SESSION OF 2023
SUPPLEMENTAL NOTE ON SENATE SUBSTITUTE FOR
HOUSE BILL NO. 2302
As Recommended by Senate Committee on
Agriculture and Natural Resources
Brief*
Senate Sub. for HB 2302 would establish funding for the
State Water Plan and water infrastructure projects, create the
Water Technical Assistance Fund (Assistance Fund) and the
Water Projects Grant Fund (Grant Fund), authorize the
Kansas Water Office (KWO) to provide grants and adopt rules
and regulations to establish criteria for grants, update
reporting requirements for the Kansas Water Authority, and
make technical amendments.
Milford and Perry Reservoirs Debt Repayment and
Investment (New Section 1-2)
The bill would appropriate $52.0 million in FY 2023 from
the State General Fund (SGF) to the water supply storage
debt payment (debt payment) on Milford and Perry
Reservoirs into the Water Supply Storage Debt Payment for
Milford and Perry Reservoirs Account (Reservoirs Account) in
the State Treasury.
The bill would require the State Treasurer to invest all
moneys in the Reservoirs Account in U.S. Treasury bills until
the interest rate for the bills is equal to or less than the
interest rate for the debt payments as determined by the
State Treasurer. Upon this determination, the State Treasurer
would be required to make debt payments from the
Reservoirs Account.
____________________
*Supplemental notes are prepared by the Legislative Research
Department and do not express legislative intent. The supplemental
note and fiscal note for this bill may be accessed on the Internet at
http://www.kslegislature.org The bill would provide that if, during FY 2023, the
Director of the KWO certifies to the State Treasurer and the
Governor, and at the same time provides certification to the
Directors of the Budget and Legislative Research, that there
is a need to call into service the water supply storage in
Milford and Perry Reservoirs, the State Finance Council
would authorize the State Treasurer to immediately make
expenditures from the Reservoirs Account for debt payments.
The bill would declare the State Finance Council action on
this matter to be characterized as a matter of legislative
delegation and subject to guidelines in continuing law and
could take place during the Legislative Session.
The bill would authorize any unencumbered balance in
the Reservoirs Account in excess of $100 on June 30, 2023,
to be reappropriated for FY 2024. The bill would reauthorize
the investment of moneys in U.S. Treasury bills, the State
Treasurer’s determination on interest rates, the Director of the
KWO’s ability to call water storage into service and
certification to the State Treasurer and Governor and the
Directors of the Budget and Legislative Research, State
Finance Council action and action during the Legislative
Session, and characterization of the State Finance Council
action as a matter of legislative delegation.
State General Fund Transfer; State Water Plan Fund;
Kansas Water Authority (New Section 3)
State General Fund Transfer to the State Water Plan Fund
On July 1, 2023, the Director of Accounts and Reports
would be required to transfer $35.0 million from the SGF to
the State Water Plan Fund (SWPF). The bill would state the
intent of the Legislature to provide for the transfer of $35.0
million from the SGF to the SWPF on July 1, 2024; July 1,
2025; July 1, 2026; and July 1, 2027.
[Note: The SWPF is a statutory fund that receives two
statutory transfers each fiscal year, $6.0 million from the SGF
2- 2302 and $2.0 million from the Economic Development Initiatives
Fund (EDIF), unless modified by the Legislature.]
The bill would state the SWPF would continue to be
appropriated and expended for the purposes prescribed in
law, with the following exceptions:
●If an appropriation is made for any fiscal year, as
provided in New Section 3(a), on July 1 of such
fiscal year or as soon thereafter when moneys are
available:
○$5.0 million would be transferred from the
SWPF to the Assistance Fund established by
the bill; and
○$15.0 million would be transferred from the
SWPF to the Grant Fund established by the
bill.
Stockwater Fee Use
The bill would require, for FY 2024 through FY 2028, the
priority of funds collected and remitted to the SWPF on
stockwater use to be used for stockwatering conservation
projects, and the type and scope of such projects would be
identified by the Kansas Water Office in the formulation of the
SWPF.
Sunset
The bill would sunset the provisions of New Section 3 on
July 1, 2028. All moneys in and liabilities of the two funds
established by the bill would be transferred to the SWPF, and
the two funds would be abolished.
Kansas Water Authority Recommendations to the Legislature
The bill would allow, notwithstanding the provisions of
the law that established the SWPF, the KWA to recommend
3- 2302 to the Legislature an appropriation of up to 10 percent of the
unencumbered balance of the SWPF to be used to
supplement the salaries of existing state agency full-time
equivalent (FTE) employees and for funding new FTE
positions created to implement the State Water Plan. The bill
would allow moneys from the appropriation to be used to
supplement existing positions, but the moneys could not be
used to replace SGF or fee fund moneys or other funding for
positions existing on July 1, 2023.
The bill would list the eligible FTE positions for which
moneys could be used, to include engineers, geologists,
hydrologists, environmental scientists, attorneys, resource
planners, grant specialists, and any other similar positions.
The bill would allow the KWA to recommend that
moneys be used to supplement salaries if at least two
conservation districts present a joint proposal to the KWO for
positions to provide shared services to the districts involved in
the proposal.
The KWA would be required to encourage funding
requests from state and local entities that cooperate with
qualified nonprofit entities on projects that provide a direct
benefit to water quantity and quality, including water
infrastructures that are both natural and man-made, and
include matching funds from non-state sources.
The bill would state that all reporting requirements in the
SWPF law would continue and would apply to the two funds
established in the bill.
Water Technical Assistance Fund (New Section 4)
The bill would establish the Assistance Fund, which
would be administered by the KWO.
The bill would provide that when the unencumbered
balance of the Assistance Fund exceeds $15.0 million, the
4- 2302 Director of the KWO would certify the excess amount to the
Director of Accounts and Reports. Upon receipt of the
certification, the Director of Accounts and Reports would
transfer the excess amount from the Assistance Fund to the
SGF.
The bill would require the KWO to use the Assistance
Fund to provide grants for planning, engineering,
management, and other technical assistance that could be
necessary in the development of plans for water infrastructure
projects or for processing the grant and loan applications for
such water infrastructure projects. The KWO could offer
services directly, provide funding to other organizations to
provide services at no cost to a municipality, unincorporated
area with a national park site or state historic site, or special
district related to water, or the KWO could provide grants
directly to applicants to cover expenses related to the hiring
of technical assistance.
The bill would allow any municipality, unincorporated
area with a national park site or state historic site, or special
district related to water organized under state law to apply for
a grant. The KWO would be authorized to award full or partial
grants to the applicants. Municipalities or unincorporated
areas with fewer than 2,000 residents would be prioritized for
the awarding of full grants. Watershed districts, conservation
districts, groundwater management districts, and all special
districts related to water would not be prioritized for the
awarding of full grants for the purposes of New Section 4 of
the bill.
The bill would require the KWO to adopt rules and
regulations to establish any necessary criteria for
administering the Assistance Fund and awarding grants for
technical assistance. The bill would require the criteria to
include, but not be limited to, factors applicable to:
●Municipalities and unincorporated areas of different
populations, including the prioritization of small
5- 2302 municipalities and unincorporated areas as
required by New Section 4(b)(2);
○Factors could include, but not be limited to,
public health, socio-economic factors, and the
ability for a municipality or unincorporated
area to repay any loans without grant
assistance; and
●Special districts, such as watershed districts,
conservation districts, groundwater management
districts, rural water districts, and any other similar
districts formed for a special or single purpose
related to water.
The bill would prohibit any single awarded grant for
technical assistance exceeding $1.0 million unless specified
by an appropriation act of the Legislature.
Water Project Grant Fund (New Section 5)
The bill would establish the Grant Fund, which would be
administered by the KWO.
The bill would provide that when the unencumbered
balance of the Grant Fund exceeds $30.0 million, the Director
of the KWO would certify the excess amount to the Director of
Accounts and Reports. Upon receipt of the certification, the
Director of Accounts and Reports would transfer the excess
amount from the Grant Fund to the SGF.
The bill would allow the KWO to provide full or partial
funding for grants to any municipality or special district related
to water that is established under state law for the following:
●Construction, repair, maintenance, or replacement
of water-related infrastructures and any related
construction costs;
6- 2302 ●Matching moneys for grant or loan applications for
water-related infrastructure projects; and
●Grants that could be applied to an outstanding loan
balance from the existing Public Water Supply
Loan Fund or Kansas Pollution Control Revolving
Fund.
The bill would require the KWO to adopt rules and
regulations to establish any necessary criteria for grants from
the Grant Fund. The bill would require the rules and
regulations to include any necessary criteria that could be
applied to the selection of projects with outstanding loan
balances from the existing Public Water Supply Loan Fund or
Kansas Pollution Control Revolving Fund.
The criteria would be based on the following factors:
●The planned construction on the project with the
outstanding loan balance being complete;
●The municipality or special district having made at
least five years of payments on the project loans;
●Awarding grants that provide repayment of up to:
○90 percent of any remaining project loan
balance for cities with fewer than 2,000
residents;
○75 percent of any remaining project loan
balance for cities with fewer than 5,000
residents;
○50 percent of any remaining project loan
balance for cities with fewer than 10,000
residents; and
○25 percent of any remaining project loan
balance for all other cities in Kansas; and
●Any other relevant criteria including, but not limited
to, the socio-economic status of the residents of
7- 2302 any municipality, public health, and the ability of
any municipality to repay a loan without further
assistance.
The bill would prohibit any single grant awarded for a
project greater than $8.0 million unless specified by an
appropriation of the Legislature.
The bill would require the KWO and Kansas Department
of Health and Environment (KDHE) to coordinate the sharing
of information about applicants to the Public Water Supply
Loan Fund and the Kansas Pollution Control Revolving Fund,
and require the agencies to take into consideration approval
or likely approval of a grant by the KWO when considering
the eligibility of any municipality to receive moneys from the
funds.
Kansas Water Authority Report (Section 6)
The bill would require the KWA to include in its annual
report to the Governor and Legislature an account of all
moneys expended from the Assistance Fund and the Grant
Fund each year.
Background
The bill was introduced by the House Committee on
Water at the request of Representative Blex.
House Committee on Water
Proponent Testimony
In the House Committee hearing, proponent testimony
was provided by representatives of the cities of Caney and
Wichita, Ducks Unlimited, Kansas Farm Bureau, Kansas
Livestock Association, Kansas Municipal Utilities, League of
8- 2302 Kansas Municipalities, Regional Economic Area Partnership
of South Central Kansas, Sierra Club – Kansas Chapter, The
Nature Conservancy, and WaterOne. The proponents
generally stated the legislation is a good start, more work
needs to be done, and there is a willingness to have these
discussions.
Written-only proponent testimony was provided by
representatives of the cities of Arkansas City, Belle Plaine,
Columbus, Ellsworth, Fredonia, Garden City, Greensburg,
Haysville, Independence, Logan, Maize, McLouth, Mound
Ridge, Olathe, Ottawa, Overland Park, Parsons, Valley Falls,
and WaKeeney; Kansas Agribusiness Retailers Association,
Kansas Grain and Feed Association, and Renew Kansas
Biofuels Association; Kansas Association of Conservation
Districts; Kansas Contractors Association; Kansas
Cooperative Council; Kansas Corn Growers Association;
Kansas Farmers Union; Kansas Rural Center; and Kansas
Rural Water Association.
Neutral Testimony
Neutral testimony was provided by a representative of
the Kansas Department of Agriculture, KDHE, and KWO,
stating the agencies are committed to working with each
other and the House Committee to move forward with the bill.
Opponent Testimony
Written-only opponent testimony was provided by a
representative of the City of McPherson, stating the bill does
not address certain groundwater management district and
municipal water issues.
House Committee Amendments
The House Committee amended the bill to:
9- 2302 ●Add provisions that would require the KWA to
encourage funding requests from state and local
entities that cooperate with qualified nonprofit
entities on projects that provide a direct benefit to
water quantity and quality, including water
infrastructures that are both natural and man-
made, and including matching funds from non-state
sources;
●Delete municipalities as the sole receiver of grants
from the KWO;
●Add special districts to various provisions of New
Section 2 of the House Committee version of the
bill;
●Add groundwater management districts to those
that would not be prioritized for the awarding of full
grants of New Section 2 of the House Committee
version of the bill;
●Replace “municipalities with greater than 2,000
residents” with “municipalities of different
populations and specify prioritization of small
municipalities” with regard to criteria for awarding
technical assistance grants;
●Require the KWO and KDHE to coordinate sharing
information about applicants to the Public Water
Supply Loan Fund and the Kansas Pollution
Control Revolving Fund and take into consideration
the approval or likely approval of a grant by the
KWO when considering the eligibility of any
municipality to receive moneys from the funds; and
●Make clarifying amendments.
10- 2302 Senate Committee on Agriculture and Natural Resources
Proponent Testimony
In the Senate Committee hearing, proponent testimony
was provided by Representative Titus, the Chairperson of the
Kansas Water Authority, and representatives of Groundwater
Management District No. 2, Kansas Farm Bureau, Kansas
Livestock Association, Kansas Municipal Utilities, Kansas
Rural Water Districts, League of Kansas Municipalities, The
Nature Conservancy, and WaterOne.
Written-only proponent testimony was provided by
representatives of American Council of Engineering
Companies of Kansas and Kansas Society of Professional
Engineers; the cities of Arkansas City, Greensburg,
Independence, McLouth, Overland Park, Valley Falls, and
WaKeeney; Ducks Unlimited; Groundwater Management
District No. 1; Kansas Agribusiness Retailers Association,
Kansas Grain and Feed Association, and Renew Kansas
Biofuels Association; Kansas Association of Conservation
Districts; Kansas Chapter of Backcountry Hunters and
Anglers; Kansas Contractors Association; Kansas
Cooperative Council; Kansas Corn Growers Association;
Kansas Farmers Union; Kansans for Conservation; Regional
Economic Area Partnership of South Central Kansas; and
Sierra Club.
Neutral Testimony
Neutral testimony was provided by a representative of
the Department of Agriculture, KDHE, and KWO.
Written-only neutral testimony was provided by a
representative of the Kansas Geological Survey.
No other testimony was provided.
11- 2302 Senate Committee Amendments
The Senate Committee amended the bill to:
●Add an appropriation of $52.0 million that would be
transferred from the SGF to the SWPF that would
be invested by the State Treasurer in U.S. Treasury
bills until the interest rate on the bills is equal to or
less than the interest rate on the storage debt;
●Authorize the Director of the KWO to certify to the
State Treasurer and Governor, and provide
certification at the same time to the Directors of the
Budget and Legislative Research, that the water
supply storage needs to be called into service,
which would require the State Finance Council to
authorize the State Treasurer to immediately make
expenditures to pay storage debt;
●Characterize the State Finance Council action as a
matter of legislative delegation that may take place
during the legislative session and is subject to
guidelines in continuing law;
●Allow for reappropriation of any unencumbered
balance in the Reservoirs Account in excess of
$100 on June 30, 2023;
●Reauthorize for FY 2024 the allowance of investing
moneys in the Reservoirs Account in U.S. Treasury
bills, the ability of the Director of KWO to call into
service the water supply in Milford and Perry
reservoirs by sending certification to the State
Treasurer and Governor and the Directors of the
Budget and Legislative Research, State Finance
Council action, allowance of action during the
legislative session, characterization of State
Finance Council action as legislative delegation,
and transmission of certification;
12- 2302 ●Remove all provisions related to sales tax revenue;
●Require the Director of Accounts of Reports on July
1, 2023, to transfer $35.0 million from the SGF to
the SWPF and state the intent of the Legislature is
to transfer $35.0 million from the SGF to SWPF
each July 1 from 2024 to 2027;
●Require, for FY 2024 through FY 2028, priority for
the use of funds collected from stockwater fees to
be used for stockwatering conservation projects.
The KWO would be required to identify the type
and scope of such projects in the formulation of the
SWPF;
●Require the Director of the KWO to certify to the
Director of Accounts and Reports any excess funds
in the Assistance Fund when its unencumbered
balance exceeds $15.0 million and, upon receipt of
the certification, the Director of Accounts and
Reports to transfer the certified excess amount
from the Assistance Fund to the SGF;
●Include an unincorporated area with a national park
site or state historic site to places to which the
KWO could offer services or provide grants to
cover expenses related to the hiring of technical
assistance;
●Require the Director of the KWO to certify to the
Director of Accounts and Reports any excess funds
in the Grant Fund when its unencumbered balance
exceeds $30.0 million and, upon receipt of the
certification, the Director of Accounts and Reports
to transfer the certified excess amount from the
Grant Fund to the SGF; and
●Make technical amendments.
The Senate Committee recommended a substitute bill.
13- 2302 Fiscal Information
According to the revised fiscal note prepared by the
Division of the Budget on the bill, as introduced, the
Department of Revenue estimates the bill would decrease
SGF revenues by $48.1 million in FY 2024, including a
reduction of $54.1 million in retail sales and compensating
use tax revenue and an increase of $6.0 million by eliminating
the SWPF transfer from the SGF. Based on the November
2022 Consensus Revenue Estimate, the Department of
Revenue estimates the bill would result in distributing $54.1
million in retail sales and compensating use tax revenue to
the SWPF in FY 2024, including $41.4 million of retail sales
tax receipts and $12.7 million of compensating use tax
receipts.
In the original fiscal note issued, the distribution of retail
sales and compensating use tax to the SWPF were identified
as a transfer from the SGF instead of as reduction in SGF
revenues. This distribution would replace the existing
statutory transfers to the SWPF totaling $8.0 million, resulting
in a net funding increase of $46.1 million for additional water
infrastructure projects in FY 2024. The Department of
Revenue indicates that the specific adjustments to the SGF in
subsequent fiscal years would be as follows:
FY 2025 FY 2026 FY 2027 FY 2028
Sales Tax ($42.0
million)
($42.7
million)
($43.2
million)
($43.6
million)
Comp. Use
Tax
($13.5
million)
($14.2
million)
($14.9
million)
($15.6
million)
Net Transfers$6.0 million$6.0 million$6.0 million$6.0 million
TOTAL
($49.5
million)
($50.9
million)
($52.1
million)
($53.2
million)
The suspension of the existing statutory transfer from
the EDIF to the SWPF would increase EDIF revenues by $2.0
million per year from FY 2024 through FY 2028. The
Department of Agriculture, KDHE, and KWO are the primary
14- 2302 recipients of the SWPF appropriations, so enactment of the
bill would likely increase the expenditures of all three
agencies by unknown amounts. According to KWO,
administration of the bill would cost $246,650 in FY 2024 and
$200,000 in subsequent fiscal years. These expenditures
would be made to fill 2.0 FTE positions and contract with
outside counsel to draft rules and regulations.
KDHE indicates that enactment of the bill could
decrease agency revenues from loan service fees as water
storage debt is paid, but the size of this reduction is unknown.
Any fiscal effect associated with enactment of the bill is
not reflected in The FY 2024 Governor’s Budget Report.
The League of Kansas Municipalities indicates the new
local grant opportunities authorized by the bill would increase
municipal revenues by unknown amounts.
The Kansas Association of Counties indicates the bill
would not have a fiscal effect on counties.
A revised fiscal note reflecting the Senate Committee’s
amendments was not available when the Senate Committee
took action on the bill.
Water; State Water Plan Fund; State Water Plan; water infrastructure projects; Water
Technical Assistance Fund; Water Projects Grant Fund; rules and regulations;
Kansas Water Office; Kansas Water Authority; Kansas Department of Health and
Environment; municipalities; national parks; unincorporated areas; stockwater; water
supply storage debt; Milford Reservoir; Perry Reservoir
15- 2302