Brief⁽¹⁾

As amended by the House Committee, this bill contains a variety of provisions relating to property taxation and valuation. This bill would do the following:

• Exempt from property taxes certain natural gas distribution systems primarily used for irrigation of farm land which are owned by small nonprofit utilities.



• Expressly exclude from the statutory definition of public utility found in K.S.A. 79-5a01 natural gas distribution systems owned and operated by nonprofit public utilities which are operated predominately for the purpose of providing fuel for irrigation of land devoted to agricultural use.



• Increase from 50 to 100 the maximum number of customers who may be served by a nonprofit utility. (Determination of this maximum threshold would not take into account any customers added due to sales or transfers of property or rights in tenancy. This provision would also include shareholders in the statutory list of owners of a nonprofit public utility.)



• Require county appraisers to send notice of classification and appraisal to lessees as well as property owners when the lease agreement has been recorded or filed with the register of deeds.

• Shift the order and burden of proof from the taxpayer to the county appraiser for appeals from valuation of property used for commercial and industrial purposes when certain expense and income information is received by the appraiser. This provision would expand protections which are already available to residential property owners to include real property used for commercial and industrial purposes.



• Allow the register of deeds to record any plat if all back taxes and at least the first half of all current year real estate taxes have been paid when the plat is presented for recording between December 20, when the tax is initially due, and June 20 of the next year. Under current law, taxes must be paid in full (both halves) before a plat may be recorded and this is problematic for taxpayers who pay their property taxes in two installments as permitted by statute.



• Repeal four obsolete statutes pertaining to withholding and remittance of federal taxes by all employers including state and local governments. (These statutes were enacted in 1943 and federal law now governs the withholding and remittance of these taxes.)



• Provide clean-up legislation to expressly allow the small claims division of SBOTA to have jurisdiction over original valuation appeals in those counties without a hearing officer or panel.

Background

The Senate Committee held a hearing on this issue at which time proponents testifying in favor of the bill included Senator Steve Morris, sponsor of the bill, as well as representatives of the Southwest Kansas Irrigators, Kansas Farm Bureau, and Stevens County Farm Bureau.

The Senate Committee amended the bill by narrowing the scope of the bill to gas distribution systems only, instead of natural gas gathering and distribution systems. The Senate Committee also added the section which would amend the statutory definition of utility for state assessment purposes to expressly exclude the nonprofit public natural gas distribution systems which are operated predominately to provide fuel for irrigation of land devoted to agricultural use.

The House Committee amended the bill to include the provisions for notice to lessees (subject matter of H.B. 2180), shift of the burden of proof for commercial and industrial property (subject matter of H.B. 2020), recording of plats if at least the first half of all real estate taxes have been paid under certain circumstances (subject matter of S.B. 335), repeal of the obsolete statutes pertaining to withholding and remittance of federal taxes by all employers (subject matter of H.B. 2526), and clean-up legislation to expressly allow the small claims division of SBOTA to have jurisdiction over original valuation appeals in counties without a hearing officer or panel.

The House Committee of the Whole amended the bill to expand the number of customers who may be served by a nonprofit utility (subject matter of H.B. 2272).

The Division of the Budget reports that passage of S.B. 78 as amended by the Senate Committee would reduce property tax revenues for state and local governments and would require additional State General Fund moneys to offset the loss in local collections attributable to the statewide mill levy for school finance. However, proponents said that the natural gas distribution system property had not been taxed in the past.

An updated fiscal note reflecting amendments by the House is not available at this time.

1. *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.ink.org/public/legislative/bill_search.html.