To Contact Us

KAEP
816 SW Tyler
Topeka, KS 66612

Phone: 785-234-0461
Fax: 785-234-2930
E-mail: info@kaep.org

 

 

 

2009 LEGISLATIVE UPDATE

All of the bills being tracked by your Association are logged on the Bill Tracker page of our website.  You can read a brief summary of the bill, the actual text of the bill, the history of the bill and upcoming actions by following the link.  If you have any problems using the Bill Tracker, please contact Mary Jane Stankiewicz maryjane@KansasAg.org or Ron Seeber ron@KansasAg.org.


June 2, 2009
KAEP Legislative Victories

Ethanol Resolution: APPROVED

SCR 1610 will be sent to EPA that encourages them to consider higher blends. This resolution was developed by KAEP and introduced by Senator Mark Taddiken. KAEP led the charge on this issue with the help of the Kansas Farm Bureau, the Petroleum Marketers and Convenience Stores and the Kansas Co-op Council. It was overwhelmingly approved by both chambers. Special thanks goes to Speaker O'Neal and Rep. Larry Powell who assisted us in getting this bill through the process on the House side. Governor Parkinson has agreed to write a letter to EPA regarding support of this matter.

Exemption from Wet Distillers Feed Tax: APPROVED

KAEP staff worked with the Kansas Department of Agriculture to find a way to exempt Wet Distillers Grain from the .08 cent state feed tax, and we are pleased to announce that we were successful with this effort. The Kansas Department of Agriculture has provided a Distillers Wet Grains Exemption information document and exemption form. Please note these documents are also listed on the Kansas Department of Agriculture’s website, www.ksg@kda.ks.gov.

Raid on Ethanol Incentives: DENIED

Through a cautious and diligent effort, the KAEP was able to sequester any attempt to raid the ethanol incentive. After meeting with then Governor Sebelius and then Lieutenant and now Governor Parkinson, KAEP was able to reinforce the importance and positive economic impact of the incentive and subsequently help keep it from the proverbial “low hanging fruit” of a budget grab. The biodiesel incentive did not enjoy similar success. This is a huge victory for the industry during a legislative session where bankers, realtors, and other professional organizations were subject collectively to their fee funds being raided in the multiple millions of dollars. The ethanol industry owes a great debt to our allies such as John Bottenberg in assisting with our stealth advocacy effort to prevent an incredibly dangerous policy from coming to fruition. Our challenge now is to keep the incentive program intact next legislative session when the statute is up for renewal. Our charge in the mean time is to continue to educate our legislators of the overwhelming positive economic impact ethanol production has to Kansas and the nation especially during these challenging times.

Energy Bill Deal Struck: KAEP Successful in Striking Dangerous Language: APPROVED

Legislation allowing for the Holcomb plant expansion and establish statutory guidelines ensuring a more stable regulatory environment for Kansas industry.

KAEP position: Work with the Alliance to pursue legislation that prohibits state agencies from regulating industry without prior standards based upon science.

Result: In a stunning change of the executive branch’s policy of denying a license for an expansion of the Holcomb coal fire power plant, Governor Parkinson negotiated and came to agreement with Sunflower electrical cooperative allowing for the construction of an 895 megawatt plant. The company is also to create the Sunflower Integrated Bioenergy center, which will seek federal renewable energy stimulus funds for projects that could include ethanol, biodiesel, and algae energy plants. The agreement also required that legislation (HB 2369) be approved allowing for comprehensive energy policy including increased wind power and other renewable policies. The KAEP legislative team discovered objectionable language in the bill dealing with the use of agriculture land in the production of biofuels. We brought our concerns to the Senate Leadership and those provisions, drafted by KS Livestock Association, were stricken. Special appreciation needs to be extended to Senators Mark Taddiken, Pat Apple, Mike Peterson, and Steve Morris for listening to KAEP concerns and responding accordingly. HB 2369 was approved overwhelmingly by both chambers

Water Office Fee Increases: DENIED

The Kansas Water Authority proposed a fee increase on industrial water usage, pesticides and fertilizer to fund current programs and enhance additional programs within the office. This is part of an across the board fee increase for the entities the agency oversees to maintain current levels of funding ($ 1.3M) and increase an additional $3.4M for dam safety/rehabilitation, WRAPS Implementation, water supply restoration, and hydrologic modeling. They planned to acquire this funding through changing the statutory level of fees.

Result: After our expressing strong opposition to House and Senate leadership, both bills were referred to committee and received no further action this legislative session.

Precarious Immigration “Reform”: DENIED

Several legislators once again attempt to pass legislation that will give Kansas businesses the burden of enforcing federal immigration laws without protecting them from federal civil rights lawsuits. In addition, they want to mandate all Kansas businesses to use the federal e-verify system prior to hiring any employee. The e-verify system is inaccurate and unreliable. We opposed new mandates on business to enforce federal immigration law. Oppose any bill that requires businesses to choose between state prosecution and federal equal opportunity civil rights violations.

Result: Several immigration related bills were introduced this session, but our legislative advocacy prevented momentum on the bills.

Costly Workers Compensation “Reform”: DENIED

Governor Sebelius, labor unions and trial lawyers introduced several bills attempting to amend the law to overturn a recent Kansas Supreme Court decision and increase worker compensation rates. The court case resulted in a favorable outcome for business concerning workers compensation rates. One in particular, SB 258, gained considerable momentum. Estimates show that this bill could increase rates up to 12%. SB 258 would tie rates to a midwest states average and tack on an automatic cost of living adjustments. We opposed legislation that would result in increased workers compensation rates.

Result: We halted momentum on workers compensation legislation. A handful of entities to square off with union and trial attorney interests to defeat legislation that would dramatically increase workers compensation.

Other Items

Legislature Tax Package: Decrease in Tax Credits

Legislature approved a comprehensive tax package (HB 2365) that is estimated to raise $60 to 70 million to the help address the state’s $328 million budget shortfall. The rest is made up by state budget cuts. There was considerable opposition from the business community and the limit the cut to 10%. Several attempts were made by legislators to raise the tax increase to 15% or higher. Democrat and moderate Republican legislators voiced concerns that businesses were not “putting enough skin in the game” and there was no public hearing on the measure. House Republican leadership opposed the measure, but a coalition of the above mentioned groups garnered enough votes to approve the measure. The Governor and Senate leadership also supported the proposal.

HB 2365 includes an across the board 2 year 10% cut of all nonrefundable tax credits ($7.7m) with the exception of earned income, tax on food, child dependents, and homestead credits. Included among those nonrefundable credits moving forward for the state’s 2010 and 2011 fiscal years are:

Additionally, the package includes:

May 11, 2009
Veto Session Update

The Kansas Legislature’s veto session ended Saturday, May 9, shortly before 3am. The House concurred to the Senate’s budget and tax package to fill the $328 million anticipated budget deficit for fiscal year 2010. The Senate’s budget and tax proposal combines a series of budget cuts and tax provisions (outlined below). Attempts were made at the Governor’s request to suspend the estate tax and franchise tax phase outs, and to decouple the state from tax breaks provided in the federal stimulus package. Neither of the Governor’s requests was approved. The final economic outcome of the legislature action leaves only an estimated $17,000 ending balance. The legislature will return for a ceremonial end of the session June 4. Unless there are unforeseen circumstances, we do not anticipate any substantive action at that time.

Raid on Ethanol Incentives Prevented

Through a cautious and diligent effort, the KAEP was able to sequester any attempt to raid the ethanol incentive. After meeting with then Governor Sebelius and then Lieutenant and now Governor Parkinson, KAEP was able to reinforce the importance and positive economic impact of the incentive and subsequently help keep it from the proverbial “low hanging fruit” of a budget grab. The biodiesel incentive did not enjoy similar success. This is a huge victory for the industry during a legislative session where bankers, realtors, and other professional organizations were subject collectively to their fee funds being raided in the multiple millions of dollars. The ethanol industry owes a great debt to our allies such as John Bottenberg in assisting with our stealth advocacy effort to prevent an incredibly dangerous policy from coming to fruition. Our challenge now is to keep the incentive program intact next legislative session when the statute is up for renewal. Our charge in the mean time is to continue to educate our legislators of the overwhelming positive economic impact ethanol production has to Kansas and the nation especially during these challenging times.

Energy Bill Deal Struck: KAEP Successful in Striking Dangerous Language

In a stunning change of the executive branch’s policy of denying a license for an expansion of the Holcomb coal fire power plant, Governor Parkinson negotiated and came to agreement with Sunflower electrical cooperative allowing for the construction of an 895 megawatt plant. The company is also to create the Sunflower Integrated Bioenergy center, which will seek federal renewable energy stimulus funds for projects that could include ethanol, biodiesel, and algae energy plants. The agreement also required that legislation (HB 2369) be approved allowing for comprehensive energy policy including increased wind power and other renewable policies. The KAEP legislative team discovered objectionable language in the bill dealing with the use of agriculture land in the production of biofuels. We brought our concerns to the Senate Leadership and those provisions, drafted by KS Livestock Association, were stricken. Special appreciation needs to be extended to Senators Mark Taddiken, Pat Apple, Mike Peterson, and Steve Morris for listening to KAEP concerns and responding accordingly. HB 2369 was approved overwhelmingly by both chambers.

Legislature Tax Package: Decrease in Tax Credits

Legislature approved a comprehensive tax package (HB 2365) that is estimated to raise $60 to 70 million to the help address the state’s $328 million budget shortfall. The rest is made up by state budget cuts. There was considerable opposition from the business community and the limit the cut to 10%. Several attempts were made by legislators to raise the tax increase to 15% or higher. Democrat and moderate Republican legislators voiced concerns that businesses were not “putting enough skin in the game” and there was no public hearing on the measure. House Republican leadership opposed the measure, but a coalition of the above mentioned groups garnered enough votes to approve the measure. The Governor and Senate leadership also supported the proposal.
HB 2365 includes an across the board 2 year 10% cut of all nonrefundable tax credits ($7.7m) with the exception of earned income, tax on food, child dependents, and homestead credits.

Included among those nonrefundable credits moving forward for the state’s 2010 and 2011 fiscal years are:

Additionally, the package includes:

Coming Soon

The Kansas Ethanol Processors Association will soon provide a link for a comprehensive list of victories and other legislation issues facing the industry.
 

May 4, 2009
Veto Session Update

The Kansas Legislature’s veto session started on Wednesday, April 29 with relatively little progress.  The House and Senate budget committees both approved wrap up budgets to fill the $328 million anticipated budget deficit for fiscal year 2010.  The Senate’s budget combines a series of budget cuts, suspension of the estate tax and franchise tax phase outs, and decouples the state from tax breaks provided in the federal stimulus package.  The House’s budget is based entirely on budget cuts and fee fund sweeps.  However, during debate on Friday, the House bill failed to receive the necessary votes to advance it to final passage.  The House budget committee will meet early this week to work on a new bill.  The Senate will debate their bill early this week as well.

Energy Bill Vetoed

As anticipated, the Governor vetoed House Bill 2014, the comprehensive energy bill that provides for an expansion of the Holcomb power plant and provides regulatory reform within certain state agencies.  The House approved HB 2014 74-48 (10 votes shy of a veto override).  The Senate approved the bill 31-7 (4 more votes than needed for a veto override).   House leadership will need to muster 10 votes to override the expected veto and there are behind the scenes deals being negotiated during the break to obtain those votes.  The override will more than likely be one of the last acts of the veto session.

Ethanol Resolution

SCR  1610 will be sent to EPA that encourages them to consider higher blends. This resolution was developed by KAEP and introduced by Senator Mark Taddiken. KAEP led the charge on this issue with the help of the Kansas Farm Bureau, the Petroleum Marketers and Convenience Stores and the Kansas Co-op Council. A special thanks goes to Speaker O'Neal and Rep. Larry Powell who assisted us in getting this bill through the process on the House side. We will now ask Governor Parkinson to write a letter to EPA regarding this matter and include a copy of SCR 1610.

Franchise Tax and Estate Tax Phase Out Suspension

The Senate introduced and the Tax Committee held a hearing on SB 334, a bill that suspends the graduated phase out of the estate tax and franchise tax until 2012.  This bill is estimated to bring in $19 million in additional revenue into the state coffers that was otherwise slated for franchise and estate tax reductions.  The KS Department of Revenue testified in favor of the bill.  Opponents included the Kansas Chamber, and other business organizations.  No action was taken on the bill and hearings will continue this week.

Coming This Week: Veto Session Continues

The House and Senate will continue to work to find $328 million to fund the state.  With the House failing to approve a budget on its first try, the veto session may continue through the remainder this week and possible into next week.
 

April 6, 2009
Week In Review

The regular session of the legislature ended on Friday night, April 3 with both chambers reconvening April 29 for the veto session.  The House and Senate worked long hours churning through their work and sending dozens of bills to the Governor.  The Governor will review the bills and have the option to sign them into law, allow them to become without her signature, veto the bills, or line item veto certain sections of appropriation bills.

Ethanol Resolution Approved

The House approved Senate Concurrent Resolution 1610, which encourages EPA to look at higher blends of ethanol. The Senate approved SCR by a vote of 39-0.  The House approved the resolution by a vote of 110-12.  We have met with the Lieutenant Governor and have his administration’s support.

Energy Bill Approved: Veto Pending

The House and Senate approved the Conference Committee Report for House Bill 2014, the comprehensive energy bill that provides for an expansion of the Holcomb power plant and provides regulatory reform within certain state agencies.  The House approved the HB 2014 74-48 (10 votes shy of a veto override).  The Senate approved the bill 31-7 (4 more votes than needed for a veto override).   The Governor has announced she will veto the bill.  House leadership will need to muster 10 votes to override the expected veto and there are behind the scenes deals being negotiated during the break to obtain those votes.

2010 Budget Approved

The House and Senate Conferees approved the budget conference committee report for House Bill 2354, the 2010 fiscal year's budget.   The bill deferred several items to the veto session budget including payments to counties compensating for property tax revenue losses resulting from the exemption of new manufacturing machinery and equipment and rail equipment.  The conference committee agreed to the Senate’s position to cut $390k (3.6%) from KS Department of Agriculture’s budget.  The Senate approved the conference committee report by a vote of 35-3.  The House approved it 71-53. The Governor has the option of vetoing all or parts of the HB 2354.

Coming This Month: Veto Session

On April 29, the Veto Session begins.  This session is traditionally to fund bills approved by the legislature and give the House and Senate an opportunity to attempt to override a gubernatorial veto.  However, March revenue estimates released earlier in the week estimated a projected $57 million budget shortfall.  This will lengthen the veto session as legislators decide how to make up for the funding deficit.  This could entail more intense budget cuts to state agencies, a possible tax increase, or a combination of both. House and Senate budget committees will start working on the “omnibus budget” the week of April 20th at which they will have an even better update of the state’s revenue situation.
 

March 30, 2009
Week In Review

All bills not exempt from bill deadlines had until end of business Wednesday to be approved by the second chamber.  In order to complete its workload, both the House and Senate churned through hundreds of bills and worked late hours.  Thursday was reserved for conference committees to meet and negotiate difference in bills approved by both chambers.  With a snow storm pending, no conference committees were scheduled Friday.

2010 Budget

The House and Senate Conferees agreed to a budget conference committee report for House Bill 2354, the 2010 fiscal year's budget.   They deferred several items to the veto session budget including payments to counties compensating for property tax revenue losses resulting from the exemption of new manufacturing machinery and equipment and rail equipment.  The conference committee agreed to the Senate’s position to cut $390k (3.6%) from KS Department of Agriculture’s budget.  The conference committee also agreed to cut about $9 million from the Department of Commerce’s budget.  The final numbers are being crunched and the report should be voted on by the House and Senate early this week.  

Ethanol Resolution

The House will debate this week Senate Concurrent Resolution 1610, which encourages EPA to look at higher blends of ethanol. Due to time limitations, the House leadership decided to only debate bills that were not exempt from bill deadlines.  SCR 1610 is exempt from deadlines and eligible for debate.  We anticipate it being approved and sent to the Governor by week’s end.

Rail Road Bill Signed Into Law

The Governor signed into law Senate Bill 46.  The bill clarifies a lease agreement originally entered into by the Kyle Railroad and the Mid-States Port Authority in 1984.  This legislation will become effective upon its publication in the Kansas Register.

Minimum Wage Increase

The House debated and approved by a vote of 104 -16, Senate Bill 160.  This bill increases the state’s minimum wage law from $2.65 an hour to $7.25. The wage increase would take effect on January 1, 2010. The House Committee amended the bill allowing new employees under the age of 20 to be paid, during the first 90 days (3 months) of employment, a wage of $4.25 an hour. This provision could not be used to displace employees.  The Committee also amended the bill requiring the state minimum wage to mirror the federal minimum wage in perpetuity.  The bill now goes to a conference committee where differences will be negotiated by the House and Senate conferees.

Constitutional Amendment Establishing a “Rainy Day” Fund

The Senate approved by a vote of 32-8 Senate Concurrent Resolution 1614, a proposed Constitutional amendment calling for an annual .25% transfer of general state revenues into budget stabilization fund The funds could only be removed by special legislation by a three fifths vote.  When the balance exceeds 5% of total state revenue (excluding federal funds), the legislature could transfer out any amount exceeding that 5% with a simple majority vote.  Should SCR 1614 approved by a 2/3rd vote of both chambers, it would go to a popular vote of the electorate at the next election.

Estate Tax for Agricultural Use

The full House approved House Sub. for SB 98 by vote 125-0.  This bill clarifies that agricultural land is to be use-valued for Kansas estate tax purposes, regardless of whether such land was held directly by decedents or was held in non-publicly traded legal entities, including certain partnerships, corporations, limited liability companies, or limited liability partnerships. The clarification of the use-valuation provisions also would be retroactive relative to estates of decedents dying after December 31, 2006.

Coming This Week

This week entails reports being approved by both chambers and the possibility of legislation exempt from deadlines making it through the process.   The final day of the regular session is Saturday, April 4.
 

March 23, 2009
Week In Review

 

Friday was the last day for bills that are not exempt from deadlines to make it through the committee process.  Committees worked long hours amending and approving bills in order to be debated this week.  Concerning the budget, House and Senate Budget Committees both approved their respective budget bills.  The House will debate their bill on Monday of this week the Senate will debate theirs on Tuesday.  Should both bills be approved, the budget legislation will go to a joint House/Senate Conference Committee at which changes between the two versions will be negotiated.

 

Ethanol Resolution

 

The House Agriculture Committee held a hearing and passed out favorably Senate Concurrent Resolution 1610, which encourages EPA to look at higher blends of ethanol. KAEP again testified in support of the bill focused on the fact that there is science and data to support E15 and we think that even higher blends will occur in the future.  We also outlined the job creation by ethanol and the benefit of displacing foreign oil. The Kansas Department of Agriculture and Kansas Farm Bureau also testified in favor of the bill.  We received significant assistance from Agriculture Chairman Larry Powell (R-Garden City), House Speaker Mike O’Neal (R-Hutchinson), and the Speaker’s Chief of Staff Brent Hayden in expediting the resolution through the process.  We anticipate House action this week and to have it on the Governor’s desk shortly thereafter. 

 

Energy Bill Conference Committee

 

The House and Senate conferees agreed on provisions in House Bill 2014, the comprehensive energy bill that provides for an expansion of the Holcomb power plant and provides regulatory reform within certain state agencies.  They came to an agreement on the levels of Renewable Fuel Standards in the bill.  They clarified that the standards for renewables regulated by the Kansas Corporation Commission are tightly restricted to electric generation facilities.   Your Association was in close communication with key Conferees to ensure those standards were restricted to those facilities. The bill will be approved before the end of the regular session on April 4. The Governor has announced she will veto the bill.  At this time, the Senate has the votes to override a veto, but the House is a few votes short.

 

Promoting Employment in Kansas Act

 

The House Tax Committee held a hearing, amended and approved House Bill 2365.  This bill allows a qualified company to retain their employees withholding if a company relocates employees to Kansas from outside Kansas, an existing business can qualify if it hires new employees and the expansion is not to an existing facility or other business operation, or if a qualified business contracts with a third party to perform services on the companies behalf or the third party serves as the legal employer of the new employees providing services to the qualified company.  Representative Marvin Kleeb (R-Overland) authored the bill and was its key proponent.  He testified that this legislation is needed due to the weak economy and out of state competition.  Other proponents included several economic development associations and the Kansas Chamber.  The Department of Revenue testified against the bill and estimates an $8 million fiscal note.  Kleeb offered and the committee accepted an amendment scaling back the scope of the bill by excluding all bioscience and agriculture related businesses among others.   The committee approved the bill without many planned amendments being heard to reinstate businesses cut out of the bill.  Those amendments will be offered on the House floor should leadership allow for debate.

 

KS Bioscience Authority Utility Committee Presentation

 

Tom Thorton and Bret Healy, KS Bioscience Authority, gave a presentation to the House Utilities Committee concerning the American Recovery and Reinvestment Act (federal stimulus package) and Kansas Bioenergy and Biorefining Center for Innovation (KBBCI).   Concerning the stimulus package, they reported that KBA will receive no funding from the law.  There are formulaic funds that will go through Kansas and the KBA will work with a number of organizations statewide to maximize funding under competitive grants.  With regard to the KBBCI, Healy reported that this is a world class research and development effort underway at KU and KSU.  The goals of the KBBCI are to 1) lead replacement of fossil-based fuels and chemicals through the use of commercial biorefining; 2) commercialize efficient biomass resources to produce cost-effective quality power; and 3) improve the carbon capture and sequestration of greenhouse gases.  Chairman Carl Holmes (D-Liberal) did voice concerns that biodiesel and ethanol have hit the market cap and questioned how to get beyond the cap.  Healy responded that alternative fuels are being developed, proliferation of blending pumps will assist, and federal tax policy can help as well.  

 

Senate Comprehensive Transportation Plan Funding

 

The Senate Transportation Committee held a hearing on Senate Bill 323, a bill that provides funding for the next 10-year comprehensive transportation plan.  This bill raises revenue through a variety of increased fees, taxes and bonding.  The administration and legislature, at this time, do not seem receptive to increases in such funding sources in part due to the economic recession and politics.  Several members of the T-link task force did testify in favor of the bill.    

 

House Comprehensive Transportation Plan

 

The House Transportation Committee held a hearing on House Bill 2382, the House transportation plan.  The KS Department Transportation assisted in drafting the bill which outlines a comprehensive transportation plan, but does not address a funding mechanism.  It is considered a framework that will focus initially on infrastructure maintenance and will set goals for enhancements once funds become available.  Concerns were expressed by committee members that the Senate has a bill that includes a funding source.  Chairman Gary Hayzlett (R-Lakin) assured the committee that the funding will go through the normal appropriations process.

 

Coming This Week

 

The House and Senate have until Wednesday to approve nonexempt bills from the opposite chamber of origin.  On Thursday and Friday, budget and other conference committees will meet to try and negotiate differences between bills. The negotiations may continue throughout the weekend depending upon progress made.  The next week will entail reports being approved by both chambers and the possibility of legislation exempt from deadlines making it through the process.
 

March 16, 2009
Week in Review

The legislature just finished the ninth week of the legislative session.  Bills continued to get worked in the committees that were approved by the opposite chamber and agency budgets developed.  With the budgetary shortfall, the federal stimulus package, and uncertain state revenue, legislators are struggling to make sufficient cuts with the rules of the game changing continually.  The federal stimulus package has certain strings attached in order to access the money and timelines to receive the monies.  However, in some cases, it is unclear exactly what those regulations are and when they will be clarified. 

Ethanol Blend Resolution

Senate Natural Resources Committee heard testimony and passed out favorably SCR 1610, which encourages EPA to look at higher blends of ethanol. KAEP focused on the fact that there is science and data to support E15 and we think that even higher blends will occur in the future.  KAEP testified outlining the job creation by ethanol and the benefit of displacing foreign oil.  It will now go to the full Senate.  Constantine Cotsoradis, Kansas Department of Agriculture and Brad Harrelson, Kansas Farm Bureau also testified in favor of the bill. We hope for Senate action this week.  We have assurances from the Lt. Governor (probably soon-to-be Governor) of assistance on this issue.

Bio Fuel Presentation

The House Energy and Utilities Committee received a briefing from Corey Mohn and Mary Tucker with the Kansas Department of Commerce and Dr. Thomas Robb, Abengoa, on the status of biofuels in Kansas.  Tucker reviewed the tax credits incentives for biofuel production and investment.  She reported that approximately 1.6 billion gallons of ethyl alcohol have been produced in Kansas since 1988.  802 million gallons are eligible for the incentive with a total distribution of $62 million.  Currently there are 7 producers that are receiving incentives with 5 producers reaching maximum payout.  In 2008, there were 300 million gallons produced.  Of which, 75 million were eligible for the incentive and there was a total distribution of 5.2 million in 2008.  Also, when reviewing incentives for retailers who sell and dispense renewable fuels, the department said that they have received few applications to receive the incentive, and that the Governor recommended no funding for fiscal years 2009 and 2010.   Mohn reviewed the existing ethanol facilities and those that are under construction and idle in the state.  He commented that 25% of the local crop production is utilized in biofuel production.  Concerning blender pumps, Mohn said that the state has a goal of 100 blender pumps within Kansas in a year.  He reported that currently there are ten operating.  He referenced Growth Energy’s goal of raising the E-10 limit to E-15 or E-20.  Mohn also put in a plug for ICM and Abengoa on their advancements in bio fuel technology and production.  Tom Robb, Abengoa, gave a presentation on the status of the Hugoton Cellulosic ethanol plant.  He said that Abengoa is awaiting the completion of the EPA’s environmental impact study.  Construction is proposed to commence in early 2010, with a 24-month duration.

Stimulus Package Reporting

The Senate Ways and Means Committee held a hearing SB 296.  This bill would impose requirements on state agencies within the Executive Branch in reporting and requesting monies requested and received from the federal American Economic Recovery and Reinvestment Act of 2009. Agencies officials expressed strong concerns that the State Finance Council approval provisions called for in the bill would jeopardize the monies due to the strict timelines required by the federal law.

Workers Compensation Bill

A very unconventional subcommittee “roundtable” meeting was held on SB 258, a bill requiring the Department of Labor to adjust the current caps on all benefits contained in the Workers Compensation Act to an amount equal to the Midwest cost of living adjustment.  This bill will significantly increase workers compensation rates.  Opponents included KS Grain and Feed, Kansas Agribusiness Retailers Association, the KS Cooperative Council, KS Chamber, National Federation of Independent Businesses, and other business related groups. Opponents testified that the business community cannot take yet another financial hit if work comp rates are increased. Proponents included the trial attorneys association and labor unions.  Senator Dick Kelsey, the Chairman of the subcommittee announced that the bill will not be approved this session, but will request that the roundtable continue to meet.

Energy Bill Conference Committee

The House and Senate conferees continued to meet on HB 2014, the comprehensive energy bill that provides for an expansion of the Holcomb power plant and provides regulatory reform within certain state agencies.  There is disagreement on the levels of Renewable Fuel Standards and the bill remains in the conference committee.   There is a considerable amount of politics being played on this issue with the current Governor’s possible departure to Washington and political implications that may follow in her wake.

Rail Road Bill

The House approved SB 46 without amendment by a vote of 121-0.  The bill clarifies a lease agreement originally entered into by the Kyle Railroad and the Mid-States Port Authority in 1984.  The bill now goes to the Governor.

KS Bioscience Authority Funding Bill

The General Government Budget committee had originally scheduled a hearing on HB 2317, a bill that requires the KBA to report its budget through the appropriations process and places it under the jurisdiction of the KS Development Finance Authority.  After communication with the House Speaker and the Chairman of the committee about the origin of the bill and the detrimental effects this bill would have on the KBA, the hearing was cancelled and probably will not be rescheduled.

KS Department of Agriculture Budget

The Senate Ways and Means Subcommittee reviewed the KDA’s budget this week.  The legislature had requested all agencies to make a list outlining how they would cut their 2010 budget by 10%.  One of KDA's recommendations was to strip the state general funds out of the grain warehouse program. However, the Senate Ag subcommittee did not recommend cutting the state grain warehouse program by $150,000.  The subcommittee also decided not to cut the phytosanitary certificate program either.  This recommendation will go to the full Senate Ways and Means committee this week.

Coming This Week

This is the tenth week of the legislative session.  Bills have all of next week to be approved by committee and must be approved by the second chamber before March 25th.  After that deadline, conference committee will need to hammer out the difference between versions of bills approved by each chamber. The end of the regular session is April 4.  See below for the bills we are tracking for you and hearings scheduled this week.
 

March 9, 2009
Week in Review

With Governor Sebelius being nominated by the President to serve as the Secretary of Health and Human Services, there is much speculation on the timing of the nomination, whether she will be sworn in prior to the end of the legislative session, and the possible political implications of Lt. Governor Mark Parkinson assuming the Governorship. With controversial issues such as the budget shortfall and the energy bill hanging out there, many wonder whether the new Governor will change the demeanor and tone of current statehouse political rancor.

Concerning the budget, this week, House Appropriations Chair Kevin Yoder stated that the Governor's 2010 budget cannot be passed as is because it assumes that the state will receive revenue from such things as gaming casinos and tax cuts savings based on bills that have not passed. The budget should go to the House floor for debate during the week of March 23rd. Yoder also explained that while the federal stimulus money that Kansas has received is a good thing, the problem is that most of this money requires matching state funds, and during these tight times it remains a challenge to find these funds.

KAEP Meets With Lt. Governor and Policy Makers

The Kansas Association of Ethanol Processors met with current Lt. Governor (and possibly soon to be Governor) Mark Parkinson, Kansas Department of Agriculture Secretary Adrian Polansky, and other key policy makers urging support of an industry petition asking the EPA to authorize the use of higher blends of ethanol in non-flex fuel vehicles. The request was well received and the ethanol industry was assured support from key lawmakers in Kansas to assist with the initiative.

Energy Bill

The Senate debated, amended and approved Senate Substitute for House Bill 2014 by a vote of 31 -9 (more than the 27 votes needed to override a Governor’s veto). This bill clarifies the air permitting process and ensures that all Kansas businesses be treated fairly by the state government. The bill requires 20% of energy generated by Kansas Utilities to be from renewable resources by 2020. Renewable resources is defined by including biomass, solar, wind, photovoltaic, hydropower, geothermal, and landfill gases. The bill establishes state policy that the regulation of air quality is in accordance with the federal Clean Air Act. Support for the bill stems from the Governor’s denial last year of the of an air quality permit for the Holcomb coal fire power plant expansion and subsequent vetoes of legislation to rectify her decision.

Workers Compensation Hearing

The Senate Commerce Committee held a hearing on SB 258. This bill has the potential of dramatically raising your workers compensation rates, and we testified in strong opposition to the bill. There are serious concerns about how this bill will affect businesses during this time of recession. In addition to our association, a number of other business organizations opposed the bill. The bill was supported by trial lawyers and labor unions. SB 258 would require the Department of Labor to adjust the current caps on all benefits contained in the Workers Compensation Act to an amount equal to the Midwest cost of living adjustment. The Department of Labor would be required to determine the cost increases based on the last date that each cap was established by legislative changes utilizing the consumer price index for urban wage earners and clinical wage workers in the Midwest. The Chairman has appointed a subcommittee to further review the bill. We will continue to monitor this legislation and educate policy makers on your behalf.

Legislation to Abolish KTEC

The Governor requested the introduction of SB 303 abolishing the Kansas Technology Enterprise Corporation and Kansas Inc. and transferring its powers and duties to the Department of Commerce. The Governor recommended this action in her proposed budget and had the legislation introduced to emphasize her desire. No hearing has been scheduled at this time and we will closely monitor the situation.

KDA Budget/Grain Warehouse Program

The Kansas Department of Agriculture was required by the legislative budget committee to submit a list of program cuts that would occur if the department was to take a 10% cut in their budget next year. One of the cuts that would have a significant impact on the grain industry is the deletion of $150,000 of the State General Fund that the state warehouse program currently receives. As you will recall, the ag groups just a few years ago, sought and received $150,000 of the State General Fund to assist in the funding of the state warehouse program. While KDA has cut various programs over the past few years, the grain warehouse program has been held harmless. However, now it appears that funding may be in jeopardy. According to KDA, there are 111 facilities with a capacity of 330 million bushels that are state licensed. If KDA does not get this funding then the state would have to look at 1) raising licensing fees and/or 2) going to a risk based inspection program. The Governor has not released all of her budget recommendations for the upcoming year so we do not know what position the Governor has taken on this issue. The Senate Ag budget subcommittee will meet on Monday, March 9 to discuss the KDA budget and we may get a better feel for this issue at that time.

Rail Road Bill

The House Transportation Committee held a hearing on SB 46. The bill would clarify a lease agreement originally entered into by the Kyle Railroad and the Mid-States Port Authority in 1984. KAEP testified in favor of the bill as well as Kyle Railroad, Rail America, and the Kansas Cooperative Council. Since the bill is considered non controversial, it was approved by the committee and placed on the House consent calendar. If no legislator objects, it will be voted on without debate after three legislative days.

Coming this week

The Committees continue to hold hearings on bills approved by the opposite chamber, and budget committees will continue to review agency cuts and make recommendations for the 2010 fiscal year. On Thursday, March 12, Room 446-N, the statehouse, the Senate Natural Resources Committee is holding a hearing on SCR 1610, the KAEP resolution urging the Environmental Protection Agency to authorize use of higher blends of ethanol in non-flex fuel vehicles.
 

March 2, 2009
Week in Review

It was a relatively light week at the Kansas Legislature.  The previous week was a legislative date at which all bills that were not exempt from deadlines must have been approved by their respective chamber of origin.  The legislature took a brief break and then held a number of briefings and hearings on various bills.  Floor action was light with the exception of the House debate on the energy bill.

Ethanol Resolution Introduced

Senator Mark Taddiken introduced Senate Concurrent Resolution 1610 on behalf of KAEP.  Other sponsors include Senators Abrams, Barnett, Brownlee, Bruce, Brungardt, Colyer, Donovan, Emler, Faust-Goudeau, Francisco, Haley, Hensley, Holland, Huelskamp, Kelly, Kelsey, Kultala, Lee, Lynn, Marshall, Masterson, McGinn, Morris, Ostmeyer, Owens, Petersen, Pilcher-Cook, Pyle, Reitz, D. Schmidt, V. Schmidt, Schodorf, Steineger,Teichman, Umbarger, Vratil and Wysong.   The resolution urges the Environmental Protection Agency to authorize the use of higher blends of ethanol in non-flex fuel vehicles.

Energy Bill

The House debated and approved HB 2014 by a vote of 79-44.  This bill clarifies the air permitting process and ensures that all Kansas businesses be treated fairly by the state government.   The bill establishes state policy that the regulation of air quality is in accordance with the federal Clean Air Act.   Support for the bill stems from the Governor’s denial last year of an air quality permit for the Holcomb coal fire power plant expansion and subsequent vetoes of legislation to rectify her decision.  She has promised to veto HB 2014 in its current form and, in order to override a veto, the House must muster 84 for votes.  The bill also includes a renewable resources component.  The bill requires 20% of energy generated by Kansas Utilities to be from renewable resources by 2020.  Renewable resources is defined by including biomass, solar, wind, photovoltaic, hydropower, geothermal, and landfill gases.  The Senate Utilities committee plans to approve its version of an energy bill this week.

Kansas Water Office Fee Increase

The Senate Ways and Means Committee held a hearing on SB 165, a bill raising the fees of the Kansas Water Office to enhance its duties. Proposed increases are as follows:

 

Who Pays

Current Fee

Revenue

Proposed Fee

Proposed Revenue

Municipal

Water Users

$.3/1,000 gal

$3,785,991

$.045/1,000 gal

$5,679,987

Industrial

Water Users

$.03/1,000 gal

$1,079,103

$.045/1,000 gal

$1,618,654

Stockwater

Use

$.031/1,000 gal

$ 404,716

$045/1,000 gal

$ 607,073

Pesticide

Registration

$100/product

$ 965,000

$150/product

$1,447,500

Fertilizer

Tonnage Tax

$1.40/ton

$2,940,000

$2.10/ton

$4,410,000

Sand Royalty

$.15/ton

$170,000

$.225/ton

$255,000

Proponents included the Kansas Agribusiness Retailers Association, KS Water Office, KS Rural Water Associaiton and KS Association of Conservation Districts.  In addition to KARA, opponents included the Johnson County’s Water District one, KS Cooperative Council, and KS Livestock Association.

KTEC, KBA and Department of Commerce presentation to the Vision 2020 Committee

The Vision 2020 Committee requested that the KS Bioscience Authority and KTEC make a presentation on the role they will play for investment in Kansas for the next several decades.  Tom Thorton, KBA, explained that there are several key components that the KBA is focusing on for the economic future of Kansas.  They include further development and investment resulting from the NBAF award, pharmaceutical clinical research and development, and bioenergy advancements.  He emphasized the tools already exist to make Kansas a national and world leader in all of those areas.  Tracy Taylor cited strides in (and potential for) KTEC’s involvement in assisting companies citing the example of investing in clean air and energy technology endeavors.   He also elaborated on the strides KTEC assisted companies are making in the development of more energy efficient combustion engines and how those technologies will be utilized by the Wichita based aircraft industry.  Secretary of Commerce Dave Kerr testified that biofuels, animal, plant, and human health science development will play a key role in the future of Kansas.  He did however caution the committee that our state’s biggest challenge is and will remain the development of an able and adequate workforce.

Coming this week

The Committees will hold hearings on many of the bills approved by the opposite chamber and budget committees will continue to review agency cuts and make recommendations for the 2010 fiscal year.  The budgets have been altered from their original form due to the influx of federal money expected from President Obama’s stimulus package.  

Note: The Senate Commerce Committee has decided the hear SB 258, dealing with increasing Workers Compensation rates.
 

February 23, 2009
“Turn Around” Week in Review

This week was the “turn around” cut-off date in which all bills that are not exempt from deadlines must be approved by their chamber of origin or are dead for the session. The week entailed hearings in most committees wrapping up by Wednesday and the remainder of the week spent debating bills in each chamber. This is a time when things were fast and furious and we worked vigilantly to keep an eye out for detrimental policy amendments to bills.

Kansas Bio Legislative Caucus

The Kansas Bio Legislative Caucus held its bi-weekly luncheon and received presentations from Greg Krissek, ICM. Krissek briefed the caucus on the next generation of ethanol and biomass production. He emphasized the importance of the bioscience industry in Kansas and the need to move forward with the work of the Kansas Bioscience Authority. He cited cooperation with the KBA and ICM noting grant awards for the development of converting cellulose to ethanol and biomass gasification. Legislators were impressed by both presentations and provided positive feedback concerning the roles played by Kansas Bio, the KBA, and KTEC.

2009 Budget Rescission Bill

The Governor signed SB 23 into law which calls for around $300 million in budget cuts to the 2009 state budget. This action ended a political standoff between House and Senate leadership during which transfers were not made freeing up money that would have the end result of delaying income tax refunds and a state employee pay day. The Governor vetoed provisions in the bill limiting the KS Bioscience Authority spending ability to $35million (conference report approved $39million). The governor stated in veto message the following, “With this veto and accompanying allotment, I am restoring my original budget recommendations to limit transfers to the Kansas Bioscience Authority, helping to preserve State General Fund balances.”

She also reduced the amounts of cuts to K-12 education and eliminated a 2.9 million state general fund allocation for the Wichita Center for Medical Education.

Department of Commerce: IMPACT Program

The Senate Commerce Committee held a hearing and the full Senate approved Senate Bill 120, a bill that will further broaden the appeal of the state Investments in Major Projects and Comprehensive Training (IMPACT) program. The bill would clarify the use of program funds for new employees during training. It clearly identifies IMPACTS availability and usability for companies in business and financial services and research and development. The increased flexibility in the bill will allow the program to address upfront costs including wages that incur before new employees generate long-term business production and revenues. Secretary of Commerce David Kerr testified in favor of the bill citing it is a great interest to service sector companies and would give flexibility for recruitment tools and strategies. Senator Julia Lynn commented that this incentive program will be helpful to healthcare and bio related companies.

Federal Stimulus KDOT

The KS Department of Transportation anticipates $380 million being transferred to Kansas from the President’s stimulus package for transportation needs. $268 million would be given to KDOT for projects across the state. $16million and $22million respectively would be given to the Wichita and Kansas City Metro areas respectively to be decided locally. $32 million would go to local projects across the state. $10 million would be obligated for transportation enhancements (depots, paths, etc). $134 million of the $268 directed to KDOT must be obligated prior to 120 days of receipt. These KDOT funds will play a key role in rail and highway enhancements. We will continue to stay in close communication with KDOT regarding the use of these funds.

Railroad Bill

The Senate approved SB 46 by a vote of 39-0. This bill would exempt a port authority from certain restrictions on sale of real or personal property if that port authority had entered into certain types of agreements regarding lease, purchase, or both, before July 1, 1987. The restrictions to which the sale would be exempt are listed in KSA 12-3412 subsection (b): The current lessee of such property shall have the first right to purchase such property; such property shall be appraised by an independent appraiser prior to sale; and such property shall be sold for no less than the appraised value.

The bill was requested by the Kyle Railroad Company, a short-line railroad that runs from north central Kansas into eastern Colorado on track leased from the Mid-States Port Authority (MSPA). The Kyle Railroad has been owned by RailAmerica, Inc., since 2002. The MSPA was formed in 1980 to restore rail service on line owned by the Chicago, Rock Island, and Pacific Railroad Company when that railroad went bankrupt. The Authority’s members represent Decatur, Jewell, Norton, Phillips, Republic, Sheridan, Sherman, Smith, and Thomas counties. The MSPA has used bonds guaranteed by state funds to finance indebtedness incurred for purchase of the rail line; the last payment on those bonds will be made June 1, 2009. John Giles, Chief Executive Officer, RailAmerica, Inc., and Bob Alderson, General Counsel for the Mid-States Port Authority, testified in favor of the bill. Both said the bill would clarify a lease agreement originally entered into by the Kyle Railroad and the MSPA in 1984. Also providing testimony in favor of the bill were Tom Tunnell, Kansas Grain and Feed Association, and Leslie Kaufman, Kansas Cooperative Council. No other testimony was received on this bill. The MSPA also has lease agreements with shippers. Documentation provided to the Senate Committee after the hearing shows that the Kyle Railroad has exercised its purchase option and that the Kyle Railroad and the MSPA have agreed that the Kyle Railroad will continue all of MSPA’s leases with other lessees (generally, shippers such as cooperatives) if SB 46 is signed into law.

Energy Bill

The Senate Utilities Committee held a hearing on Senate Bill 265, legislation that clarifies the air permitting process and ensures that all Kansas businesses be treated fairly by the state government. This bill is similar to a House bill to accomplish the same. The bill establishes state policy that the regulation of air quality is in accordance with the federal Clean Air Act. Like the House bill, the Association was part of a 50 member coalition of business and agriculture entities. Support for the bill stems from the Governor’s denial last year of the of an air quality permit for the Holcomb coal fire power plant expansion last year and subsequent vetoes of legislation to rectify her decision. The bill also includes a renewable resources component. The bill requires 20% of energy generated by Kansas Utilities to be from renewable resources by 2020. Renewable resources are defined by including biomass, solar, wind, photovoltaic, hydropower, geothermal, and landfill gases. The Kansas Chamber and Allie Devine, KS Livestock Association, testified on behalf of the coalition. Also testifying in support included Sunflower Electrical Cooperative. The Kansas Cooperative Council also submitted written testimony in support. The Sierra Club testified in opposition and the KS Department of Health and Environment submitted written testimony opposing.

Minimum Wage Bill approved by Senate

The Senate approved, by a vote of 33-7, Senate Bill 160, legislation increasing the state’s minimum wage law from $2.65 an hour to $7.25. The wage increase would take effect on January 1, 2010. The Senate Commerce Committee amended the bill to clarify the method that may be used to calculate an employee’s wage rate if an employer decides to include tips. The federal minimum wage, which is established by the federal Fair Labor Standards Act, applies to a large majority of businesses in Kansas that are presumed to be engaged in interstate commerce. Certain other institutions, such as health care facilities, educational facilities, and state and local governments, are covered by federal law too. The state’s minimum wage law applies to those businesses which are smaller in terms of annual sales or conduct business solely within Kansas. According to the fiscal note prepared by the Division of the Budget, the original bill would increase state income tax revenue to the State General Fund by $3.6 million during the last ten months of FY 2010. In consultation with the Department of Revenue, this calculation assumes that 19,000 Kansans would see an increase in wages and that the average state tax rate would be 2%.

Coming this Week

With “turn around” deadline passed, Legislators will take Monday off and then spend the remainder of the week reviewing bills that are either exempt from deadlines or have been approved by the opposite chamber. Budget committees will continue to work on the 2010 budget and other committees will hold informational hearings to educate members on issues coming down the legislative pipeline. As always, your association will work to ensure that attempts to implement detrimental policy stay just that….attempts.
 

February 16, 2009
2009 Budget Rescissions

The House and Senate approved a conference committee report for Senate Bill 23, the bill that mandates government cuts for the final few months of the 2009 fiscal year. The bill is needed to lessen the amount of cuts needed for the 2010 fiscal year (starting July 1, 2009) and starts addressing the near $1 billion shortfall the Kansas state government is facing. A joint House/Senate conference committee negotiated the differences in versions approved by each chamber. The Governor now has the bill on her desk that reduces expenditures by $325million. The bill limits the Kansas Bioscience Authority’s spending to $39million and accepted the Senate position restoring $1.9million to KTEC allowing the agency to fulfill its contractual obligations for fiscal year 2009. The Governor can either sign the bill, line item veto certain sections, or veto the bill.

Minimum Wage Increase Hearing

The Senate Commerce Committee held a hearing on SB 180, a bill increasing the Kansas minimum wage. Under current law, the Kansas minimum wage is $2.65 per hour. SB 160 would raise the minimum wage to $7.25 an hour beginning September 1, 2009. The bill was introduced by Senator Francisco and was cosponsored by the Chairman David Wysong. Proponents included the AFL-CIO, Statewide Independent Living Council, Kansas Action Network, and the KS National Education Association. They cited that Kansas is out of step with peer states and in need of an increase. Opponents included the KS Chamber, NFIB, Americans for Prosperity, and the Kansas Restaurant and Hospitality Association. They cited that free market should determine wages in Kansas, will have a “bumping” effect on less trained and experiences employees, and may result in reduced hours or layoffs. If a business is involved in interstate commerce (a.k.a. use a credit card, checking account, importing or exporting goods, etc. ) they are required to pay the federal minimum wage. The current federal minimum wage is $6.55 per hour and will jump to $7.25 effective July 24, 2009.

Workers Compensation Bills

The House Insurance Committee held a hearing HB 2018, a bill removing outdated requirements regarding insurance rates and rate modifications. HB 2018 would also remove the requirement that the Insurance Commissioner not approve workers compensation rates or rating plans which produce rates or premiums for risks with less than $2,250 annual premium that are higher than those which would be applied to such risks in the voluntary market. The Insurance Commission requested introduction of the bill, Last year, an identical bill was introduced, but did not receive a hearing for fear that it would be amended with non-business friendly workers compensation legislation. We will monitor this bill closely because it is ripe for an amendment sponsored by labor unions and trial lawyers that could ultimately be costly to business. The Senate Financial Institutions Committee also held a hearing on SB 89, a bill exempting certain workers compensation policy information from being open to public inspection. Individual employer’s records would be accessible for purposes of verification of coverage to the Department of Labor for the administration of the Workers Compensation Act. The Kansas Association of Insurance Agents testified in favor of the bill, but recognized that it may germane to bad amendments as well. He, therefore, requested the bill be amended in a fashion making it immune from such action.

Energy Bill

The House Utilities Committee approved House Bill 2014, legislation that clarifies the air permitting process and ensures that all Kansas businesses be treated fairly by the state government. The bill establishes state policy that the regulation of air quality is in accordance with the federal Clean Air Act. The bill will is slated for floor action on Wednesday and final action on Thursday. The Senate is holding hearings next week on a similar bill next week and we anticipate rapid action on that bill as well. Support for the bill stems from the Governor’s denial last year of the of an air quality permit for the Holcomb coal fire power plant expansion last year and subsequent vetoes of legislation to rectify her decision.

Rail Road Port Authority Bill

The Senate Transportation Committee approved SB 46. Under current law, a port authority must sell real property at or above appraised value under a negotiated sale agreement. SB 46 would exempt sale-purchase agreements, lease purchase agreements, installment sale contracts, purchase options, or other similar instruments entered into by a port authority prior to July 1, 1987, from this provision.

Employee Misclassification Bill

The House Tax Committee held a hearing on House Bill 2175. HB 2175 would rescind authority currently in place that allows the Department of Revenue to provide taxpayer information on anyone suspected of violating the Kansas Income Tax Act to the Department of Labor. This information is limited to withholding tax, payroll information, and the identity of any person who has been or is currently being audited or investigated in connection with the administration and enforcement of the Withholding and Declaration of Estimated Tax Act. The bill would also repeal the law that prohibits any person to misclassify an employee as an independent contractor for the sole or primary purpose of avoiding state income tax withholding and reporting requirements or state unemployment insurance contributions reporting requirements. We are watching this bill closely because last year’s draconian immigration bill was very closely tied to the misclassification and may be germane for a similar amendment should it be debated in the full house.

Coming this Week

Next week is the “turn around” cut-off date in which all bills that are not exempt from deadlines must be approved by their chamber of origin or are dead for the session. This will entail hearings in most committees wrapping up by Wednesday and the remainder of the week (and into Saturday) spent debating bills in each chamber. This is a time when things get fast and furious and we will work vigilantly to keep an eye out for detrimental policy amendments to bills.
 

February 9, 2009
2009 Budget Rescissions

The House approved its version of the 2009 rescission budget. The bill decreases the Governor’s recommended State General Fund expenditures by $110 million, and decrease expenditures from all funding sources by $134.9 million. The Senate previously approved their version of the bill cutting roughly $30million less than the House. The bill now resides in a Joint House/Senate conference committee at which conferees pound out differences in the bills to try and reach agreement. After two late conference committee sessions, conferees have agreed to accept a modified House position limiting the Kansas Bioscience Authority’s spending to $38million (the Senate and Governor approved $35million out of the $47million fund). The conference committee broke for the weekend and will resume negotiations on Monday. The amount of cuts to education, social services, all agencies, and payments to localities have yet to be agreed on.

KS Bioscience Authority Audit

At a Joint meeting of the House and Senate Commerce Committees, legislators received a briefing regarding the Kansas Bio Science Authority performance. The audit was conducted by GPS Consulting, Pittsburg PA. The audit focused on whether the KBA was adhering to its statutory obligations, initiating defined programs, and outcomes of KBA investments. After the review, the audit recommended that the KBA preserve funding mechanism citing that no other state has stable long term funding that Kansas has applied. The consultant declared it a stable, patient investment and that the KBA should not become a "political football" with regard to the budget. It was recommended that the legislature continue to monitor and evaluate progress by analyzing job creation and benchmarking comparisons with other states. It was also recommended that the KBA Board should be made up with more bioscience entrepreneurs. The report also suggested that the KBA address communication gaps. It was sited that some critiques of KBA included a lack of awareness around what is going on and that stakeholders should receive a consistent set of communications on what the KBA is doing and supporting. Finally, the report believed the KBA should expand the research and development voucher program.

Comprehensive Transportation Plan

The KS Department of Transportation presented to the Senate Transportation committee the findings of the Governor’s T-Link study group that conducted a statewide studied the transportation needs of Kansas. Every ten years, the state develops a comprehensive transportation plan and the T-link group developed recommendations for the renewal of the plan this year. Concerning rail needs, the T-link group recommended that shippers, local governments, and industrial parks be included within the short line rail program. This would allow those entities access to low interest loans and grants to upgrade lines and develop infrastructure. T-Link also recommended $7million in additional annual state funding and recognized an additional $20million in annual finding needed. Concerning highways, T-link recommended $790 million in funding with $1.2 billion in future needs. They recommended promoting multi-modal solutions and congestion relief. Funding options included increased motor fuels tax, miles traveled tax, increased existing fees, gaming revenues, removing the aviation fuels sales tax exemption, and bonding.

Energy Bill

The House Utilities Committee held a hearing on House Bill 2182, legislation that clarifies the air permitting process and ensures that all Kansas businesses be treated fairly by the state government. The bill establishes state policy that the regulation of air quality is in accordance with the federal Clean Air Act. Twenty six other states, including Missouri, Oklahoma, and Colorado, have adopted similar legislation. The Association was part of a 13 member coalition (see below) of business and agriculture entities. Support for the bill stems from the Governor’s denial last year of the of an air quality permit for the Holcomb coal fire power plant expansion last year and subsequent vetoes of legislation to rectify her decision. The Kansas Chamber and Allie Devine, Kansas Livestock Association, testified on behalf of the coalition. Also testifying in support included Sunflower Electrical Cooperative. The Kansas Cooperative Council also submitted written testimony in support. The Sierra Club testified in opposition and the KS Department of Health and Environment submitted written testimony opposing.

The coalition includes the KS Association Ethanol Processors, KS Grain and Feed, KS Agri-Business Retailers Association, KS Chamber, KS Farm Bureau, KS Livestock Association, KS Bankers Association, Midwest Energy, Sunflower Electric Power Corporation, Ark Valley Electric Cooperative, Lenexa Chamber of Commerce, KS Contractors Association, and the Grant County Chamber of Commerce.

Overweight Vehicles

The House Transportation Committee held a hearing on HB 2146. HB 2146 would change the fee structure for oversize and overweight vehicles by increase fees for special permits on over-the-road trucks. The current fee for a single-trip permit is $5 and $125 for an annual permit. The bill would increase fees to $20 for a single-trip permit and $150 for an annual permit. HB 2146 would also create a new $30 fee for a single-trip permit for a “large structure” and a $50 fee for a single-trip permit for a “super load.” The definition of a “large structure” and “super load” would be defined by rules and regulations. The Petroleum Marketers and Convenience Store Association testified in support of the bill. They felt the fees are slightly over what is needed but are in the appropriate range. They really would like for the added revenue to change the permit request process to an electronic process instead of over the phone. KS Department of Transportation testified in support of the bill.

Coming This Week

The rescission budget will remain a top priority this week. Several hearings are slated to discuss workers compensation, misclassification of employees, and raising the minimum wage. We will monitor all of the above closely and other items that may pop up.
 

February 2, 2009
2009 Budget  Rescissions

The Kansas Senate debated, amended and approved the Senate Substitute for Senate Bill 23, the 2009 budget rescission bill.  A coalition of conservative Republicans and Democrats successfully amended the bill overriding Senate Republican leadership.  The approved budget adjusts the current year's budget $334 million.  It decreases the 2009 budget by $134 million in revenue adjustments and 200 million in expenditure adjustments. It includes a 1.5% across the board for all agencies with the exception of k-12 education.  The bill calls for a $4million sweep of the state water plan fund.  It also reduces the spending ability for the Kansas BioScience Authority by $12 million (limiting the agency to $35million for FY 2009). Senator John Vratil successfully amended the bill reducing the KTEC budget cut to 6.5% reduction for KTEC.  Senator Francisco also amended the bill shifting money in state water plan to better fund the small lakes and storage operation.  The bill now goes to the House where it will be amended and debated this week.

The House Appropriations committee passed out their version of the budget bill in House Substitute for Senate Substitute 23.  The main changes to the senate version includes 1.5 percent reduction to general government and ag budgets with the rest of the agencies receiving a 1 percent cut in current year spending.  The House also reduced the amount to the BioScience authority by $8.3million.  The biggest debate on the bill when the whole House debates the bill will surround the 1.5 percent that K-12 would take under this bill.  This money is then used to support social services, which might make the small cut more palatable.  However, it is anticipated that the democrats and moderates will be very vocal about this topic.  This will be the first test of newly elected Speaker O'Neal and his appropriations chair, Rep. Yoder to see what they can pass out of the House.

KS Bioscience Authority

Tom Thorton, KS Bioscience Authority, briefed the House Commerce Committee regarding KBA accomplishments.  Regarding ethanol production in Kansas, Thorton commented on and complemented ICM’s biomass innovations and noted assistance received from the KBA has assisted with the progress. He also reminded the committee that Abengoa and ICM are two Kansas based companies have the path way capabilities for all stages of ethanol production.  Representative Delia Garcia expressed enthusiasm regarding the blending pump grand opening at the Topeka Sam’s club and was encouraged that more will soon be opening.   Chair Steve Brunk, Wichita, asked Thorton to comment on proposed $12million transfer from the Authority to the State General Fund in the Governor 2009 rescission proposal.  Thorton responded that “now is not the time to pull back or diminish this extraordinary engine for growth”, but understands that KBA may need to “take a hit”.  When asked about the proposal to move KTEC to the Department of Commerce, he voiced concerns that such a transfer would dilute to focus of an extremely affective entity.

Water Office  Before House Agriculture Budget Committee

The Kansas Water Office again testified before the House Agriculture Budget Committee.  KWO officials noted that the $6 million dollar cut called for in the Governor’s proposed 2009 rescission package was amended in the Senate to cut $4 million.  They added that the proposed 6 million (or 30%) cut of their $21 million budget is nearly impossible to absorb, but they “will make do the best that they can”.  The agency did not again review their request for a fee increase, but instead focused on the different programs administered by the agency and the need to maintain adequate funding to operate.

Water Office Fee Bill In Senate Committee

The Kansas Water Office introduced the bill that would raise all of their fees by 50 percent in the Senate Ways and Means Committee.  Tracy Streeter, executive director, stated the water authority believed such a fee increase was necessary since the fees have not been raised since 1989.  The fee increase would cause the fertilizer tonnage fee to go up by $.70/ton and raise pesticide product registrations by $50 per.  Steve Irsik, chairman of the Kansas Water Authority, told the committee that while he would have to pay significant fees due to these increases, he believes he and others must look beyond their own pocketbooks and consider what is best for Kansans and the water situation in Kansas. 

KDHE Briefs Budget Committee

The House Agriculture Budget Committee received a briefing from the KS Department of Health and Environment on its proposed budget.  During which, Representative Carl Holmes voiced strong concern that fee funds collected from water testing go directly to the State General Fund and then allocated to the agency to pay for the program.  Holmes asked for more detailed information on how the money is being spent and voiced concern that the money was being diverted for needs not related to water safety.   Rep. Larry Powell also questioned whether there could be possible cost savings by combing the lab functions KDHE and KDA. Powell suggested that by combining KDHE Environment Division with KDA, cost savings could be established.  KDHE agreed to communicate KDA on possible overlapping duties.   

Coming This Week

The House plans to debate its version of the 2009 budget rescissions this week.  Because time is of the essence, we anticipate that a bill will be going to the Governor in fairly short order.  The Governor played a role in crafting the proposal approved by the Senate and has related to our sources that she will sign it.  However, should it leave the House substantially altered the Governor may veto.  We will continue to watch developments closely so that our interests are protected.

SB 46 - Senate Transportation will consider this bill which clarifies what will occur to leases between shippers and RailAmerica and the Mid States Port Authority.

January 26, 2009
Week in Review

The Kansas Legislature wrapped up its second week with a number of informational several presentations from agencies and hearings on various bills. Not much progress was made with regard to advancing the Governor’s 2009 budget rescission bills. However, we do anticipate movement next week.

February 18 Board Meeting

We have scheduled a board meeting at 10:00am, Wednesday, February 18 , at the Salina Country Club. We plan to better define KAEP’s philosophical position on the mandated blend issue as well as a whole host of other “business” type issues. We also plan to better define goals and objectives for the association and possibly consider a strategic plan for the future. We will have a draft agenda out soon, but in the mean time if you want something added to the agenda, please contact Chairman McNinch or Tom Tunnell.

Budget Discussions will Dominate Next Week

Both the House Appropriations and the Senate Ways and Means Committee will work the FY09 budget this week. The Governor has recommended cuts but Senate Repulicans have commented that they are not in favor of the Governor's recommendations and will roll out their plan early this week. Senate Republicans have expressed a desire to do across the board cuts to all agencies to resolve the nearly $190m deficit but this has drawn fire by the Democrats who state that such a plan would cause unintended consequences and unduly hurt some agencies. The legislature must deal with the current year budget soon so that they can direct their attention to next year's budget that has even a more significant projected deficit.

Water Office Fee Increase Proposal

The House Agriculture budget subcommittee reviewed the Kansas Water Office's request to raise fees by 50 percent. The KWO plans to raise stockwatering fees and industrial user fees with the total fee increase resulting in $4.7m in new funds. This comes at the same time that the Governor has proposed a $6m state general fund reduction to the KWO budget. Rep. Hill has asked the KWO to look into how other states fund the various programs and compare that to Kansas.
 

January 19, 2009
Week in Review

The Kansas Legislative session started on January 12.  Newly elected and reelected House and Senate members were sworn in and the Governor gave her annual state of the state address and submitted her budget.  Due to a near one billion dollar budget shortfall, the Governor has proposed a series of budget cuts and tax “suspensions.”  House and Senate Republicans have voiced concerns over many of the proposals submitted by the Governor.  Though it is early in the legislative session, the Senate Ways and Means Committee began hearings countering many of the Governors proposals last week and will continue with these hearings this week.  Senator Vratil from Johnson County has stated that he plans to submit an across the board cut but the details of this plan have not been laid out to the committee yet.

The House Appropriation Committee has slated hearings and possible action this week.  The budget shortfall promises to be the underlying theme of this legislative session and the all options are on the table with regard to revenue enhancements.  While the Kansas state budget has seen a number of shortfalls in the last two decade, the current budget shortfall is unprecedented. Your association will play a key role in protecting the industry from unwarranted tax and fee increases and fee fund sweeps.

KAEP Meets With Governor

Members of the Kansas Association of Ethanol Processors met with the governor last week to inform her of the status of the ethanol industry and new innovations being developed to harness energy from cellulosic materials while being CO2 neutral. The Governor did announce that she is willing to work with the industry to raise the blending rate beyond the current 10%.     Members were able to thank her for retaining the $3.5 million ethanol incentives money in her 2010 budget during this extremely challenging budget year.  Your Association will work to maintain the current funding and vigorously fight any attempts to deplete.  

Kansas Department of Agriculture Review on Ethanol

Secretary Polansky briefed both the House and Senate Agriculture on the state of the Department of Agriculture.  During which, the committee heard high praise from the Secretary on the achievements of the Kansas Ethanol Industry.  Your Association staff has worked closely with the Secretary to ensure that he is well informed of positive developments happening within the industry.

Franchise and Estate Tax “Suspensions”

The Governor requested the introduction of bills freezing the corporate franchise tax phase out (House Bill 2022) and estate tax.  A hearing is scheduled for HB 2022 in the House Tax Committee on 1/22.  Current law calls for the franchise tax to be gradually phased out ending completely in the 2011 tax year.  The Governor estimates the “suspension” of the franchise tax will allow the state to retain $14 million annually of money otherwise returned to the taxpayer.  She also has proposed freezing the estate or “death” tax effecting in the 2010 tax year allowing the state to obtain $5 million in savings that would otherwise go to the heirs of the deceased.  The Kansas Department of Revenue has called the law change a “suspension,” but has not provided a timeline on when the tax decrease will be reinstituted.

Budget Cuts and Fee Fund Sweeps

Due to the budget shortfall, the Governor has proposed limiting the Kansas Bioscience Authority’s budget by $12 million in fiscal year 2009 and $20 million in 2010.  The Bioscience Authority is an independent entity of the state whose mission is to attract federal and private bioscience investment in the state.  She also has proposed eliminating Kansas Inc and Kansas Technology Enterprise Corporation (KTEC), a private/public partnership established by the state of Kansas to promote technology based economic development.  The governor has also proposed sweeping a fund established by the business machinery and equipment tax credit that returns dollars back to counties and municipalities that would have otherwise retained revenue through the exemption. 

Immigration

Several representatives have voiced support of repealing the laws allowing for the in-state tuition and strengthening criminal penalties relating to fraud and trafficking of illegal aliens, but stopped short of proposing legislation similar to last year’s.  Last year’s legislation placed new mandates on businesses when they hire employees and to punish employers who hire illegal immigrants.  We are still wary of a repeat this year and have been closely monitoring bill and committee activity.  The broad language in last year’s bills will subject your business to $1000 fine the first time you are caught with an illegal employee, $25,000 the second time and a permanent loss of your business license on the third offense.  Following the hiring procedures in the proposed bills will subject you to potential discrimination lawsuits from prospective employees.  Your Association is working with a coalition of 14 other business and farm organizations to make sure that any immigration reform legislation protects businesses that make a good faith effort to verify their employees’ legal immigration status.

Workers Compensation

Due to a recent pro-business Kansas Supreme Court Decision, the Labor Unions and Trial Attorneys will be pushing for reform legislation to bring Kansas Law back to its previous status and, more than likely, a even less business friendly form. Changes in the Workers Compensation statute could adversely impact workers compensation rates.  We are again working with a coalition of business organizations to make keep the status quo on current workers compensation policy.

Comprehensive Transportation Plan

The House Transportation Committee will soon start a series of “Transportation 101” presentation from the Kansas Department of Transportation and related stakeholders as it begins to review the 10 year renewal of the statewide transportation plan.   The committee plans to move forward with developing a ten year plan, but may divide it up into two 5 year increments depending on forthcoming federal and state resources.  There are hopes that the Obama Administration will provide assistance in the form of infrastructure stimulus package that will address many of funding needs currently absent.  Key corridors for grain ground and rail transportation are currently being reviewed for upgrades and maintenance. 

Consolidation of Local Government

Speaker Mike O’Neal (R-Hutchinson) and other House Republicans called for a look into the potential consolidation of local government based on the Flint Hills Center for Public Policy report that stated while Kansas’ population has increased by 17.4% since the 1980 census, local government has grown by 65% which results in higher costs to taxpayers due to this inefficiency.  Kansas ranks 49th in the nation in the average number of residents to the number of government workers (city, county and township workers).  Only North Dakota and South Dakota have more government workers than Kansas. 

Coming this Week

Legislative Action
 The Senate is hoping to debate changes to the Governor’s 2009 budget rescission plan Senate Bill 23.  The House Appropriations Committee plans to review the same budget bill on 1/21, 1/22 and 1/23.   The House Energy Utilities Committee plans to review several energy bills including: House Bill 2013 relating to renewable portfolio standards on 1/20; House Bill 2015 regarding energy efficiencies for equipment and vehicles on 1/22; and House Bill 2016 relating to utility emission on 1/22.  The House Tax Committee plans a hearing on House Bill 2022 eliminating the corporate franchise tax on 1/22.