The list of bills in the Legislature shrank considerably on Friday, February 24, Turnaround Day. Turnaround Day is a legislative deadline requiring any bill that has not been passed through its house of origin to be stricken from the calendar. There are certain select committees that are “exempt” from this rule. They include House and Senate Tax, Federal and State Affairs, Budget, as well as Senate Ways and Means and House Appropriations. Procedurally, leadership will identify which bills they still want to consider after turnaround and refer them to one of the aforementioned committees to protect them from being removed from the calendar.

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We have mentioned several times that the electric utilities are taking a lot of heat this session. Generally, legislative leadership has heard from their constituents that they are tired of increasing electric bills. This goes for residential and business customers alike. Several bills were introduced early in the session to address utility rates from multiple angles. They included bills to expand the number of KCC commissioners, the election of KCC commissioners, limiting Evergy from recovering certain transmission-related costs, enhancing the benefits for customers who sell power back to Evergy, and requiring the KCC to study cost competitiveness in our region. House Utility Chairman, Rep. Leo Delperdang, announced to his committee on its last day of meetings before the break that they aren’t going to work any of these bills before turnaround and instead would add them to a list of general energy policy studies. SB 88 and its companion HB 2154, the KCC election bill, are off the table, as are most of the other bills meant to push back on rising electric rates in Kansas. 

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The chairman also said he is in talks with TC Energy to have them provide a briefing, likely sometime in March, on the pipeline spill in Washington County. Expect some noise from the usual suspects when TC Energy comes in to discuss their mitigation efforts. The timing of their presentation comes after turnaround day and ensures no punitive legislation may be brought against them or the industry as a result. HB 2327 was just such a bill that didn’t receive a hearing in committee. If passed, it would have revoked any property tax exemption received by a pipeline that experienced a spill. It would have also forced the company to pay any property taxes it had been previously exempted from. This type of bill is harmful to the industry and fails to recognize the role domestic fossil fuel production plays in the United States.
 
On the other hand, SCR 1603 was brought forward by several Senators urging the President of the United States to restore energy independence in the United States. The highlights of SCR 1603 urge President Biden to 1) Reject unscientific environmental mandates that restrict domestic energy production and raise costs for American families; 2) Consider current geopolitical tensions and support policies that ensure America’s long-term energy affordability, security, leadership, and progress, including actions to increase investment in domestic refineries and natural gas production; 3) Expand domestic energy production and ensure energy reliability and affordability for consumers by cutting through the red tape purposefully hampering the building of energy infrastructure, primarily pipelines; 4) Reevaluate energy policies that have curtailed domestic production of oil and natural gas; and 5) Utilize our nation’s abundant natural resources and relationships with energy-producing allies as leverage against a Russian regime that is intent on disrupting world peace and threatening global stability. The measure passed the Senate (28- 10) and is currently in the House Energy Committee.

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In the final hours before the Senate left, they amended a tax bill and eliminated the sales tax on all food and food products in Kansas. We all experienced the slight reduction that went into effect on January 1, but this amended bill, if passed, takes all food tax to zero. Where the legislature will receive pushback is from local units of government. As the bill reads, no entity is allowed to tax food or food products. This means lower state and local revenues which will have to be made up somewhere. The Senate also advanced a flat tax plan which will further reduce revenue. The revenue they are losing will have to be made up somewhere, or government will have to reduce spending. Of those two options, we all know which is more likely. 

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Perhaps there is a middle ground, or maybe they will modify the flat tax rate to recover some of the missing revenue. But we don’t envision a plan where the size or cost of government is reduced. Keep an ear open for proposals to increase property tax to provide the remainder of the funds. This is where we foresee the tax plans affecting our industry. But until the final gavel, you never know what they will come up with.

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