31 Jan 2022 Kansas Statehouse Insider – Week 03
2022 Legislative Session, Week 3
This week, the Legislature passed a map drawing new lines for the state’s four Congressional districts, held hearings on various bills proposing to exempt “food” from states sales tax, and advanced an economic development bill that would provide for incentives for specified industries to establish their national corporate headquarters in the state with specified capital investment of at least $1,000,000,000. In addition, the Committees on Agriculture received annual reports from the state commodity commissions, and the House Agriculture Committee held a hearing on a bill making it unlawful to capture or possess an ornate box turtle – the official state reptile of Kansas. Here are some of the other highlights from this week.
Redistricting
Aside from passing a budget, one of the main objectives of the 2022 session will be adopting new maps and boundaries for the legislature, statewide elected seats, state school board, and our state Congressional districts. This week, both the Senate (26-9) and the House (79-37) passed Sub Senate Bill 355, a bill containing a reapportionment map for Kansas’ four congressional districts. Each district would contain 734,470 Kansans – a four-way division of the state’s census population which is thought to be the key to a federal court holding the map as constitutional. The bill was presented to Governor Kelly for consideration on Thursday, January 27. It is assumed that, due to lack of Democrat support, the Governor will veto the bill.
Unemployment Fund Briefing
This week, Kansas Dept. of Labor provided a report to the legislature on a recent increase in fraudulent unemployment claims received by the agency. The agency has seen renewed attempts to file fraudulent unemployment claims in the new benefits year. Thankfully, the agency reported it is catching these claims – using identity verification protocols and a one-week waiting period – and has not paid out substantially more in unemployment claims. Last year, state auditors found the state had paid out about $700 million in fraudulent claims from its employment security fund during the pandemic.
Sales Tax Exemption for Fencing Following Wildfire
Last week, the Senate passed Senate Bill 318, providing a sales tax exemption for purchases to reconstruct, repair or replace certain fencing damaged or destroyed by wildfires across the state in December. The bill was amended to provide a permanent exemption on these materials from the state sales tax. In addition, the bill was amended to allow county commissioners to provide a property tax exemption for properties that were damaged during a natural disaster. The House Committee of Taxation has scheduled a hearing on the bill on Tuesday, February 1, at 3:30 pm in room 346-s.
Sales Tax Exemption for Delivery Services
This week, the Senate Tax Committee held a hearing on Senate Bill 327, a bill that would exempt separately stated delivery charges from state sales tax beginning on July 1, 2022. The state department of revenue estimates bill would cost the state $4.8 million annually in lost revenue.
Food Sales Tax Exemption
Governor Laura Kelly, and 2022 Gubernatorial Candidate (and current Attorney General) Derek Schmidt have stated a goal of eliminating, to some degree, the current state sales tax on food. Referred to as Governor Kelly’s “Axe the Tax” plan, a full repeal of the food sales tax would cost the state over $500 million annually in lost revenues, while allowing the average Kansas family to save about $500. Multiple bills on the issue have been introduced. The Senate Tax Committee will hold hearings on Senate Bill 339 and Senate Bill 342 on Tuesday, February 1. In addition, the House Tax Committee held hearings on House Bill 2484 and House Bill 2487.
Hearing on Resolution Denouncing Natural Gas “Price Gouging”
This week, the House Utilities Committees held a hearing on HCR 5023, denouncing price gouging and market manipulation in the natural gas marketplace. The resolution supports investigations into the extraordinary price increases of wholesale natural gas during the extreme cold weather event “Uri” during February 2021 that resulted in increased costs on ratepayers. The Committee Chairman has indicated his intent to take Committee action on the resolution next week.
KDA Agency Fees
Introduced on Wednesday, January 26, House Bill 2560 would authorize the extension of current fees assessed on the agribusiness industry by the Kansas Dept. of Agriculture. No fees would be increased by the bill. A hearing has been scheduled in the House Committee on Agriculture for Tuesday, February 1 at 3:30 pm in room 112-n.
New Economic Development Idea Proposed
On Thursday, January 27, on a vote of 32-7, the Senate passed Senate Bill 347, a bill which would enact the “Attracting Powerful Economic Expansion” act to provide for tax and other incentives to boost the state’s economic development. The bill would be the single biggest economic development bill in state history, with up to $1 billion in tax and other inducements to bring an unidentified business to the state. It is said the business would bring a $4 billion investment, build a 3 million square foot facility for a headquarters or factory in eastern Kansas, and hire at least 4,000 workers. The inducements would include a refundable tax credit for a portion of the investment, reimbursement of certain payroll costs and training costs, retention of certain payroll withholding taxes, a sales tax exemption for project construction and a property tax incentive for projects located in a foreign trade zone. Proponents to the measure, including the Kansas Dept. of Commerce, argued that competitive economic incentives were vital to Kansas being competitive with surrounding states. The bill is now scheduled for hearing in the House Committee on Commerce, Labor and Economic Development on Monday, January 31.
Industry Regulations
Legislation on regulatory reform will be advanced this year. House Bill 2087 would amend a law requiring review of economic impact of proposed regulations by the state budget director. The Senate amended the bill to reduce the review threshold from $3 million to $1 M threshold to increase the number of regulations reviewed by the state budget director. The Senate passed the bill on a vote of 39-0. The bill now goes back to the House to either concur or non-concur with the Senate amendment. Also, as introduced, Senate Bill 34 would sunset all administrative regulations every five years unless extended by the legislature. However, the bill is likely to be amended to require a five-year review, only, and also allow for a 15-day quick repeal process for outdated regulations. In addition, House Concurrent Resolution 5014 and Senate Concurrent Resolution 1609 would propose a constitutional amendment to increase legislative oversight of agency regulations. If approved by two-thirds of the legislature, the amendment would go before Kansas voters in the 2022 election.
Electric Rates Bill
Kansas has the highest energy rates in our region. Senate Bill 359 was introduced to help reduce those costs on rate payers by removing the state sales tax on utilities and granting the same authority to cities and counties. The measure is thought to have an elevated fiscal cost for the state. A hearing on the bill is scheduled for Wednesday, February 2 in the Senate Committee on Assessment and Taxation.
Renewable Energy Bills Heard
This week, the Senate Committee on Utilities held hearings on two bills (SB 323, SB 324) that would add new requirements for lease instruments concerning wind and solar projects. In addition, the Senate Committee on Local Government held multiple-day hearings on SB 325 which would enact the “Kansas Renewable Energy Transparency Act,” adding state-level zoning requirements for wind and solar easements and projects. Specifically, SB 325 would state that, on and after July 1, 2022, no facility could be constructed on any parcel of land that is not zoned for industrial use by the county in which the facility is to be constructed, and no developer could begin site preparation for or construction of a facility without first acquiring the appropriate building permit or conditional use permit from the county where the facility is to be constructed. The bill outlines a process for citizens to petition the county government to protest a decision to rezone land for industrial activities. It is thought the bills were intended to initiate discussion on concerns with wind and solar projects in Kansas.
Autonomous Vehicles
On Monday, Senate Bill 379 was introduced to provide for the use and regulation of autonomous motor vehicles in Kansas. The bill was referred to the Senate Transportation Committee. Multiple-day hearings are scheduled over the bill on Tuesday, February 1 and Wednesday, February 2, at 8:30 am in room 546-s.
Water Funding
In the House Water Committee on Wednesday, Chairman Ron Highland (R-Wamego) announced a plan to use current SGF to pay off long-term state debt of approximately $84 million on Milford and Perry reservoirs. Kansas has balloon payments due in 2028, 2029 and 2030, for which the total principal and interest payments would be greater than $110 million. Paying off this debt now would save the state approximately $26 million. More information is available in the KWA 2022 Annual Report. The Chair said he has sent a letter to the House Appropriations Chair and Sen Ways and Means Chair with this request.
Senate Confirmation of State Board of Tax Appeals Nominee
On Thursday, January 27, the Kansas Senate confirmed the appointment of Devin Sprecker to serve a term of four years on the Kansas Board of Tax Appeals.