Energy is still the big story in Topeka going into this week. Last week the Senate took strong action on legislation limiting the power of the Sec. of Health & Environment to block construction of two coal-fired energy plants near Holcomb. The move had strong bi-partisan support. Similar legislation is scheduled for debate and action on the House floor this morning. The House bill does include some renewable energy requirements supporting supplemental wind power.
Currently, neither the state nor federal government regulates CO2 emissions. Yet, Sec. Bremby took unprecedented action to block Sunflower Electric’s construction permits where their planned CO2 emissions would have been vastly lower and the plant more energy efficient than any of the state’s existing plants. As to the existing plants, Bremby admitted that he had no current authority to revise their air quality permits and he admitted that at the present time he wasn’t even sure how much of a problem CO2 emissions were for the state.
In other news, Thursday the House Education Budget Committee that I vice-chair took action to recommend over $20M in increased funding for the state’s schools of higher education and approved planning money for construction of expansions of KU’s Pharmacy programs in Lawrence and Wichita. We also added Aviation research and technical training funding for the aviation initiative in Wichita and additional funding for the Wichita Center for Graduate Medical Education. We view these programs as essential “value-added” programs for Western and South Central Kansas.
Our Committee was also briefed by Legislative Post Audit regarding their concerns following an audit of the state’s 28 “virtual schools”. These virtual schools are valuable programs that reach out to rural students and others who would benefit from distance learning but the audit found abuses by school districts who were using the programs as money raisers. Schools who enroll these students get full weighted per pupil funding even where the actual costs of educating these students is thousands of dollars less. We then learned that some districts are recruiting drop-out to enroll, not in traditional GED programs but actual high school enrollment to obtain full weighted per pupil funding. One district was making so much money on this tactic that it started trading students with neighboring districts. The Legislature benefits greatly from the work of the Division of Legislative Post Audit in monitoring state programs for potential abuses.
The House Governmental Organization Committee will have hearing soon on an annexation bill I’m having introduced to address the questionable annexation attempt in Mulvane. In Mulvane’s attempt to attract a potential casino, the city fathers, along with casino-friendly property owners, are proposing annexation of a narrow, meandering, several mile long strip of land, as narrow as 100 feet in places, connecting the city with a potential distant casino site along I-35 in Sumner Co. Such a move, even if consented to by pro-casino landowners, would set a very poor precedent as to future proposed annexations of land. If allowed, annexations of land as narrow as a foot or less would be legal if technically contiguous. My bill would prevent such annexation of less than full tracts.

Topping the news in Topeka last week was suspension of committee action on HB 2711, this year’s mega-energy bill. The House Utilities Committee had hearings all week on the bill and was scheduled to work the bill Friday. However, the bill picked up much opposition by both sides of the energy debate, with conservationists saying the bill did not go far enough and supporters claiming the bill had too many moving parts when all that was needed at this point were provisions providing regulatory certainty.
The bill stems from unprecedented action taken by Sec. of Health & Environment Bremby to apply emergency powers limited to existing plants to deny an original application for construction of two coal-fired energy plants near Holcomb. Sunflower had complied with all state and federal regulations and had been given a “thumbs up” by KDH&E staff only to have the Secretary block the permit, citing concerns over CO2 emissions. The statute he used clearly applies to plants already in existence and producing quantities of CO2. Incidentally, all the state’s coal-fired energy plants currently emit far more CO2 than the Holcomb plants would as the Holcomb plants would be state-of-the-art facilities. Each of these facilities’ air quality permits will be up for renewal in the next 5 years and the Secretary’s action has caused a great deal of regulatory uncertainty in the state, where investments in energy contribute substantially to the state’s economy. The Holcomb plants alone represent an investment of over $3B, with much of the energy production being sold out-of-state, making Kansas a net exporter of energy.
The bill, among other things, would clarify the current law regarding permitting and would provide a procedure for Sunflower to reapply. The Secretary would be prohibited from applying standards more stringent than those that exist under state or federal law. The bill, as originally introduced, would have established energy efficiency standards for newly constructed state owned buildings, including public schools, and state motor pool vehicles. It would have also set in statute carbon dioxide emission limitations with a carbon tax applied where emissions exceeded limitations. The later has received much criticism as such limitations are generally reserved to the rule & regulation process rather than statute and there is greater interest in providing financial incentives for conservation and efficiency than imposing yet another tax.
The Senate has identical legislation that appears to be moving forward. Look for House to be more deliberate in its approach, perhaps concentrating, for now, on the regulatory provisions of the original bill as this is where time is of the essence this session. I’ve been pulled in to work on the regulatory piece, with a view of looking at the bigger picture. This is not just about Sunflower’s desire to invest billions of dollars in new energy efficient plants in Western Kansas. What we do will affect all our energy plants and investments in all parts of the state and the air quality permits for existing plants come up for renewal in the next few years. Providing regulatory certainty to energy producers as well as reliable and affordable energy to consumers is vital.
Another issue that will receive much debate this session is immigration reform. At least a half a dozen bills have been filed or are in the process of being filed. Patterned after similar laws in such states as Arizona and Oklahoma, sponsors are trying to address illegal immigration issues being experienced by our neighboring states so that Kansas is not behind the curve. It is still uncertain whether Congress will try to pre-empt state laws but, up until now, Congress has failed to be anything more than hopelessly inconsistent with how it deals with illegal immigration. The cost of this uncertainty has fallen on the states and their taxpayers. I’ll be providing more on this issue as it develops this session.

The past two weeks my reports have focused on a tight budget picture for the upcoming fiscal year. Late last week, though, we did get some positive news with the release of the January revenues report. The January tax-only general fund revenues jumped $35M over estimates, which helped offset the $28M shortfall from estimates in December. A one-time corporate tax payment of $10M helped and we learned that several corporate tax checks expected by year-end were received in early January, so the December shortfall was not as bad as it had appeared.
Sales taxes receipts in January were nearly $8M over estimates, bucking a trend seen nationally that reflected an economic slowdown in consumer spending. In all, we’re now running about $13M ahead of projections for the year, a good sign considering what’s going on in the national economy. The key numbers will be those released in early April. Those will signal where we’re at in terms of available resources to close out the final FY 2009 budget.
The big news from last week included introduction of bi-partisan energy legislation aimed at breaking the deadlock between lawmakers and the Sec. of Health & Environment & Governor over construction of coal-fired power plants in SW Kansas and a Shawnee Co. District Judge’s preliminary ruling that last year’s casino legislation is constitutional. Identical mega-energy bills were introduced in the House & Senate late last week with hearings and committee action scheduled for this week and perhaps debate and final action in the House & Senate as early as next week.
The key component in the legislation is language that would prevent the Sec. of Health & Environment from rejecting a construction application that otherwise complies with state & federal environmental regulations. Sec. Bremby’s rejection of Sunflower’s Holcomb plant application came after regulatory staff had given it the green light based on current standards. The legislation would place carbon emission limitations in state law, imposing a carbon tax to the extent emissions exceeded those limitations. An accelerated timeline for Sunflower’s reapplication is included and is aimed at avoiding protracted litigation in the courts over the Secretary’s rejection of the initial application.
The bill also contains a number of provisions aimed at promoting energy efficiency in other areas, including new state & public school buildings and the state motor pool.
The Shawnee Co. District Court’s decision in the Casino gambling case sets the stage for an immediate appeal of the decision to the Kansas Supreme Court, where a final decision will be handed down on the constitutionality of so-called state-owned casinos in Kansas. The initial decision found that the law “as written” seemed to suggest that the state would have ultimate control over casino operations and that was enough to satisfy the requirement of “state-owned and operated” in the Kansas Constitution. I strongly disagree, as does the new Attorney General, who has already filed a notice of appeal to the Supreme Court. I have a meeting with the new AG Wednesday and plan to discuss the case with him then. What’s more important than the language of the law is how it is actually applied once casino operator contracts are let. It’s uncertain when a final decision from the Supreme Court will be handed down.