To Contact Us

KAEP
816 SW Tyler
Topeka, KS 66612

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

 

 

 

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 at Ron Seeber ron@kansasag.org. 
 

 

March 8, 2010
 Blending Bill Setback by Special Interests

The House Commerce Committee effectively killed SB 425, the blending bill, in its current form.  House leadership ordered the Committee Chairman Representative Steve Brunk to gut the provisions of SB 425 and replace them with the provision of an Unemployment Insurance Bill.  This was done specifically to kill the bill and was accomplished through pressure applied by well financed, anti-ethanol special interests.

There is a saying in the statehouse that nothing ever dies and KAEP and the Petroleum Marketers are reviewing options to resurrect our bill.  Now that the rug of democracy and the traditional legislative process has been yanked from underneath us, we will need to find an inventive way to accomplish our goal.  

Agriculture Related Budgets

The House Appropriations Committee delayed making any decisions on the Kansas Department of Agriculture, State Conservation Commission and Kansas Water Office budgets until the veto session.  Lawmakers want to see what the April Revenue estimates look like before they complete the 2011 fiscal year budget.  This means any cuts or transfers of money until mid to late April. 

Interstate Water Litigation Fund

Senate Ways and Means discussed SB 558, which is to provide a special fund for the interstate water in the hopes that it won't be "misappropriated" or "lost" in the shuffle like the previous $17m that was transferred into the state general funds. The bill would also allow the fund to keep any interest earned.

Supporters of bill included Attorney General Six, Kansas Grain and Feed Association, Kasnas Agribusiness Retailers Association, Kansas Farm Bureau, Kansas Cooperative Council, Kansas Livestock Association, Groundwater Management 3, Groundwater Management 4, and the Secretary of the Kansas Department of Agriculture.

Lab Equipment Fee Budget

The House Agriculture and Natural Resounces Committee held a hearing regarding SB 396, which would allow the Kansas Department of Agriculture to transfer up to 10 percent carryover fees to the lab equipment fee fund with a cap of $500,000.  Leslie Kaufman with the Kansas Coop Council and Mary Jane Stankiewicz, with KGFA and KARA both spoke in favor of the bill due to the importance of this equipment to the functioning of our industry.  This bill has already passed the Senate. 

Repeal of Residential Utilities Sales Tax Exemption

The House Tax Committee amended and voted out of committee with recommendation HB 2549, a bill removing certain sales tax exemptions and imposing a sales tax on certain services that under current law are not subject to sales tax.   Included in the bill are requirements that all residential customers pay sales tax on utilities, all non-profit and religious organizations pay sales tax on their purchases and consumers pay taxes on miscellaneous items, such as lottery tickets, bingo, and coin-operated laundries. It is estimated that taxpayers will pay an additional $160 million in taxes previously exempt.  The lion’s share of which comes from the utilities tax.

Businesses were successful in stripping provisions in the bill that remove the tax exemption on the servicing of certain equipment. Currently, businesses do not pay sales taxes to service, maintain or clean machinery and equipment (tangible, real property), but this bill would have change that and amount and has the potential to cost our businesses possessing such equipment.   We have heard of different definitions on whether our industry would be affected and fear that an incorrect interpretation could have unintended dire consequences.  The Committee also stripped from the bill a repeal all of exemptions granted “by name” to a specific organization and non profits. The bill now goes to the House floor where it may be debated should House leadership choose.

Unemployment Tax Relief Approved by Senate

The Senate unanimously approved HB 2676, a bill that provides employers needed unemployment insurance for 2010 and 2011.  The bill amends the Employment Security Law regarding contribution rates, penalties, and interest. The bill would provide that for calendar year 2010 and 2011 the charge for contributing employers in rate groups 1 through 32 (employers with a positive retention history) would be that of the 2010 original (lower) tax rate computation table.  Contributing employers in rate groups 33 through 51 (employers with a high turnover rate) would be capped at a 5.4 percent contribution rate. In addition, employers would have 90 days past the due date to file their contribution without being charged a penalty or interest.  The bill will soon go to the Governor for signature

KDOT Damage Bill

The House Transportation held a hearing on SB 462, the bill that would allow KDOT to recover damages caused by someone that is driving illegally on the highways.  Opponents raised concerns about two provisions in the bill: 1) that KDOT could seek damages “regardless of whether a ticket had been issued or not” and 2) the ability of KDOT to seek indirect damages that did not specifically limit what damages could be sought.  Opponents also asked the committee to limit the indirect damages to only certain items that would be listed in the bill.  After the hearing, Chairman Hayzlett stated that he would wait to hear if the parties were able to come to some agreement before working the bill.  Those in opposition to the bill were: Kansas Grain and Feed Association, Kansas Agribusiness Retailers Association, Kansas Manufactured Housing and the Kansas Cooperative Council.  Only KDOT testified in favor of the bill.

State Fair Workers Compensation Bill

The House Commerce Committee held a hearing on HB 2658, a bill that allows the State Fair Board to bid on workers compensation insurance.  The State Fair Board testified that the fair could save up to $100k.  This is considered non controversial bill.  However, business groups are concerned that this bill could be amended to include workers compensation language very unfriendly to business on the House floor.
 


March 1, 2010
Week in Review

This week started slowly with the legislature taking Monday off after turnaround, but quickly gained momentum.  After lengthy debate, the House approved and sent to the Governor a bill that bans smoking in most public locations.  Certain exemptions apply including private clubs, smoke shops, nursing homes and state owned and operated casinos.  Proponents cited the dangers of second hand smoke.  Opponents noted the irony of the government telling business owners their place of business must be smoke free, yet allows their own state owned casinos patrons to smoke.

Ethanol Blending Bill

After full Senate approved SB 425, the bill requiring terminals to offer all grades of fuel in Kansas, the Speaker of the House received the bill from the Senate and referred the bill to the House Commerce Committee.  This committee is made up of a chairman and several members with interests very supportive of petroleum producers and a hearing seems unlikely in that committee.  KAEP and the Petroleum Marketers have been in communication with House leadership and urged referring the bill to a more appropriate venue for a hearing.  We will continue our communication with leadership to ensure a fair hearing on the bill.

Property Tax Stabilization Bill

The House Taxation committee held a hearing on HB 2630, the Property Tax Accountability Act. This bill allows that the base mill rate (excluding 20 mills collected statewide for schools, 1.5 mills for state building fund and any mill rate approved by voters) move proportionally in the opposite direction of change in total appraised values on existing property (mill rate declines if values increase / mill rate increases if values decline) so that total tax on existing property remains the same as the prior year.  Proponents included the bill’s sponsors Representatives Steve Brunk, Arlen Siegfreid, Sharon Schwartz, the Kansas Policy Institute, and Kansas Association of Realtors, Kansas Grain and Feed Association and Kansas Agribusiness Retailers Association. They testified that total property taxes in Kansas have far outpaced the population growth and rate of inflation in the last ten years.  This bill will allow for better tax stability for our members by allowing valuation increases to be moderated by mill levy adjustments.   Opponents include the Kansas Association of School Boards, the Kansas League of Municipalities, and the Kansas Association of Counties. They cited their needs to allow local control and flexibility.

Rainy Day Fund

The Senate Ways and Means Committee held a hearing on SCR 1627.  This an amendment to the Kansas Constitution creating a budget stabilization fund.  It would require that 1%  of state revenue be placed into a "rainy day" fund.  The fund would be capped at 7.5% of total annual revenue.  The legislature would vote to transfer funds from the fund to the state general fund only when there is a budget deficit and that the deficit not be caused a tax cut.  State Treasurer Dennis McKinney testified in support, but suggested the limit be raised to 15%.  The Kansas Chamber also testified in support and suggested a spending stipulation, in addition to the tax cut provision, be placed on the amendment as well.

KDA Administrative Hearings Bill

The House Agriculture Committee held a hearing on SB 393, a bill would make changes to current law regarding the emergency adjudication procedures of the Kansas Administrative Procedure Act under certain circumstances for the Kansas Department of Agriculture.  KDA proposed the bill so that they do not have to have a hearing prior to suspending or revoke a license - they will only be required to give the person an opportunity for a hearing.  KDA will still be required to give notice and an opportunity for a hearing however it will be up to the licensee or registrant to request a hearing.  This is a fairly common practice in administrative law.   KDA indicates that the bill would reduce the costs of administrative proceedings because a hearing may not be required in each case.

February 22, 2010
 Turnaround Week

This week was “turn around” week.  It is when all “non exempt” bills must be passed by the chamber of origin by Saturday or they are dead for the session. The House and Senate wrapped up on Friday after several late evenings of debate.  Several hot button topics were debated including the passage of a bill banning texting while driving and an unsuccessful attempt to repeal the death penalty.  The legislature will take Monday off and return on Tuesday.

Ethanol Blending Bill Approved

The full Senate approved SB 425, a bill a bill requiring terminals to offer all grades of fuel in Kansas. This bill was introduced by the Petroleum Marketers and endorsed by the Kansas Association of Ethanol Processors.  After a vigorous debate about RINs, monopolies, government control in our lives, the Senate approved the bill with a 23-16.  The bill will now go to the House.

House Unemployment Insurance Relief Tax Approved

The full House approved HB 2676, a bill that provides Unemployment Insurance Tax relief for 2010 and 2011.  The bill amends the Employment Security Law regarding contribution rates, penalties, and interest. The bill would provide that for calendar year 2010 and 2011 the charge for contributing employers in rate groups 1 through 32 (employers with a positive retention history) would be that of the 2010 original (lower) tax rate computation table.  Contributing employers in rate groups 33 through 51 (employers with a high turnover rate) would be capped at a 5.4 percent contribution rate. In addition, employers would have 90 days past the due date to file their contribution without being charged a penalty or interest.  KARA and KGFA were part of a coalition of businesses supporting this legislation. 

Senate Unemployment Compensation Bill

Senator Wagle, Chair of the Senate Business and Labor Committee, held hearings and discussed adding the following items to the House unemployment compensation bill recently approved (HB 2676)  or a similar piece of legislation.  She would like the bill to: increase the taxable threshold of income to $9000 in 2011 and $10,000 in 2012, impose a surcharge on employers to pay the interest on federal loans to keep to fund solvent, eliminating the waiting week for benefits, remove the automatic cost of living adjustment, eliminate the “trailing spouse” (benefits for a relocated out of state spouse) for Fiscal year 2010 and 2011, and require the Kansas Secretary of Labor report to House and Senate Leadership regularly.   The committee’s work is not complete and we will continue to monitor.

Highway Damage Bill Approved

The full Senate approved SB 462, a bill specifying indirect costs as costs for which the owner and driver of any vehicle or object being illegally operated on any highway or highway structure would be liable if that operation causes damage to the highway or highway structure. The owner and driver would liable for reasonable costs associated with repair of damages regardless of whether a ticket was issued. Current law makes the driver and owner liable for “damage” caused by illegal operation.  The bill would include in indirect costs the reasonable costs associated with damage assessment, engineering and design, mobilization, traffic control, and detours.  The bill still has flaws but the approved is better than originally written.  We will work with House transportation committee members to perfect the bill.

Shifting the Burden of Proof in Tax Appeals Bill Stopped

The Senate Judiciary Committee to “table” or effectively stop SB 528, a bill that shifts the burden of proof in the tax appeal process.  Under current law, county appraisers are required to produce evidence that demonstrates by a preponderance of the evidence, the validity and correctness of the valuation assigned to the property. SB 528 would require the property owner, rather than the county appraisers, produce this evidence. During the hearing, opponents explained the burden should remain with the government who has the information.

Laboratory Fee Fund Approved By Senate

The full Senate approved SB 396, which allows a fee fund to be established to acquire, maintain or replace lab equipment.  The bill does not increase fees or establish new fees but instead allows the KDA to move 10 percent of the carry over balances from the fee funds go into this fund.  The bill also caps the fee fund at $500,000.

Workers Compensation Bill Introduced

Senator Kelly Kultala introduced SB 545, a bill very costly to business that raises all compensation caps and gives the employee choice of a physician. Senate Committee Chair Susan Wagle is aware of its presence, dislikes the bill, and will not hear it at this time.  The labor unions and trial lawyers have already scheduled a rally/protest at the statehouse on February 25 to bring attention to the bill.  It is, after all, an election year so business is prepared to square off against those groups whose primary goal is to increase the cost business.

 

February 15, 2010
COMING THIS WEEK

Bill Requiring the Sale of All Fuel Grades

The Senate Agriculture Committee will take action on SB 425, a bill requiring terminals to offer all grades of fuel in Kansas. The Kansas Association of Ethanol Processors has endorsed this bill.  It is scheduled for continued hearing and action: Tuesday, 2/16/2010, 8:30 AM, Rm 144-S, the statehouse.

Turnaround Week

This upcoming week is what is referred to as “turn around” week.  It is when all bills must be passed by the chamber of origin by February 20 or they are dead for the session. The original turnaround day was February 27, but House and Senate leadership moved the date up to allow for extra days at the end of the session to debate the budget.  The exceptions are bills that have at any point of time been referred to committees exempt from bill deadlines.  These committees include House Appropriations, Calendar and Printing and Taxation, House and Senate Federal and State Affairs, Senate Ways and Means, or other select committee.  Committees will wrap up their work by Wednesday and the remainder of the week will be spent debating bills on the House and Senate floors.  This will make for long sessions and may roll over to Saturday.

WEEK IN REVIEW

Sales Tax Exemption Repeal

The House Tax Committee held and is continuing to hold hearings on HB 2459, a bill removing certain sales tax exemptions and imposing a sales tax on certain services that under current law are not subject to sales tax.  The Kansas Chamber, KGFA and KARA will testify against the bill on provisions in that removes the tax exemption on the servicing of certain equipment. Currently, businesses do not pay sales taxes to service, maintain or clean machinery and equipment (tangible, real property), but this bill would change that and amount and has the potential to cost our businesses possessing such equipment.   They have heard of different definitions on whether industry would be affected and fear that an incorrect interpretation could have unintended dire consequences.  The Secretary of Revenue, School Labor Unions, and social service organizations testified in favor of the bill.  Over 60 entities opposed to the bill will testify this week.  They are opposed to the items following items included in the bill:

Highway Damage Bill

KGFA, KARA, The Kansas Cooperative Council and The Manufactured Housing Association will continue to meet with representatives of KDOT to further discuss SB 462.  This bill places in states that when a highway or highway structure is damaged, the responsible party is liable for all costs associated with the repair of damage, including direct and reasonable consequential costs. Consequential costs include, but are not limited to, costs associated with damage assessment, engineering and design requirements, mobilization, traffic control, and detour costs.  The expansion of this policy could bare excessive and unwarranted costs to “responsible” parties. 

Shifting the Burden of Proof in Tax Appeals

The Senate Judiciary Committee held a hearing on SB 528, a bill that shifts the burden of proof in the tax appeal process.  Under current law, county appraisers are required to produce evidence that demonstrates by a preponderance of the evidence, the validity and correctness of the valuation assigned to the property. SB 528 would require the property owner, rather than the county appraisers, produce this evidence. This bill stems from a property tax controversy with appraisals dispute between Nebraska Furniture Mart, Best Buy, and other “big box” commercial entities and taxing entities.  Proponents included the League of Municipalities, city of Lenexa, and the city of Overland Park.  They explained the bill establishes a more fair tax system and current law states that no presumption shall exist in favor of the county appraiser with respect to the validity and correctness of such determination. Opponents included the Kansas Grain and Feed Association, Kansas Agribusiness Retailers Association, Kansas Cooperative Council Kansas Realtors, Kansas Farm Bureau, Kansas Livestock Association, and Manufactured Housing Association.  They explained the burden should remain with the government who has the information.  The Realtors stated that the appraisers would be less apt to negotiate if you allow the government decision to have a presumption of validity. 

KDOT to Expand Rail Loan Plan

The Senate Transportation Committee held a hearing SB 502, a bill that expands the list of entities who qualify for funding under KDOT's freight rail plan.  The bill opens up the plan to industrial parks, cities and counties.  The bill allows more flexibility in expanding shortline infrastructure.  KDOT testified in favor of the bill but also explained they could accomplish the same outcome through the rules and regulations process.  Kansas Grain and Feed and the Kansas Cooperative Council testified in strong support of the bill, but related that they are comfortable going through the regulatory process if the same results are accomplished.  KDOT assured stakeholders that they would move forward regulation promulgation process immediately.  The Committee approved going down the regulatory route and urged KDOT to move forward immediately.  There will be no need for legislative action.

Capping Benefits

The Senate Business Committee held a hearing on SB 529, a bill that caps the maximum weekly benefit through (no cost of living adjustment).  The Kansas Chamber testified in favor of the bill citing that Kansas are in top 5 states of unemployment insurance fund tax increases and a cap would assist in keeping the balance in check. 

Moratorium on New Tax Exemptions

The House Taxation Committee held a hearing on House Concurrent Resolution 5028, a resolution that places a three year moratorium on the granting of new tax exemptions, tax credits or economic development incentive programs.  Secretary of Revenue Joan Wagnon testified in support citing the decrease in the tax base and the need to keep revenues flowing into the state coffers.  Other proponents included education, social service, and childrens advocacy organizations.  Opponents testified that flexibility is need in tax policy during trying economic times and cited economic development situations of which such policies have saved jobs and increased revenue as a result.  They included several of chambers of commerce and like minded organizations. 

UI Tax Credits for Employers Bill Dies

In the House Commerce the Department of Revenue testified against HB 2664, a bill that provide income tax credits to offset unemployment insurance tax increases, but does not provide relief of current rates.  The agency expressed concerns that the state could not absorb the hit to the State General Fund during this difficult economic recession.  The committee chairman, Rep. Steve Brunk, indicated that this bill will not proceed through the process.

Unemployment Insurance Relief Bill Approved by Committee

The House Commerce Committee held hearings, amended, and approved on HB 2676, a bill, as amended, implements the original 2010 (lower) unemployment insurance tax rate and provides for a 180 day window forgiving penalties and interest of late payments. The bill was introduced by Representative Aaron Jack.  Other proponents included the KGFA and KARA as part of a coalition spearheaded by the Kansas Chamber, the Kansas Society of Human Resource Managers.  Proponents cited that employers don’t need a huge tax hit during a recession and can address the unemployment insurance shortfall in subsequent legislation to be aggressed later in the session.  Secretary of Labor Jim Garner defended the rate increase for 2010 citing the increase mechanism is specified in current law.  He expressed concern that HB 2676, as written, will violate federal law and will have a extreme negative fiscal impact on the fund.  The bill now goes to the full House for debate.

Laboratory Fee Fund Approved By Senate Committee

Senate Ways and Means approved SB 396, which allows a fee fund to be established to acquire, maintain or replace lab equipment.  The bill does not increase fees or establish new fees but instead allows the KDA to move 10 percent of the carry over balances from the fee funds go into this fund.  The bill also caps the fee fund at $500,000.

Agriculture Budget Approved

The House Appropriations Committee tentatively has approved the Kansas Department of Agriculture Budget.  The Agriculture and Natural Resources budget committee recommended an additional $75,000 enhancement over and above the governor's recommendation for FY 2011 for the state grain warehousing program.  The budget committee recommended diverting funds from the KDA’s contributions to the state’s monumental buildings fund to the grain warehouse and dairy programs. Kansas Grain and Feed Association and Kansas Cooperative Council supported the grain warehouse program funding and were able to include a proviso excluding the program from cuts if at all possible.  The new money slated for the dairy and grain warehousing were deleted by the full Appropriations Committee, but the proviso language remained in the bill.  The committee will vote on the full budget next week.

 

February 8, 2010

Bill Requiring the Sale of All Fuel Grades

 

The Senate Agriculture Committee held a hearing on SB 425.  Tom Palace with the Kansas Petroleum Marketers and Convenience Store Association brought forward this bill to require terminals to offer all grades of fuel in Kansas. Others speaking in support of the bill were: Zarco 66 in Lawrence, Growth Energy, 24-7 Stores, Western Plains Energy, the Kansas Grain Sorghum Association and the Kansas Corn Growers Association. 24-7 store owner, Mark Augustine, requested the committee ensure competitive forces so that retailers are allowed to shop for the lowest price for ethanol and gas. The Kansas Association of Ethanol Processors did not have a position at the time of the hearing, but have subsequently voted to support the bill.

 

Sen. Janis Lee inquired to Steve McNinch, Western Plains Energy, why this bill was asking for more government control.   McNinch replied that this bill asks for transparency.  Sen. Lee also asked if this issue is being litigated in other states.  Palace replied yes, but had heard that the court in North Carolina had upheld this language.

 

Opponents were Magellan Pipeline and the Kansas Petroleum Council.  Magellan does not own any of the gasoline or ethanol that it handles and therefore will be impacted by SB 425 because the bill promotes splash blending as opposed to terminal blending. Kansas Petroleum Council stated this bill violates the commerce clause, mandates refiners carry certain fuels, and conflicts with federal law that requires blending of fuels. National trade association may sue if this bill is passed in Kansas.

 

The hearing is being held open and will be continued at a later date.

 

Bill Assuming Liability for Damaged Highways

 

The Kansas Department of Transportation introduced SB 462, a bill assuming liability to damaged infrastructure.  This bill is in response to an accident in which a bridge in Hays was severely damaged. While KDOT could recover actual damages, KDOT was prevented from recovering detour costs while they repaired the damage. KDOT asked for the word "illegal" removed because property is damaged.  KGFA testified that we were concerned that if we were legally operating a vehicle with an overweight and over sized permit this bill would allow KDOT to collect damages if the road was damaged.  KDOT said it is not a common occurrence but it happens 3-4 times over 5 years.

 

State Farm insurance, KAIA, Kansas Manufacturer Association also appeared in opposition to this bill.  All parties asked for the term "legal" be left in the statute.  KDOT agreed to get a hold of the opponents and work out language so that someone who is operating a vehicle legally should not be liable for damages.

 

Kansas Department of Agriculture Budget

 

KDA presented its budget for fiscal year 2011 to the House Agriculture Committee and requested state general funds for the following:

However, the Governor did recommend these changes.

 

KDA Administrative Hearings Bill Passes Senate

 

The full Senate approved SB 393, a bill that changes current law regarding the emergency adjudication procedures of the Kansas Administrative Procedure Act under certain circumstances for the Kansas Department of Agriculture.  KDA proposed the bill so that they do not have to have a hearing prior to suspending or revoke a license - they will only be required to give the person an opportunity for a hearing.  KDA will still be required to give notice and an opportunity for a hearing however it will be up to the licensee or registrant to request a hearing.  This is a fairly common practice in administrative law.   KDA indicates that the bill would reduce the costs of administrative proceedings because a hearing may not be required in each case.   The final vote was 38-0.

 

Unemployment Rate Discussion

 

The Senate Business and Labor committee continued to receive testimony from Kansas Department of Labor Jim Garner with regard to the depleted unemployment compensation fund. The state officially runs out of money in the fund this month and has subsequently raised rates on employers and borrowed money from the federal government.  Garner gave an overview of the Kansas Unemployment Rate Assessments as they relate to a positive turnover history and negative turnover balance employers. Senator Wagle questioned why employers with a positive rating were receiving such a high tax increase. He responded that only 9%  of employers have a negative rating and difference had to be made up by the whole.  Senator Holland asked of other states found inventive solutions to address shortfall.  Garner replied that there is no easy fix. Senator Wagle polled the committee about considering a cap on the cost of living automatic increase and/or increasing the surcharge to employers with a negative balance. The committee voted to introduce a bill capping the benefits COLA for 3 years.

 

Kansas Streamlining Government Act

 

The House Appropriations Committee approved HB 2442, a bill would creating an independent commission to review and recommend when and if state programs or agencies should be consolidated, changed or even eliminated. The Kansas Veterinary Medicine Association and the Kansas Association Realtors successfully amended the bill to have all agencies that are "exclusively fee funded" to be exempted from this bill. 

 

KBA Presentation

 

Kansas Bioscience Authority President Tom Thorton presented to the Senate Commerce Committee an update on agency and new developments.  He testified that huge strides have been made in Kansas.  However, due to the cuts of the last three years, the KBA has tightened its focus on project funding. Concerning NBAF, the KBA's goal is to maximize the collaboration of related bioscience organizations.   The KBA's end result is to have Kansas referred to as “the  defender of American agriculture”.

 

Water Fund Money Lost

 

The Attorney General's office reported the Senate Ways and Means Committee that due to error in the 2007 budget bill, $19 million was inadvertently sent to the State General Fund from the Water Litigation Fund.  This money was to be collected from water court settlements between Colorado and Nebraska and used to pay for future litigation. Now the fund is broke and Kansas has literally no money to defend itself with regard to water litigation.  The legislature will consider stop gap funding for this fiscal year.

 

Budget Rescission Bill Approved by House Committee

 

The Appropriations Committee approved HB 2222, a bill that cuts to several agencies that could not be accomplished by the Governor without the legislature’s approval.  The committee amended the bill to reduce legislative salaries by 11%. Rep. DeGraaf offered an amendment denying Planned Parenthood any state dollars. Staff reported that such an amendment may jeopardize federal Medicaid money and the amendment failed. Rep. McCleland offered an amendment funding the Judiciary $5 million with money going to public education which failed as well. An amendment cutting the voucher days for legislature by 25 days-$853,000 was approved.   Other cuts in the bill include: $250,000 cut to KTEC, $2 million cut to Kansas Housing Corporation, $80 million from the KS Department of Transportation, $500,000 from the Department of Commerce, $5 million from the Securities Commission, Cut 50% of legislators franking privileges (free postage), and $1.1 million from the legislature.

 

SB 396 - Lab Fee Fund

 

Senate Ways and Means held a hearing on SB 396, which allows a fee fund to be established to acquire, maintain or replace lab equipment.  The bill does not increase fees or establish new fees but instead allows the KDA to move 10 percent of the carry over balances from the fee funds go into this fund.  The bill also caps the fee fund at $500,000.

 

 

January 31, 2010

Ethanol Briefings

 

On Monday, January 25th, Mary Jane Stankiewicz and Greg Krissek on behalf of the KAEP will presented to the House Agriculture a report on the current status of the ethanol industry in Kansas and the industry’s prospective outlook. On Tuesday, January 26, Abengoa Bio-energy made a presentation to the House Utilities Committee.

 

Sales Tax Rejected By Committee

 

The House Tax Committee rejected HB 2475, a bill that increases the state sales tax 1 cent sales tax for 3 years to address a $400 million budget hole for fiscal year 2011.  After the 3 years, all but .02 of a cent will sunset and that remaining portion will be dedicated to transportation infrastructure funding.  This does not mean that the contents of the bill are gone for good.  We expect to see a sales tax increase proposed again in some shape or form prior to the session’s end.  For the time being, legislators will focus on alternative proposals to fill the budget gap.

 

Unemployment Fund Shortfall

 

Several committees continued to hear testimony from the Kansas Department of Labor on the Department of Labor on the unemployment fund shortfall and the subsequent increase in the fund’s rates.   Due to the unexpected numbers of unemployed Kansans due to the recession, the Unemployment insurance fund will run out of money this.  The state will need to borrow money from the federal government in order to make needed unemployment payments.  We will keep you apprised of developments as legislative initiatives move forward.

 

Budget Rescission Bill Approved by Senate

 

The Senate approved HB 2222, a bill that cuts to several agencies that could not be accomplished by the Governor without the legislature’s approval. There was an attempt to restore $22 million in Medicaid cut by the Govrnor, but after lengthy debate, the amendment failed.  Other cuts include: $250,000 cut to KTEC, $2 million cut to Kansas Housing Corporation, $80 million from the KS Department of Transportation, $500,000 from the Department of Commerce, $5 million from the Securities Commission, Cut 50% of legislators franking privileges (free postage), and $1.1 million from the legislature.

 

Kansas Streamlining Government Act

 

The House Appropriations Committee held a hearing on HB 2442, a bill would creating an independent commission to review and recommend when and if state programs or agencies should be consolidated, changed or even eliminated. The hope is that the independent commission would be more objective and thus real savings would occur. 

 

The bill drew fire because it would not be subject to the Kansas Open Meetings Act.  The authors, Represenative Lee Taffanelli and Senator Derek Schmidt, defended this because they believe the intent is to protect employees who might fall under the whistle blower act when they appear before the commission. The Kansas Chamber, Wichita Independent Business Association and other pro-business groups gave written testimony in favor of the bill.  The Kansas Veterinary Medicine Association and the Kansas Association Realtors requested an amendment to have all agencies that are "exclusively fee funded" to be exempted from this bill.

 

KDA Administrative Hearings Bill

 

The Senate Agriculture Committee held a hearing on SB 393, a bill would make changes to current law regarding the emergency adjudication procedures of the Kansas Administrative Procedure Act under certain circumstances for the Kansas Department of Agriculture.  KDA proposed the bill so that they do not have to have a hearing prior to suspending or revoke a license - they will only be required to give the person an opportunity for a hearing.  KDA will still be required to give notice and an opportunity for a hearing however it will be up to the licensee or registrant to request a hearing.  This is a fairly common practice in administrative law.   KDA indicates that the bill would reduce the costs of administrative proceedings because a hearing may not be required in each case.

 

Coming This Week:

 

The Petroleum Marketers and Convenience Store Association have introduced and the Senate Agriculture Committee will hold a hearing on SB 425.  SB 425 would require that any terminal or bulk storage plant that sells pre-blended fuel also offer un-blended fuel for sale. The hearing will be held Tuesday, 2/2/2010, 8:30 AM, Room 144-S, the statehouse.

 

 

January 25, 2010

COMING THIS WEEK

Ethanol Presentations Monday and Tuesday

On Monday, January 25th, 3:30pm, Mary Jane Stankiewicz and Greg Krissek on behalf  of the KAEP will present to the House Agriculture a report on the current status of the ethanol industry in Kansas and the industry’s prospective outlook.  The presentation will be held in room 783 in the Docking State Office Building. On Tuesday, January 26, 9am, Abengoa Bio-energy is slated to present to the House Utilities Committee in room 785, Docking State Office Building.

WEEK IN REVIEW

Secretary Svaty Confirmed

The Senate Agriculture Committee held a hearing and recommended favorably the confirmation of acting Secretary Josh Svaty to make his post permanent.  Svaty was questioned on a number of issues including Biofuels, Ag tax policy, water issues, clean air, and other challenges facing the industry.  The full Senate unanimously approved his confirmation.  We look forward to continuing our positive lines of communication with the Secretary and the agency as a whole.

Sales Tax Increase Proposed

The House Tax Committee started hearings on HB 2475, a bill that increases the state sales tax 1 cent sales tax for 3 years to address a $400 million budget hole for fiscal year 2011.  After the 3 years, all but .02 of a cent will sunset and that remaining portion will be dedicated to transportation infrastructure funding.  Proponents included education and state employee labor unions, state funded social service organizations, highway infrastructure advocates, and a few private citizens with concerns about schools and the elderly.  They testified that the funds are needed to support these organizations due to budget cuts they have recently absorbed in the last year.  Opponents will testify on Tuesday and will carry the message that tax increases are not the answer when Kansas is trying to claw its way out of a recession. Unemployment Insurance Working Group

Your association’s staff is part of an unemployment insurance working group organized by the Kansas Chamber.  We are looking at ways to legislatively lessen the blow to members because of the recent rise in unemployment fund employer tax rates.  These rates were increased due to the recession and caused drastic decrease in the state’s unemployment insurance trust fund.  We are discussing a variety of options and will report as things get hammered out.

“Technical Adjustments” to Income Tax Credits  

The Department of Revenue requested a bill and received a hearing on HB 2465, a bill that eliminates a number of tax credits.  This includes regional economic development foundations that provide tax credits.   While the Department of Revenue claimed that this was a cleanup of credits that are not currently utilized, conferees and committee members voiced concern that the bill accomplished much more than billed.   We noticed that this bill was scheduled for hearing even before the bill was printed and could be read and shared our concerns with the business committee and committee members.

Texting Ban Bill

The House Transportation committee held a hearing on HB 2439, a bill that bans the use of devices allowing texting, sending instant messages, or emailing while driving.  The bill applies to drivers of all ages and would carry a $100 fine per offense.   Proponents included law enforcement officials, KS Department of Transportation, KS Department of Health and Environment, Ford Motor Companies, and AT&T.  The Senate will hear a stricter texting ban bill SB 351 this week that includes provisions making texting punishable by jail time.

Budget Rescission Bill

The Senate Ways and Means Committee held a hearing on and approved SB 350, a bill that cuts to several agencies that could not be accomplished by the Governor without the legislature’s approval. The bill was amended into HB 2222, (a bill that previously dealt with a state agency fees) and was sent to the full Senate. These cuts include:

·         $250,000 cut to KTEC 

·         $2 million cut to Kansas Housing Corporation

·         $80 million from the KS Department of Transportation

·         $500,000 from the Department of Commerce

·         $5 million from the Securities Commission

·         Cut 50% of legislators franking privileges (free postage)

·          $1.1 million from the legislature 

HB 2428 - Reservoir Fee Bill

The House Vision 2020 Committee held a hearing on HB 2428.  This bill was introduced by the Kansas Water Office and proposes a .O3/1,000 gallons of water fee to create a fund to assist in the protection and restoration of Kansas reservoirs.  The fee would not apply to groundwater.  The fee is estimated to cost a household approximately $.13-.24/month. The fee would generate about $2 million/year. The fee could not increase for 3 years but thereafter it could be increased up to $.02 without coming back to the legislature. The fee would be used to ensure Kansas has adequate storage in the future.  The fees would be used to reduce the sediment that is going into the lakes via streambank stabilization so that these lakes have storage capacity in the next 30-50 years. According to the Kansas Biological Survey 6 out of the 20 reservoirs that provide drinking water supplies for various communities are already 30 percent filled with silt.  KDOR asked for an amendment so that this fee is not treated like a sales tax.

 

January 18, 2010

Legislature Returns: Challenging Session

 

The Kansas Legislature convened Monday, January 11 and had a relatively light work week. Several informational hearings were held, parameters set for the remainder of the session, and the Governor presented his budget. This is by far the calm before the storm and we anticipated the most volatile legislative session in recent history. Please read below for details of the start of the 2010 Legislative session.

 

Blender Pump Bill Introduced
 

Tom Palace, Executive Director of the Petroleum Marketers and Convenience Store Association, introduced a bill allowing for the blending of ethanol at the pump. The bill was introduced in the Senate Transportation Committee but has not yet been assigned a bill number. Committee Chairman Mark Taddiken is extremely supportive of the bill.
 

Governor’s Budget Plan
 

The key factor of the week was Governor Parkinson State of the State Address. During which, he outline his proposal to address a near $400 million dollar state budget shortfall for fiscal year 2011. Governor Parkinson has proposed a 1 cent sales tax increase and a 55 cent per pack cigarette tax increase that should fill the budget hole. After the 3 years, all but .02 of a cent will sunset and that remaining portion will be dedicated to transportation infrastructure funding. Republican lawmakers voiced concerns over such an increase especially when we are in a deep recession. The Governor warned that if such tax increase is not enacted, he will be forced cut deeper into the budget. This bill was introduced in the House Tax Committee, but in an unprecedented move, the Senate Tax Committee denied bill introduction. Legislative committees traditionally allow for the introduction all legislation as a courtesy to those requesting the bill. Their denial of introduction of the Governor’s proposal reflects the acrimony currently existing under the dome.
 

Sales Tax Exemption Elimination
 

Kansas Department of Revenue Secretary Joan Wagnon proposed an alternative solution to the budget deficit by repealing certain sales tax exemptions equaling approximately $196 million in tax increases. The Biomass to energy tax credit is among those slated for elimination. In addition, her bill would, among other things, would:

She also suggested that the following tax credits be repealed:

The House Tax Committee introduced a bill containing the Secretary of Revenue’s sales tax exemption repeal. Similar to the Governor’s proposal, the Senate Tax Committee refused to introduce identical pieces of legislation.

Sales Tax Exemption Repeal on Goods and Services

During an address to the House Republicans, Secretary of Revenue Joan Wagnon fired a warning shot threatening to repeal sales tax credits on agriculture related products and services. We have learned from attendees at this closed door meeting that the Department of Revenue desires to examine all existing sales tax credits and agriculture and business in general were specifically mentioned. No legislation has been introduced requiring such a review and neither the House or Senate Tax Chairman have requested a hearing. We do anticipate action on this issue is forthcoming and your staff will diligently monitor all activities in the statehouse.

Unemployment Insurance Fund

Department of Labor Secretary Jim Garner presented to the Senate Business and Labor Committee an explanation of the increased unemployment insurance tax rates. Due to the unexpected numbers of unemployed Kansans due to the recession, the Unemployment insurance fund will run out of money next month. In order to refill the fund, Kansas employers received notices in the mail Mid-December advising them of their new contribution rates. Each employer’s tax rate will be different based upon their unique circumstances. The average 2009 tax rate was 2.02%; the average estimated tax rate for 2010 is more than doubled 4.37% (Unemployment taxes are assessed on the first $8000 of wages paid per employee). Many positive balance experience rated employers will be paying at the maximum rate of 5.4% in 2010. Employers with negative balances will pay up to 7.4% -- a surcharge of 0.2 to 2.0% is assessed based on the employers’ particular experience. These rates are expected to raise $407 million in 2010, but are still shy of the amount needed. The state, therefore, will need to borrow money from the federal government in order to make needed unemployment payments. We expect legislative initiatives to be introduced to reduce the burden on employers.

COMING THIS WEEK

Secretary of Agriculture Confirmation

This week, acting Secretary of Agriculture Josh Svaty will appear before the Senate Agriculture Committee seeking their blessing for full Senate confirmation. This position, like most high level cabinet positions, requires Senate approval. Secretary Svaty has shown to be an effective leader in acting secretary role, very supportive of the industry, and an independent voice. In fact, while addressing the Committee during his state of Kansas Agriculture address, he expressed concerns about some of the federal initiatives being proposed by the Environment Protection Agency. We are optimistic that he will be confirmed with little or no opposition.