Session of 1998
                   
HOUSE BILL No. 2967
         
By Representative Wagle
         
2-13
            9             AN ACT concerning confined feeding facilities for swine; imposing cer-
10             tain restrictions; providing for certain tax credits; amending K.S.A. 79-
11             32,117 and K.S.A. 1997 Supp. 65-171d and repealing the existing
12             sections.
13            
14       Be it enacted by the Legislature of the State of Kansas:
15           Section 1. K.S.A. 1997 Supp. 65-171d is hereby amended to read as
16       follows: 65-171d. (a) For the purpose of preventing surface and subsur-
17       face water pollution and soil pollution detrimental to public health or to
18       the plant, animal and aquatic life of the state, and to protect beneficial
19       uses of the waters of the state and to require the treatment of sewage
20       predicated upon technologically based effluent limitations, the secretary
21       of health and environment shall make such rules and regulations, includ-
22       ing registration of potential sources of pollution, as may in the secretary's
23       judgment be necessary to: (1) Protect the soil and waters of the state from
24       pollution resulting from underground storage reservoirs of hydrocarbons
25       and liquid petroleum gas; (2) control the disposal, discharge or escape of
26       sewage as defined in K.S.A. 65-164 and amendments thereto, by or from
27       municipalities, corporations, companies, institutions, state agencies, fed-
28       eral agencies or individuals and any plants, works or facilities owned or
29       operated, or both, by them; and (3) establish water quality standards for
30       the waters of the state to protect their beneficial uses.
31           (b) The secretary of health and environment may adopt by reference
32       any regulation relating to water quality and effluent standards promul-
33       gated by the federal government pursuant to the provisions of the federal
34       clean water act and amendments thereto, as in effect on January 1, 1989,
35       which the secretary is otherwise authorized by law to adopt.
36           (c) For the purposes of this act, including K.S.A. 65-161 through
37       65-171h and sections 2, 3 and 4, and amendments thereto, and rules and
38       regulations adopted pursuant thereto:
39           (1) ``Pollution'' means: (A) Such contamination or other alteration of
40       the physical, chemical or biological properties of any waters of the state
41       as will or is likely to create a nuisance or render such waters harmful,
42       detrimental or injurious to public health, safety or welfare, or to the plant,
43       animal or aquatic life of the state or to other designated beneficial uses;

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  1       or (B) such discharge as will or is likely to exceed state effluent standards
  2       predicated upon technologically based effluent limitations.
  3           (2) ``Confined feeding facility'' means any lot, pen, pool or pond: (A)
  4       Which is used for the confined feeding of animals or fowl for food, fur
  5       or pleasure purposes; (B) which is not normally used for raising crops;
  6       and (C) in which no vegetation intended for animal food is growing.
  7           (3) ``Animal unit'' means a unit of measurement calculated by adding
  8       the following numbers: The number of beef cattle weighing more than
  9       700 pounds multiplied by 1.0; plus the number of cattle weighing less
10       than 700 pounds multiplied by 0.5; plus the number of mature dairy cattle
11       multiplied by 1.4; plus the number of swine weighing more than 55
12       pounds multiplied by 0.4; plus the number of swine weighing 55 pounds
13       or less multiplied by 0.1; plus the number of sheep or lambs multiplied
14       by 0.1; plus the number of horses multiplied by 2.0; plus the number of
15       turkeys multiplied by 0.018; plus the number of laying hens or broilers,
16       if the facility has continuous overflow watering, multiplied by 0.01; plus
17       the number of laying hens or broilers, if the facility has a liquid manure
18       system, multiplied by 0.033; plus the number of ducks multiplied by 0.2.
19       However, each head of cattle will be counted as one full animal unit for
20       the purpose of determining the need for a federal permit. ``Animal unit''
21       also includes the number of swine weighing 55 pounds or less multiplied
22       by 0.1 for the purpose of determining applicable requirements for new
23       construction of a confined feeding facility for which a permit or registra-
24       tion has not been issued before January 1, 1998, and for which an appli-
25       cation for a permit or registration and plans have not been filed with the
26       secretary of health and environment before January 1, 1998, or for the
27       purpose of determining applicable requirements for expansion of such
28       facility. However, each head of swine weighing 55 pounds or less shall be
29       counted as 0.0 animal unit for the purpose of determining the need for
30       a federal permit.
31           (4) ``Animal unit capacity'' means the maximum number of animal
32       units which a confined feeding facility is designed to accommodate at any
33       one time.
34           (5) ``Habitable structure'' means any of the following structures which
35       is occupied or maintained in a condition which may be occupied: A dwell-
36       ing, church, school, adult care home, medical care facility, child care
37       facility, library, community center, public building, office building or li-
38       censed food service or lodging establishment.
39           (6) ``Waste retention lagoon or pond'' means an excavated or diked
40       structure, or a natural depression, provided for or used for the purpose
41       of containing or detaining animal wastes or other wastes generated in the
42       production of animals.
43           (d) In adopting rules and regulations, the secretary of health and en-

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  1       vironment, taking into account the varying conditions that are probable
  2       for each source of sewage and its possible place of disposal, discharge or
  3       escape, may provide for varying the control measures required in each
  4       case to those the secretary finds to be necessary to prevent pollution. If
  5       a freshwater reservoir or farm pond is privately owned and where com-
  6       plete ownership of land bordering the reservoir is under common private
  7       ownership, such freshwater reservoir or farm pond shall be exempt from
  8       water quality standards except as it relates to water discharge or seepage
  9       from the reservoir to waters of the state, either surface or groundwater,
10       or as it relates to the public health of persons using the reservoir or pond
11       or waters therefrom.
12           (e) (1) Whenever the secretary of health and environment or the
13       secretary's duly authorized agents find that the soil or waters of the state
14       are not being protected from pollution resulting from underground stor-
15       age reservoirs of hydrocarbons and liquid petroleum gas or that storage
16       or disposal of salt water not regulated by the state corporation commission
17       or refuse in any surface pond is causing or is likely to cause pollution of
18       soil or waters of the state, the secretary or the secretary's duly authorized
19       agents shall issue an order prohibiting such underground storage reservoir
20       or surface pond. Any person aggrieved by such order may within 15 days
21       of service of the order request in writing a hearing on the order.
22           (2) Upon receipt of a timely request, a hearing shall be conducted in
23       accordance with the provisions of the Kansas administrative procedure
24       act.
25           (3) Any action of the secretary pursuant to this subsection is subject
26       to review in accordance with the act for judicial review and civil enforce-
27       ment of agency actions.
28           (f) The secretary may adopt rules and regulations establishing fees
29       for the following services:
30           (1) Plan approval, monitoring and inspecting underground or buried
31       petroleum products storage tanks, for which the annual fee shall not ex-
32       ceed $5 for each tank in place;
33           (2) permitting, monitoring and inspecting salt solution mining oper-
34       ators, for which the annual fee shall not exceed $1,950 per company; and
35           (3) permitting, monitoring and inspecting hydrocarbon storage wells
36       and well systems, for which the annual fee shall not exceed $1,875 per
37       company.
38           (g) Prior to any new construction of a confined feeding facility with
39       an animal unit capacity of 300 to 999, such facility shall register with the
40       secretary of health and environment. Facilities with less than 300 animal
41       units may register with the secretary. Any such registration shall be ac-
42       companied by a $25 fee. Within 30 days of receipt of such registration,
43       the department of health and environment shall identify any significant

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  1       water pollution potential or separation distance violations pursuant to sub-
  2       section (h). If there is identified a significant water pollution potential,
  3       such facility shall be required to obtain a permit from the secretary. If
  4       there is no water pollution potential posed by a facility with an animal
  5       unit capacity of less than 300, the secretary may certify that no permit is
  6       required. If there is no water pollution potential nor any violation of
  7       separation distances posed by a facility with an animal unit capacity of
  8       300 to 999, the secretary shall certify that no permit is required and that
  9       there are no certification conditions pertaining to separation distances. If
10       a separation distance violation is identified, the secretary may reduce the
11       separation distance in accordance with subsection (i) and shall certify any
12       such reduction of separation distances.
13           (h) (1) Any new construction or new expansion of a confined feeding
14       facility shall meet or exceed the following requirements in separation
15       distances from any habitable structure:
16             (1) (A) 1320 feet for facilities with an animal unit capacity of 300 to
17       999; and
18             (2) (B) 4000 feet for facilities with an animal unit capacity of 1,000
19       or more.
20           (2) In addition to the requirements of subsection (h)(1), any waste
21       retention lagoon or pond constructed or expanded after the effective date
22       of this act and utilized by a confined feeding facility for swine shall meet
23       or exceed the following requirements in separation distances:
24           (A) One mile from any habitable structure that is a dwelling; and
25           (B) three miles from any community of five or more habitable struc-
26       tures that are dwellings.
27           (i) The separation distance requirements of subsection (h) shall not
28       apply if such person newly constructing or newly expanding a confined
29       feeding facility obtains a written agreement from all owners of habitable
30       structures which are within the separation distance stating such owners
31       are aware of such construction or expansion and have no objections to
32       such construction or expansion. The written agreement shall be filed in
33       the register of deeds office of the county in which the habitable structure
34       is located. The secretary may reduce separation distance requirements if:
35       (1) No substantial objection from owners of habitable structures within
36       the separation distance is received in response to public notice; or (2) the
37       board of county commissioners of the county where the confined feeding
38       facility is located submits a written request seeking a reduction of sepa-
39       ration distances.
40           (j) The separation distances required pursuant to subsection (h) shall
41       not apply to:
42           (1) Confined feeding facilities which are permitted or certified by the
43       secretary on the effective date of this act;

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  1           (2) confined feeding facilities which exist on the effective date of this
  2       act and register with the secretary before July 1, 1996; or
  3           (3) expansion of a confined feeding facility, including any expansion
  4       for which an application is pending on the effective date of this act, if:
  5       (A) In the case of a facility with an animal unit capacity of 1,000 or more
  6       prior to the effective date of this act, the expansion is located at a distance
  7       not less than the distance between the facility and the nearest habitable
  8       structure prior to the expansion; or (B) in the case of a facility with an
  9       animal unit capacity of less than 1,000 prior to the effective date of this
10       act and, the expansion is located at a distance not less than the distance
11       between the facility and the nearest habitable structure prior to the ex-
12       pansion the animal unit capacity of the facility after expansion does not
13       exceed 2,000.
14           (k) All plans and specifications submitted to the department for new
15       construction or new expansion of confined feeding facilities may be, but
16       are not required to be, prepared by a professional engineer or a consult-
17       ant.
18           New Sec. 2. (a) Notwithstanding any other provision of law to the
19       contrary, if, pursuant to K.S.A. 17-5908 and amendments thereto, the
20       voters of a county have voted against allowing the establishment of swine
21       production facilities in the county, the secretary of health and environ-
22       ment shall not issue a water pollution control permit for any of the fol-
23       lowing located in such county:
24           (1) Construction or operation of any new confined feeding facility for
25       swine that has an animal unit capacity of 500 or more;
26           (2) expansion of any existing confined feeding facility for swine to an
27       animal unit capacity of 500 or more; or
28           (3) expansion of any existing confined feeding facility for swine if such
29       facility has an animal unit capacity of 500 or more.
30           (b) If after the effective date of this act the voters of a county vote,
31       at an election pursuant to K.S.A. 17-5908 and amendments thereto,
32       against allowing the establishment of swine production facilities in the
33       county, the prohibition of subsection (a) shall apply on and after the date
34       of such election.
35           (c) Nothing in this section shall prohibit:
36           (1) Renewal of a water pollution control permit that was issued by
37       the secretary before the effective date of this act;
38           (2) issuance of a permit for:
39           (A) Construction to repair a component of an existing confined feed-
40       ing facility for swine, waste retention lagoon or pond or animal waste
41       management system;
42           (B) construction to replace a component of an existing confined feed-
43       ing facility for swine, waste retention lagoon or pond or animal waste

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  1       management system, if the replacement does not result in an increase in
  2       swine population;
  3           (C) construction or expansion of an existing confined feeding facility
  4       for swine for the purpose of increasing the swine population to the pro-
  5       jected population, or to the population that the animal waste management
  6       system serving the facility is designed to accommodate, as set forth in the
  7       facility's animal waste management plans approved by the department of
  8       health and environment before February 1, 1998;
  9           (D) construction or expansion of an existing confined feeding facility
10       for swine, waste retention lagoon or pond or animal waste management
11       system for the purpose of complying with applicable animal waste man-
12       agement rules and regulations and not for the purpose of increasing the
13       swine population;
14           (E) construction or expansion of a confined feeding facility for swine,
15       waste retention lagoon or pond or animal waste management system, if
16       the person undertaking the construction or expansion has, before Feb-
17       ruary 1, 1998: (i) Laid a foundation for a component of such facility,
18       lagoon, pond or system; (ii) entered into a bona fide written contract for
19       the construction or expansion of such facility, lagoon, pond or system; or
20       (iii) been approved for a loan or line of credit to finance the construction
21       or expansion of such facility, lagoon, pond or system and has obligated or
22       expended funds derived from the loan or line of credit;
23           (F) construction or expansion of an innovative animal waste manage-
24       ment system that does not employ an anaerobic lagoon and that has been
25       approved by the department of health and environment.
26           (d) The provisions of this section shall expire one year after the ef-
27       fective date of this act.
28           New Sec. 3. Waste retention lagoons or ponds constructed or ex-
29       panded on or after the effective date of this act and utilized by confined
30       feeding facilities for swine shall be designed, constructed and maintained
31       in such a manner that the rate of seepage from the lagoon or pond does
32       not exceed 1/32 inch per day per unit area at the maximum design water
33       surface elevation.
34           New Sec. 4. The secretary of health and environment, in cooperation
35       with Kansas state university scientists conducting the evaluation of la-
36       goons for containment of animal waste, shall submit, on or before the
37       first day of the 1999 regular legislative session, to the chairperson of the
38       house and senate standing committees on agriculture, the chairperson of
39       the house standing committee on environment and the chairperson of
40       the senate standing committee on energy and natural resources, recom-
41       mendations regarding:
42           (a) Extension of the moratorium pursuant to section 2 on the issuance
43       of permits to certain confined feeding facilities for swine;

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  1           (b) modification of setback requirements for confined feeding facil-
  2       ities for swine and waste retention lagoons and ponds;
  3           (c) modification of design and construction standards for animal
  4       waste management systems utilized by confined feeding facilities for
  5       swine; and
  6           (d) assurance of financial responsibility for remediation of any future
  7       groundwater contamination from confined feeding facilities for swine.
  8           New Sec. 5. (a) The Kansas water pollution control revolving fund
  9       may be used to make loans to municipalities for payment of project costs
10       for acquisition, construction, improvement, repair, rehabilitation or ex-
11       tension of wastewater treatment works of municipalities as needed to
12       accommodate pork processing or packing plants.
13           (b) This section shall be part of and supplemental to K.S.A. 65-3321
14       through 65-3329 and amendments thereto.
15           New Sec. 6. (a) As used in this section:
16           (1) Terms have the meanings provided by K.S.A. 65-171d and
17       amendments thereto.
18           (2) ``Approved improvements to an animal waste management sys-
19       tem'' means improvements to the design or construction of a new or
20       existing animal waste management system that are approved by the sec-
21       retary of health and environment as a means to decrease seepage, contain
22       or destroy odor or process water or wastes but that exceed the require-
23       ments for obtaining a water pollution control permit.
24           (b) There shall be allowed as a credit against the tax liability of a
25       taxpayer imposed under the Kansas income tax act an amount equal to
26       costs incurred prior to January 1, 2004, by the taxpayer for approved
27       improvements to an animal waste management system utilized by a con-
28       fined feeding facility for swine that is located in a county where the voters
29       have not voted, pursuant to K.S.A. 17-5908 and amendments thereto,
30       against allowing the establishment of swine production facilities in the
31       county. The tax credit allowed by this subsection shall be deducted from
32       the taxpayer's income tax liability for the taxable year in which the ex-
33       penditures are made by the taxpayer. If the amount of such tax credit
34       exceeds the taxpayer's income tax liability for such taxable year, the tax-
35       payer may carry over the amount thereof that exceeds such tax liability
36       for deduction from the taxpayer's income tax liability in the next suc-
37       ceeding taxable year or years until the total amount of the tax credit has
38       been deducted from tax liability.
39           (c) The provisions of this section shall be applicable to all taxable
40       years commencing after December 31, 1998.
41           Sec. 7. K.S.A. 79-32,117 is hereby amended to read as follows: 79-
42       32,117. (a) The Kansas adjusted gross income of an individual means such
43       individual's federal adjusted gross income for the taxable year, with the

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  1       modifications specified in this section.
  2           (b) There shall be added to federal adjusted gross income:
  3           (i) Interest income less any related expenses directly incurred in the
  4       purchase of state or political subdivision obligations, to the extent that
  5       the same is not included in federal adjusted gross income, on obligations
  6       of any state or political subdivision thereof, but to the extent that interest
  7       income on obligations of this state or a political subdivision thereof issued
  8       prior to January 1, 1988, is specifically exempt from income tax under the
  9       laws of this state authorizing the issuance of such obligations, it shall be
10       excluded from computation of Kansas adjusted gross income whether or
11       not included in federal adjusted gross income. Interest income on obli-
12       gations of this state or a political subdivision thereof issued after Decem-
13       ber 31, 1987, shall be excluded from computation of Kansas adjusted
14       gross income whether or not included in federal adjusted gross income.
15           (ii) Taxes on or measured by income or fees or payments in lieu of
16       income taxes imposed by this state or any other taxing jurisdiction to the
17       extent deductible in determining federal adjusted gross income and not
18       credited against federal income tax. This paragraph shall not apply to taxes
19       imposed under the provisions of K.S.A. 79-1107 or 79-1108, and amend-
20       ments thereto, for privilege tax year 1995, and all such years thereafter.
21           (iii) The federal net operating loss deduction.
22           (iv) Federal income tax refunds received by the taxpayer if the de-
23       duction of the taxes being refunded resulted in a tax benefit for Kansas
24       income tax purposes during a prior taxable year. Such refunds shall be
25       included in income in the year actually received regardless of the method
26       of accounting used by the taxpayer. For purposes hereof, a tax benefit
27       shall be deemed to have resulted if the amount of the tax had been de-
28       ducted in determining income subject to a Kansas income tax for a prior
29       year regardless of the rate of taxation applied in such prior year to the
30       Kansas taxable income, but only that portion of the refund shall be in-
31       cluded as bears the same proportion to the total refund received as the
32       federal taxes deducted in the year to which such refund is attributable
33       bears to the total federal income taxes paid for such year. For purposes
34       of the foregoing sentence, federal taxes shall be considered to have been
35       deducted only to the extent such deduction does not reduce Kansas tax-
36       able income below zero.
37           (v) The amount of any depreciation deduction or business expense
38       deduction claimed on the taxpayer's federal income tax return for any
39       capital expenditure in making any building or facility accessible to the
40       handicapped, for which expenditure the taxpayer claimed the credit al-
41       lowed by K.S.A. 79-32,177, and amendments thereto.
42           (vi) Any amount of designated employee contributions picked up by
43       an employer pursuant to K.S.A. 12-5005, 20-2603, 74-4919 and 74-4965,

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  1       and amendments to such sections.
  2           (vii) The amount of any charitable contribution made to the extent
  3       the same is claimed as the basis for the credit allowed pursuant to K.S.A.
  4       79-32,196, and amendments thereto.
  5           (viii) The amount of any costs incurred for improvements to an ani-
  6       mal waste management system utilized by a confined feeding facility for
  7       swine, claimed for deduction in determining federal adjusted gross in-
  8       come, to the extent the same is claimed as the basis for any credit allowed
  9       pursuant to section 4 and amendments thereto.
10           (c) There shall be subtracted from federal adjusted gross income:
11           (i) Interest or dividend income on obligations or securities of any
12       authority, commission or instrumentality of the United States and its pos-
13       sessions less any related expenses directly incurred in the purchase of
14       such obligations or securities, to the extent included in federal adjusted
15       gross income but exempt from state income taxes under the laws of the
16       United States.
17           (ii) Any amounts received which are included in federal adjusted
18       gross income but which are specifically exempt from Kansas income tax-
19       ation under the laws of the state of Kansas.
20           (iii) The portion of any gain or loss from the sale or other disposition
21       of property having a higher adjusted basis for Kansas income tax purposes
22       than for federal income tax purposes on the date such property was sold
23       or disposed of in a transaction in which gain or loss was recognized for
24       purposes of federal income tax that does not exceed such difference in
25       basis, but if a gain is considered a long-term capital gain for federal in-
26       come tax purposes, the modification shall be limited to that portion of
27       such gain which is included in federal adjusted gross income.
28           (iv) The amount necessary to prevent the taxation under this act of
29       any annuity or other amount of income or gain which was properly in-
30       cluded in income or gain and was taxed under the laws of this state for a
31       taxable year prior to the effective date of this act, as amended, to the
32       taxpayer, or to a decedent by reason of whose death the taxpayer acquired
33       the right to receive the income or gain, or to a trust or estate from which
34       the taxpayer received the income or gain.
35           (v) The amount of any refund or credit for overpayment of taxes on
36       or measured by income or fees or payments in lieu of income taxes im-
37       posed by this state, or any taxing jurisdiction, to the extent included in
38       gross income for federal income tax purposes.
39           (vi) Accumulation distributions received by a taxpayer as a beneficiary
40       of a trust to the extent that the same are included in federal adjusted
41       gross income.
42           (vii) Amounts received as annuities under the federal civil service
43       retirement system from the civil service retirement and disability fund

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  1       and other amounts received as retirement benefits in whatever form
  2       which were earned for being employed by the federal government or for
  3       service in the armed forces of the United States.
  4           (viii) Amounts received by retired railroad employees as a supple-
  5       mental annuity under the provisions of 45 U.S.C. 228b (a) and 228c (a)(1)
  6       et seq.
  7           (ix) Amounts received by retired employees of a city and by retired
  8       employees of any board of such city as retirement allowances pursuant to
  9       K.S.A. 13-14,106, and amendments thereto, or pursuant to any charter
10       ordinance exempting a city from the provisions of K.S.A. 13-14,106, and
11       amendments thereto.
12           (x) For taxable years beginning after December 31, 1976, the amount
13       of the federal tentative jobs tax credit disallowance under the provisions
14       of 26 U.S.C. 280 C. For taxable years ending after December 31, 1978,
15       the amount of the targeted jobs tax credit and work incentive credit dis-
16       allowances under 26 U.S.C. 280 C.
17           (xi) For taxable years beginning after December 31, 1986, dividend
18       income on stock issued by Kansas Venture Capital, Inc.
19           (xii) For taxable years beginning after December 31, 1989, amounts
20       received by retired employees of a board of public utilities as pension and
21       retirement benefits pursuant to K.S.A. 13-1246, 13-1246a and 13-1249
22       and amendments thereto.
23           (xiii) For taxable years beginning after December 31, 1993, the
24       amount of income earned on contributions deposited to an individual
25       development account under K.S.A. 79-32,117h, and amendments thereto.
26           (xiv) For all taxable years commencing after December 31, 1996, that
27       portion of any income of a bank organized under the laws of this state or
28       any other state, a national banking association organized under the laws
29       of the United States, an association organized under the savings and loan
30       code of this state or any other state, or a federal savings association or-
31       ganized under the laws of the United States, for which an election as an
32       S corporation under subchapter S of the federal internal revenue code is
33       in effect, which accrues to the taxpayer who is a stockholder of such
34       corporation and which is not distributed to the stockholders as dividends
35       of the corporation.
36           (d) There shall be added to or subtracted from federal adjusted gross
37       income the taxpayer's share, as beneficiary of an estate or trust, of the
38       Kansas fiduciary adjustment determined under K.S.A. 79-32,135, and
39       amendments thereto.
40           (e) The amount of modifications required to be made under this sec-
41       tion by a partner which relates to items of income, gain, loss, deduction
42       or credit of a partnership shall be determined under K.S.A. 79-32,131,
43       and amendments thereto, to the extent that such items affect federal

HB 2967

11

  1       adjusted gross income of the partner.
  2           Sec. 8. K.S.A. 79-32,117 and K.S.A. 1997 Supp. 65-171d are hereby
  3       repealed.
  4           Sec. 9. This act shall take effect and be in force from and after its
  5       publication in the Kansas register.
  6      
  7