The April 6 deadline for the regular session creeps ever closer with just three weeks to go. The House is still struggling to complete their version of the 2024 State Budget. The Senate is up to its traditional games of arbitrary budget cuts to make more room for regressive tax cuts to benefit their campaign donors. The House is still assembling their tax cut package that will be far less than the ‘wish list’ package passed by the Senate. Medicaid expansion continues to be blocked by House and Senate leadership despite a 70+% approval by Kansans. The Governor stated that 75 of the 106 hospitals in Kansas are in ‘financial distress’. The federal government will provide extra funding subsidies if Kansas expands Medicaid now (saving state funds) but with the blockage by the Senate and House leadership extra state funds have to be added to the Governor’s 2024 Budget request. 150,000 low-income working Kansans would be added with expansion and thousands of health care jobs created. The House leadership rammed through an education package (64 to 61) that directs public tax dollars to private or home schools that have no accreditation or responsibility to take all students. This education package (Sub. for SB 83) is now in a conference committee with the Senate. The Governor’s veto stands ready if private schools are funded with public dollars.

WATER LEGISLATION UPDATE

House Bill 2279 amends the Groundwater Management District Act to require the 5 Groundwater Management Districts (GMD’s) to submit annual reports to the Legislature and conservation/stabilization action plans to the Chief Engineer, Division of Water Resources, Kansas Department of Agriculture (KDA). HB 2279 passed the House 116 to 6. This bill received a very positive hearing before the Senate Agriculture and Natural Resources with numerous proponents testifying and just one neutral party.

By July 1, 2024, the GMD’s would identify all priority areas of concerns and set reasonable boundaries for those areas using data from the Kansas Geologic Survey (KGS). ‘Priority areas of concern’ include areas where the estimated usable lifetime of groundwater is 50 years or less or an unreasonable deterioration of the quality of groundwater is occurring. ‘Priority areas of concern’ also include areas where groundwater levels are declining or have declined excessively and the rate of withdrawal of groundwater equals or exceeds the rate of recharge. If such action plans are not developed or deemed adequate by the Chief Engineer, the Chief Engineer will take corrective actions pursuant to authority in the Kansas Water Appropriations Act and the Kansas Groundwater Management Act.

This bill took 3 years to develop and some 50 meetings. At present rates of groundwater withdrawal, the High Plains aquifer will be 70% gone by 2070. GMD #4 in northwest Kansas started identifying areas of concern in 2001. They now have two ‘local enhanced management areas (LEMA’s)’. GMD #2 in south central Kansas serves 500,000 customers and are more concerned over water quality compared to water quantity. They now have 500 monitoring wells and will add 29 new ones to track the Burrton oil plume impacting the aquifer. GMD’s request greater input into State Water Plan Fund through the Kansas Water Authority. Developing these action plans will require more technical expertise and additional funding for groundwater remediation. GMD #1 started in 1973 and has 5 counties. Public education and outreach began in 2013 with a LEMA developed for Wichita County in 2017 and the entire district will be in a LEMA by 2024. Wichita County LEMA saw a 28-30% reduction in water use. GMD #3 came in as neutral and questioned the definitions for ‘unreasonable deterioration’ and ‘useable life’ which should be determined by GMD’s not state law.

This bill strives for that balance of combining local and state control. The waters of Kansas are owned by the people of Kansas - not the irrigators. 2022 saw the worst decline in groundwater levels since 1995. KGS produces colored maps of the High Plains aquifer depicting the years of water left by area. KGS has concerns over using these maps as a basis of law. KGS has the best water monitoring data of any state and has this data going back several decades. KGS proposed defining ‘priority areas of concern” based on the water use and water level data instead.

SUPPLEMENTAL NOTE ON HOUSE BILL NO. 2279

House Bill 2302 establishes funding for the State Water Plan and water infrastructure projects while creating the Water Technical Assistance Fund and the Water Projects Fund by carving out some $55 million of existing sales tax. This funding mechanism would sunset after five years so the Kansas Legislature can assess how these programs have developed. $5 million would be dedicated to the Water Technical Assistance Fund with special attention to cities under 2,000 given mostly grants as opposed to partial loans. Of the 645 cities in Kansas, 506 are under 2,000 in population.

This additional funding will bring the State Water Plan Fund from an annual average of $20-25 million to $70 million. This is a start and a longer-term commitment to water but small compared to hundreds of millions spent by Colorado or even in South Dakota. The hope is that the additional state funding will leverage more local funding and provide the technical assistance to access more federal funds.

GMD #2 was concerned that there was no dedicated funding for the GMD’s. GMD #2 budget is $725,000 with no public funding involved. Groundwater remediation is very costly compared to just groundwater monitoring. Water One from Johnson County serves 475,000 persons in 17 Johnson County cities since 1953. They requested that this expanded funding be dedicated to the State Water Plan Fund and the priorities established by the Kansas Water Authority. HB 2302 dedicates $15 million a year for three years to pay off the public water storage costs at Milford and Perry Reservoirs. The Governor proposed paying off the $53 million debt in one year which would free this $15 million for other water plan uses.

SUPPLEMENTAL NOTE ON HOUSE BILL NO. 2302

This coming week the Senate Agriculture and Natural Resources committee will debate and amend these two bills before sending them to the Senate floor. There is a sense of urgency that water policy must be updated along with increased funding. It is likely these two bills will end up in a Senate-House conference committee to iron out any serious conflicts.

FEDERAL CROP INSURANCE REFORMS

The Government Accountability Office (GAO) recently released a new report encouraging Congress to consider reducing crop insurance subsidies for the highest-income participants and private insurance companies. This comes at the outset of the 2023 Farm Bill reauthorization. Recommendation 1 - would introduce an adjusted gross income means test, a standard which is applied to Title 1 commodity programs to prevent farmers with an annual income above $900,000 from remaining eligible for payments funded by the taxpayer. A recent American Enterprise Institute study found that the largest 20% of farms receive more than 75% of crop insurance subsidies and that on average these large farmers possess between $3.1 million and $15.7million in total household wealth. Recommendation 2 - encourages Congress to consider reforming the ‘mandatory minimum compensation’ for private crop insurance companies.

Presently, Congress grants private crop insurance companies a guaranteed annual rate of return of14.5%at the expense of the taxpayers – regardless of market conditions. In some years, USDA’s compensation to insurance companies greatly exceeded payments to farmers. Only 20% of farmers carry crop insurance and the vast percentage is on just a few grain crops. Savings from crop insurance could well be invested in underfunded federal farm conservation programs.

GAO URGES CONGRESS TO REDUCE CROP INSURANCE SUBSIDIES… AGAIN

The National Sustainable Agriculture Coalition (NSAC) commissioned a report last summer which proposes several targeted options to reduce federal crop insurance spending that would save up to $20 Billion over 10 years and impact on average less than 3 percent of farmers.

RECORD-HIGH CROP INSURANCE SUBSIDIES ARE UNSUSTAINABLE

KANSAS HOUSING LEGISLATION

Senate Bill 34 expands the Kansas Rural Housing Incentive District (RHID) act to allow for certain housing projects in cities with a population of 60,000 or more (excluding the city of Topeka). There are limits on the number of housing units for-sale and for-rent. For-sale units not sold within six months after the certificate of occupancy is granted would be eligible to be redesignated as for-rent units. The governing body would be able to designate for-sale and for-rent units for succeeding years as part of a proposed multi-phased, multi-year development plan. The bill requires the average size of each residence constructed within a RHID to be no larger than 1,650 feet, excluding any garage or exterior area. The bill expands the list of costs that may be paid for by proceeds of special obligation bonds, adding renovation or construction of residential dwellings and multi-family units or buildings if the infrastructure, including streets, sewer, water and utilities have been in existence for at least ten years. The fiscal note from the Kansas Development Finance Authority indicates this bill could reduce state revenues as tax increment revenues would be pledged to pay debt service on the bonds. Local governments could experience an increase in debt liabilities. The fiscal effect is uncertain given the unknown number of future real property developments. This bill passed the Senate 30-6 and had a hearing in House Committee on Financial Institutions and Pensions.

Senate Bill 37amends the Kansas Housing Investor Tax Credit Act (Act) to expand the transferability of tax credits under the Act. For tax years 2022 and beyond, a tax credit could be claimed against Kansas income tax liability, the privilege tax liability imposed on certain financial institutions, and the premium tax liability imposed upon insurance companies. The tax credit could be claimed by qualified investors and project builders or developers of a qualified housing project. There were several proponents from Heartland Housing Partners to the Kansas Farm Bureau to the Sunflower Electric Power Corporation. Proponents indicated the bill would remove a restriction in the Act to allow investors to sell more than one tax credit at a time. This allows the Kansas Housing Investor Tax Credit to be transferred to multiple taxpayers. However, the total amount of these credits would still be capped at $13 million per year. This bill passed the Senate 35 to 4.

These two bills are improvements to housing bills passed last session. Going forward how is the momentum for housing to continue in the Kansas Legislature? The Kansas Legislature should establish a housing interim committee this summer for 2-3 days. There should be a complete review of the millions spent in rental assistance, homeowner assistance and the expansion of tax credits. There should be annual policy and funding report on housing brought to the Kansas Legislature. Comparatively, the Kansas Water Office was established with a Kansas Water Authority (KWA) that reports annually to the Kansas Legislature with policy and State Water Plan funding recommendations. KWA also periodically up dates the Kansas Water Plan. KWA voting members are selected by the Governor, the House Speaker and the Senate President thus both branches have buy-in. In conjunction with our state housing agency – Kansas Housing Resources Corporation (KHRC) – there should be a Kansas Housing Commission patterned on the KWA that would bring annual policy/funding reports to the Kansas Legislature. KHRC has a State Housing Trust Fund (SHTF) but no dedicated funding source. Kansas has an allotment ($311 million) of federally tax-exempt bonds - known as Private Activity Bonds - that can be used for qualified First Time Homebuyer Loans (which all states do). Kansas must build up a reserve in the SHTF to restart suchloans that have been dormant for 15 years. KHRC needs the statutory authority to issue these loans statewide.

LEAGUE OF WOMEN VOTERS OBSERVER CALLS

Kansas Legislature Website