), in fiscal year 2025. This would be an all funds decrease of 1 percent, but an SGF increase of $311.3 million, or 3.1 percent, above fiscal year 2024. The budget would spend about $1.9 billion on general government services, $8.6 billion on human services, $4.3 billion on higher education, $2.3 billion on transportation and $6.5 billion on K-12 education but without new money for special education. Some specific expenditures include money to fight the fentanyl crisis, build a new cancer research facility, fund passenger rail service and airports, fund the World Cup in Kansas City, and purchase a new plane for the Kansas Highway Patrol. The bill also includes more than $174 million for a 5 percent pay raise for state employees, increases Medicaid reimbursements for hospitals and childcare, and earmarks about $16 million to send National Guard troops to the Texas border and a budget proviso directing the governor to send the guard there to fight issues related to illegal immigration. The House budget bill, Sub HB 2273, would spend $25.1 billion, including $10.4 billion SGF, in fiscal year 2025. This is an all funds decrease of $207.1 million, or 0.8 percent, but an SGF increase of $412 million above fiscal year 2024. Status: A Conference Committee on the budget began on March 25, and the final budget language will be placed into Senate Bill 28.
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. Both the House and Senate passed the bill on a unanimous vote. Status: The bill will soon be presented to Governor Laura Kelly for consideration.
Water Structure Licensing Fees
The Kansas Dept. of Agriculture requested introduction of HB 2526 to 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. While the bill did not receive a hearing in the House, the Senate Ways and Means Committee included language from the bill in Senate Bill 524.
Irrigation District Board Elections
Senate Bill 524 would amend current law pertaining to the election of members of the board of directors of irrigation districts, which are not a part of groundwater management districts. The bill would amend the terms of office of board members to include a three-year term, if established by the board of directors by passage of a resolution. The Senate Committee on Ways and Means amended the bill to add language from HB 2526 regarding inspections of dams, and granting civil penalty authority to the Kansas Dept. of Agriculture for non-compliance with the water structures act. The bill would also allow KDA to assess registration fees and increase permit fees. The Senate further amended the bill to change the definition of dam and water structure, as the terms relate to agriculture use. The Senate passed the bill with a unanimous vote. Status: For the bill to move forward, it will need to be included in a conference committee report between the House and Senate.
Private Pesticide Applicator Certification
Introduced by the Kansas Dept. of Agriculture (KDA), HB 2607 would amend 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 amended the bill and passed it on a vote of 118-1. The Senate further amended the bill to change the maximum civil penalty for business that violate the act to $5,000 (the amount in current law), while setting the maximum civil penalty on individuals at $500. An additional amendment allows family applicators to apply pesticides at 16 years of age under direct supervision. Status: The Senate passed the bill and sent it to the House for a motion to Concur or Nonconcur with the Senate Amendments. If the House non-concurs, then the bill will be sent to a joint conference committee to discuss the final bill language.
Economic Development Program Repeal
As introduced, SB 546 would have decreased the corporate income tax rate, discontinued tax credits of the high performance incentive program (HPIP), discontinued payroll withholding tax benefits of the promoting employment across Kansas (PEAK) act, and repealed unused tax credits. A hearing in the Senate Tax Committee brought many opponents from industry. This week, the Tax Committee amended the bill and placed the contents of the bill, as amended, into Sub Bill for HB 2201. As amended, the bill would do the following: reduce corporate income tax rates to 3.5 percent in 2024, 3.0 percent in tax year 2025, and 2.75 percent for tax year 2026 and thereafter. In addition, the bill would repeal the following tax credits effective in tax year 2025: swine facility improvement; contributions to an individual development account; business and job development; plugging abandoned oil or gas well; agritourism liability insurance; assistive technology contributions; declared disaster capital investment; environmental compliance; and owners Promoting Employment Across Kansas. Status: The bill was passed out of the Senate Tax Committee and placed on the Senate calendar. The bill may receive further consideration during a joint tax conference committee.
Animal and Ag Facilities Protection
HB 2816 would prohibit entering or remaining on, and knowingly making false statements to gain access to, animal facilities and field crop production areas. The bill would amend current law to apply to physical trespass or making a false statement on an employment application to gain entry into an animal or ag research facility. 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. The House passed the bill 99-24. The Senate Committee on Agriculture and Natural Resources held a hearing on a companion bill, SB 389. The Senate removed the contents of HB 2047 and inserted the contents of SB 389, creating Senate Sub for House Bill 2047. This week, the Senate passed Sen Sub HB 2407 on a unanimous vote. Status: The bill now heads to the House for a motion to concur or nonconcur with the Senate amendments.
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. The House passed the bill 120-3. Status: The bill may be given further consideration in a conference committee.
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. Both the House and Senate passed the bill with a unanimous vote. Status: The bill will now be sent to Governor Laura Kelly for consideration.
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 bill is likely to provide more than 97 percent of Kansas employers immediate savings in their unemployment tax payments. Find a detailed summary of the substitute bill here. After amending the bill to address forgiveness of certain companies’ large negative balances, the Senate passed the bill with a unanimous vote. Status: The bill now goes to the House on a motion to concur or nonconcur with the Senate amendments.
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. The bill has no cost to the state. The House Tax Committee held a hearing on the bill, but no further action was taken. Status: The bill might be considered within a tax conference committee report in the coming weeks.
Underground Petroleum Storage Tank Permits
Senate Bill 336 would remove the requirement for underground storage tank operating permits to be renewed annually. Following passage by the Senate, the House passed the bill on a vote of 121-1. Status: Governor Laura Kelly has signed the bill into law.
Train Length Legislation
Introduced last year, SB 271 would have created a maximum train length of 8500 feet and required railroads to maintain a minimum distance of 250 feet between a near-edge railroad crossing and stored railroad rolling stock. Status: The contents of the bill were removed and replaced with language prohibiting aerial drones from countries of concern.
Train Set Back Distance
There may be a motion in a Transportation Conference Committee next week to place language in a bill adopting federal set back distance standards for stored rolling stock which would be a minimum distance of 250 feet from the near-edge railroad crossing.
Two-Man Train Crews
SB 402 was introduced to prohibit KDOT from regulating crew sizes for class II and class III railroads. Status: No action was taken, and this bill is no longer a live bill this year.
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 may be given further consideration in a joint tax conference committee.
Credit Card Surcharge 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, and the House passed the bill on a vote of 111-1. Status: On Friday, March 29, Governor Laura Kelly signed the bill into law.
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 amended the bill to exempt nonprofit 3rd parties from the requirements. This week, the House passed the bill on a vote of 83-39. Status: The bill may be given further consideration in a joint Judiciary conference committee next week.
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 the bill 34-0, and the House passed the bill 122-1. Status: The bill now goes to Governor Laura Kelly for consideration.
Underground Petroleum Storage Tank Permits
Senate Bill 336 would remove the requirement for underground storage tank operating permits to be renewed annually. The bill was approved by the Senate and the House. Status: Governor Laura Kelly has signed the bill into law.
Medicaid Expansion in Kansas
Governor Kelly has made Medicaid expansion a top policy priority for her administration. The House Committee on Health and Human Services held a hearing on its Medicaid expansion bill, HB 2556. Status: No further action was taken on the issue.
Other Bills of Interest
SB 376 extends the single city port authority income tax credit. Senate Passed, referred to House Tax.
SB 484 personal property tax exemptions for ATVs and trailers. Senate Passed, referred to House Tax.