2020 Legislative Policy Watch Weekly E-Update

Issue No. # 8, February 28, 2020

In This Issue
Economic Development Opportunities
Legislative Stalement
Electric Rates SB 339
Raw Milk SB 308 Update
Calendars for Week of March 2
FEDERAL POLICY: Comprehensive Climate & Agriculture Bill Introduced
Climate Hearing Video Available
About Policy Watch

About Policy Watch E-Updates


The Legislative and Policy Watch Weekly E-Update is a project of the Kansas Rural Center.

Editor: Mary Fund
Paul Johnson, Policy Analyst


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Sen. Jerry Moran
DC Ofc 202-224-6521

Sen. Pat Roberts
DC Ofc  202-224-4774

Rep. Roger Marshall, 
1st Dist. 
DC Ofc: 202-225-2715

Rep. Steve Watkins
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Rep. Sharice Davids
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Rep. Ron Estes
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ECONOMIC DEVELOPMENT     OPPORTUNITIES LOST
    by Paul Johnson
 
Like most states, Kansas spends its few precious economic development dollars begging certain magical economic enterprises to come to Kansas. Various economic incentives from tax cuts to workforce training are put on the table. What gets precious little attention and planning is capturing the billions of dollars flowing out of Kansas that are spent yearly on energy, food and housing by Kansans.
 
Kansas actively recruits mega-corporate dairies to locate in Kansas while destroying the livelihood of the couple hundred family farm dairies that somehow have survived. Kansas economic leaders begged the billion dollar Tyson chicken empire to come to Tonganoxie with pledges of hundreds of millions in tax incentives while providing no support or planning for the existing 86 state-inspected/custom meat plants already in Kansas. Kansans deserve a more a serious debate on the merits of chasing outside economic interests versus more investments in existing industrial, commercial and residential opportunities.
 
Energy may well be the easiest economic opportunity to invest in. Kansas has not developed its own state energy plan. Kansas has not researched the cost-saving opportunities in energy efficiency/conservation investments. Kansas is almost last of all 50 states in this regard.
 
Energy efficiency investments are far cheaper than production of electricity or natural gas. The savings from energy efficiency results in yearly savings that can circulate in the local economy. Every dollar not spent on unneeded Wyoming coal is an economic multiplier in the Kansas economy. A vibrant independent energy office should have the engineering expertise to work with existing customers or potential new ones to lower operating costs with energy efficiency upgrades. Lower energy costs afford the customer the cash flow opportunity to invest more in that factory or home mortgage.
 
Unfortunately, the Kansas House is posed to kill the Governor's executive reorganization order to establish an independent energy office and develop a statewide energy plan to capitalize on energy saving investments. The Kansas Senate has passed a bill - SB 339 - that encourages more reckless electrical use for certain large customers and forces the 'captive' ratepayers to cover the revenue loss. What can't be debated in Kansas is the takeover of the largest merged electric company in Kansas - EVERGY - by investment hedge funds that thrive solely on investor returns over the safety and reliability of electric power to a couple million Kansans.
(See below for more on SB 339)
 
Four such venture capitalist investment firms now own over 30% of EVERGY and are calling for a forced merger or sale of the company. In 2018, around $325 million of EVERGY's net revenue went to the investors - who for the most part live outside of Kansas. What could Kansas do with $300 million yearly in terms of lower rates and energy efficiency investments in homes and commercial enterprises?
 
Capturing food dollars spent in Kansas is another development opportunity that is not proclaimed by any of our economic development leaders today. According to USDA figures, per capita spending on food yearly is $2,436. Multiply that by 2.9 million Kansans and the total comes to $7.064 billion food dollars annually in Kansas. Data shows that Kansas imports 95% of the $800 million spent on just fruits and vegetables consumed in the state.
 
Consumer demand continues to increase for local and sustainably raised foods but Kansas has no state plan to meet that demand. 34 counties in Kansas now have local food councils that are giving local foods serious attention. K-State Research & Extension has 356 extension agents and has prioritized local foods but has only three positions exclusively devoted to local foods and virtually no research on organic and sustainable farming trials.
 
The 12 agriculture marketing positions - now at the Kansas Department of Agriculture (with some moving to the Department of Commerce) - promote expanded international sales and recruiting those mega-dairies and industrial factory meat plants (often dependent on undocumented immigrant labor).
 
The 2017 USDA agriculture census documents a total of 59,800 farms in Kansas with just 161 farms accounting for 50% of all Kansas farm sales and to get to 75% of sales it takes just under 2,900 farms. Not surprising since federal Farm Bills drive agricultural policy in Kansas and 88% of all commodity farm payments go to 20% of the farms.
 
Consolidation of farms and the death of more rural communities seem inevitable without fundamental reform to federal farm policy. Congressional and Senatorial candidates in 2020 should discuss this imbalance and promote moving these federal commodity payments to conservation incentives for a far greater number of farms. Farmers should be rewarded for improving soil health, developing more resiliency to climate change and responding to local/regional food marketing opportunities.
 
Housing is more of a challenge. As with energy and food, Kansas does not now have a statewide affordable housing plan. Housing is so critical for repopulating rural areas as well as providing workforce needs in many urban areas. Kansas Housing Resources Corporation (KHRC) is the statewide housing agency in Kansas but as a semi-public agency (created in 2003) without much state funding, this agency is unknown to most lawmakers.
 
At the direction of the Governor, KHRC is coordinating with several other state and federal agencies on the development of an action plan on housing. The hope is that funding can be found this year to begin the development of that statewide housing plan.
 
KHRC is prohibited by state law from using 'federal tax-exempt' private activity bonds from Commerce to issue income eligible 'first-time home buyer loans'. Kansas has a 'State Housing Trust Fund' (SHTF) but this fund has no dedicated revenue source. Such a funded trust fund could assist with down payment loans for home buyers that are often the greatest challenge to home ownership. Dedicated funding from lottery and casino revenues to the State should be dedicated to the SHTF. As the Governor declared the need for a state energy plan and office this year, the hope is that next year the Governor will declare the need for an 'affordable housing strategy', create a State housing commission that reports annually to the Legislature and dedicate economic development funds to the SHTF.     
       
   Contact Paul Johnson at pdjohnson@centurylink.net

LEGISLATIVE STALEMATE
  
The 2020 Kansas Legislative session has stalled for now. The primary decisions on the State budget, tax cuts and any Medicaid (KanCare) expansion have been left for March or more likely the veto session that starts April 27 into May. The Governor's proposal to refinance the Kansas Public Employees Retirement System (KPERS) to make future payments more affordable for the Kansas budget has been killed in the House.
 
The partisan fight of connecting the passage of a constitutional amendment - undermining women's health - to the expansion of Medicaid has stalled most all meaningful legislation. The Governor's efforts to create an independent energy office or consolidate certain social service agencies into the Department of Human Resources are held hostage as leverage to force the passage of the constitutional amendment.
 
The revenue picture is uncertain. Month over month, there have been unexpected increases in revenue to the State but can that continue? As Wall Street and corporate profits start to tumble under the uncertain impact of the 'coronavirus', what fallout may Kansas experience? Actual monthly revenues from February, March and April will be known as final budget deals are made in the veto session. The Consensus Revenue Estimating Group will meet on April 10 and develop State revenue projections for the 2021 that will be used by all lawmakers for final budgetary deliberations.
 
 2020 is an election year for all 40 Senators and 125 House members. Election year goodies - such as generous tax cuts and expanded funding for highways - are essential but questionably affordable. Lawmakers can give away the store this session and leave tomorrow's lawmakers the challenge of balancing the budget in future years. If a national recession comes in 2020 or 2021, Kansas will have difficult choices in order to adequately fund education, social services, public safety, transportation and retirement plan payments.         


ECONOMIC DEVELOPMENT ELECTRIC RATES
 
At the request of Kansas' largest electric utility - EVERGY - Senate Bill 339 would create law related to the authority of the Kansas Corporation Commission (KCC) to allow discounted electric rates for certain large industrial and commercial facilities. The KCC would be authorized to approve such rates - outside a general rate proceeding - that are not based on the electric public utility's cost of service for that facility.
 
This special rate would be allowed if it were determined such facility would not continue operations and the economic development of retaining the tax base and keeping employment opportunities were proved to the KCC. This special rate will apply to facilities that require an electric demand of at least 200 kilowatts (such as medium manufacturing and even a large hotel). The reduced revenues from this special rate would be covered by a uniform percentage adjustment to all other ratepayers.
 
Now that EVERGY is the mammoth electric company in Kansas, their demands are quickly bowed to by lawmakers. SB 339 was introduced on January 29, hearings held before the Senate Utilities committee on February 11, 12, voted out of the committee on February 24, and passed the State Senate on February 25 on a vote of 39-0. There were no questions asked any Senator on the floor. With electric rates 20-30% higher than surrounding states, forcing all other ratepayers to cover this revenue loss deserves serious attention.
 
EVERGY has explicitly stated that the lost revenues come from other ratepayers and not a dime from their well-heeled 'private investment fund' stock owners.
 
The Citizen's Utility Ratepayer Board - that represents residential and small businesses - stated this bill would unfairly benefit utilities over ratepayers and reduce the ability of the KCC to fairly regulate rates. The KCC stated that this bill does not follow the recent London Economics International rate study's considerations in designing economic development riders and does not comply with established KCC criteria regarding ratemaking treatment for revenue losses.
 
Is this bill the start of a slippery slope where connected special economic interests can manipulate their electric rates by passing special legislation to force 'captive ratepayers' to cover the losses to a privately-owned public monopoly? The KCC indicated they would need to hire outside consultants to assist in determining the special contract rates at an estimated cost of $10,000 to $20,000 for each utility that files an application. Guess who gets to pick up these additional costs? That would be the ratepayers - not the utility of their investors.

RAW MILK LEGISLATIVE UPDATE SB 308
 
Senate Bill 300 - that would have outlawed raw milk - was not considered by the Senate Agriculture and Natural Resources committee. Senate Bill 308 - to label raw milk - was amended significantly in committee before being sent to the full Senate where it passed. The mandatory labeling now reads 'this product contains raw milk that is not pasteurized'. The size and font requirements for labels were removed. The bill now goes to the House Agriculture Committee for consideration where those concerned about its fate should continue monitoring the debate.
 
The bill requires individuals selling such products and who advertise such products cannot use false or misleading advertisements and state in such advertisements that such milk or milk products are either raw or unpasteurized. The size and font requirements for such advertising were removed. The definition of 'milk' in Kansas dairy law was expanded to include healthy mammals (current law limits the definition to healthy cows). References to goat milk were eliminated as was the definition 'goat milk'. There is no provision for registering or licensing 'raw milk' dairies

CALENDARS for Week of February 24, 2020
For next week's full committee schedules, go to "Calendars" on the Menu at:
  http://www.kslegislature.org/li/     Also, we recommend checking the daily calendars for any changes.

Deadlines: Committee hearings are slim next week. February 27 is Turn Around Day", or the last day to consider non-exempt bills in their house of origin so floor action is the emphasis this week. After this date, only  exempt committees can introduce bills.  March 25 is the last day to consider non-exempt bills not in their originating chamber. Exempt committees: House and Senate Federal and State Affairs, Senate Ways and Means, Senate Assessment and Taxation, House committees on Calendar and Printing, Appropriations, Taxation or select committees of either house when so authorized. Exempt bills are those sponsored by, referred to or acted upon by an exempt committee.
 
Friday, April 3rd is First Adjournment.  No bills considered after this date except bills vetoed by governor, omnibus appropriations act and omnibus reconciliations spending limit bill. Veto session is anticipated to begin on Monday, April 27th.

FEDERAL POLICY: Introduction of First Comprehensive Climate and Agriculture Legislation
   From the National Sustainable Agriculture Coalition, FEb. 28, 2020

This week, Maine farmer and Representative Chellie Pingree (D-ME) introduced the Agriculture Resilience Act to address the most pressing farm issue of our day: climate change. The bill establishes a set of aggressive but realistic goals for farmers to help mitigate climate change and increase agricultural resilience, starting with the overarching goal of reaching net zero greenhouse gas emissions from U.S. agriculture by no later than 2040.

 The legislation's substantive programmatic sections are divided into six additional titles - agricultural research, soil health, farmland preservation and viability, pasture-based livestock, on-farm renewable energy, and food waste. NSAC's blog post, we provide a summary of each title of the bill and upcoming next steps for the legislation this year. NSAC applauds Representative Pingree for her vision and leadership in setting the table for the critical legislative phase that must follow if agriculture is to survive and thrive and be part of the solution to the climate crisis.

 To read more click HERE
 

WEALTH DAY CLIMATE HEARING VIDEO AVAILABLE

The Comprehensive Climate Hearing at this year's WEALTH Day,  February 10, 2020, 
can be viewed on  line at

You can also  find all of the climate hearing testimonies and supporting documents archived at:


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