Brief⁽¹⁾

H.B. 2071, as amended, proposes to enact a comprehensive transportation program for FY 2000 through FY 2009. Data provided by the Kansas Department of Transportation (KDOT) suggested revenue and current resource enhancements relative to current law of $2.543 billion--$904 million in additional motor fuels tax receipts; $646 million in demand transfer increases; $474 million in net available proceeds from bonds; $261 million in registration fee increases; and $257 million in new interest on funds.

New Section 1--Statement of Purpose

and Program Components

A. The Secretary of Transportation is directed to initiate a comprehensive transportation program.

B. State Highway Provisions. Program components would consist of but not be limited to:

• maintenance;
• major modifications and priority bridges;
• system enhancements projects (new language would clarify legislative intent with respect to providing $1.1 billion of such enhancements); and
• a highway demonstration project to evaluate pavement guarantees by the contractor.

C. The bill would provide assistance to cities and counties through: the Special City and County Highway Fund, federal aid, city connecting links maintenance state aid, railroad crossings not on the state highway system, and the Kansas Transportation Revolving Fund.

D. The Comprehensive Transportation Plan will address the needs of railroad, aviation, and public transit programs.

New Sections 2-8--Kansas Transportation

Revolving Fund Program

A. The Secretary is authorized to establish a Transportation Revolving Fund to assist local units with road projects.

B. Section 3 defines the terms associated with the Fund.

C. The Secretary administers the Fund and has the power to transfer money from the State Highway Fund (SHF) to capitalize the Fund.

D. The Secretary is required to adopt rules and regulations related to the Fund.

E. The Secretary will use the Fund to provide loans, credit enhancements, or facilitate the pooling of local debt by the Kansas Development Finance Authority.

F. In the event of a local default, the Secretary could recover the funds from the local unit's share of the Special City and County Highway Fund.

Sections 9 through 20-Vehicle Registration Fees. Beginning in CY 2000, registration fees for vehicles weighing more than 12,000 pounds would be increased by approximately 15 percent, but with such increases rounded to the nearest $5. All such fees would be increased by an additional 5 percent beginning in CY 2004, again with provisions rounding to the nearest $5. Passenger vehicles weighing 4,500 pounds or less (currently paying $25 per year) would see fee increases to $30.00 in CY 2000 and to $32.50 in CY 2004. Passenger vehicles and pickup trucks weighing more than 4,500 pounds would see an increase from $35 under current law to $42.50 in CY 2000 and to $45 in CY 2004.

Section 21--Cleanup. This section is cleanup.

Section 22. Cleanup, City Connecting Links Funding and Public Transit Program. Outdated language relating to the sale of benefit district bonds by counties and regarding the State Highway Benefit District Fund is deleted. The section also increases annual funding for city connecting links from $2,000 to $3,000 per lane mile. The current transportation program for the elderly and disabled is expanded to include the general public.

Sections 23, 24, 25. Cleanup. These sections are cleanup. They remove redundant language or references to the State Freeway Fund which no longer exists.

Section 26--Reporting Requirements. Current law is amended to simplify the annual report required of the Secretary of Transportation and conform reporting requirements to the new provisions of the bill. A Senate Committee of the Whole amendment would require the report to contain information on system enhancements.

Section 27--Minimum Funds to Counties. During the program period, from July 1, 1999 to June 30, 2009, the Secretary is directed to expend at least $3 million in each county for highway, bridge, and substantial maintenance projects.

Sections 28, 29--New Bonding Authority. The Secretary of Transportation would be authorized to issue new bonded indebtedness backed by the SHF of $990 million. The bonds would be required to mature in not more than 20 years.

Sections 30, 31, 32, 33, 34--Kansas Coordinated Public Transportation Assistance Act. These sections revise the definition of "transportation system" to include the general public. (Currently, the law applies to only elderly and disabled riders.) References to federal law also are updated. The Coordinated Public Transportation Assistance Fund would receive $5 million annually from the State Highway Fund. (This Fund currently receives $1 million annually.)

Sections 35, 36--Loans to Railroads. These sections relate to the Rail Service Improvement Fund. They:

• require the management of the Fund to comply with K.S.A. 68-2324 (a statute granting the Secretary of Transportation authority to manage the State Highway Fund and investments of the Fund);



• consider income of the Fund to be interest or investment income; and



• transfer $3 million from the State Highway Fund to the Fund on July 1, 1999 and each July 1 thereafter through 2006.

Sections 37, 38--Technical Changes to Public Transit Systems. These sections make technical changes to conform to other changes in the bill.

Section 39--General Aviation Provisions. On July 1, 1999, and each July 1 thereafter, the Director of Accounts and Reports transfers $3 million from the State Highway Fund to the Public Use General Aviation Airport Development Fund. (Currently, there is no money in this Fund.)

Sections 40, 43, 44, 46, 48--Motor Fuels Tax Increases. Motor fuels taxes and associated permit fees would be increased on July 1, 1999. All fees in K.S.A. 79-3492b would be increased for special LP-gas permit users, and interstate motor fuel user trip permits would be increased from $10 to $12.50. The motor fuels taxes would be increased as follows:

Sections 41, 45, 47--Technical Changes to References of the State Freeway Fund. These sections remove references to the State Freeway Fund which is no longer in existence.

Sections 42, 49--Special City and County Highway Fund Provisions. The bill changes the division of moneys between the State Highway Fund and the Special City and County Highway Fund to reflect proposed increases to the Special City and County Highway Fund. The State Highway Fund would receive 64.85 percent and the Special City and County Highway Fund would receive 35.15 percent of revenues from motor fuels, special fuels, LP-gas, and trip permits. (Currently, the SHF receives 59.5 percent and the Special City and County Highway Fund receives 40.5 percent of these revenues.) But given the rate increases, local units would receive approximately $160 million per year, which is $14 million more per year than under current law. Other changes would:

• simplify the distribution of Special City and County Highway Fund revenue to the counties by consolidating the two tier formula into a single formula;



• update the current provision which ensures that counties receive the same moneys they received from July 1, 1969 to June 30, 1970; and



• allow local units of government to use not more than 10 percent of Special City and County Highway Fund moneys they receive for footpaths and bicycle paths. The 10 percent limit does not apply to money counties are required to distribute to a city or a township. (Currently, only cities in Johnson County have this authority.) Any such moneys would be prohibited from being spent on recreational trails as defined by K.S.A. 1998 Supp. 58-3211.

Section 50--Changes in Transfer Percentages. The sales tax demand transfers from the SGF to the SHF would be changed to revenue transfers and would be allowed to increase by 1.7 percent in FY 2000 and FY 2001. Beginning in FY 2002, the current 7.628 percent statutory figure would be changed to revenue transfers and would be increased to 9.51 percent. That percentage would then be increased to 11 percent in FY 2003; increased to 11.25 percent in FY 2004; increased to 12.25 percent in FY 2005; increased to 13.25 percent in FY 2006; and increased to 13.75 percent in FY 2007 and thereafter.

Sections 51, 52--Technical Changes to the Qualified Agricultural Ethyl Producer Incentive Fund. These sections are cleanup.

Section 53--State Highway Traffic Noise Abatement. Under the Senate Committee amendments, the Secretary of Transportation would be required to "conduct and analyze" noise studies when the state participates in those highway reconstruction projects which add through-traffic lanes. State highway funds could be used for noise abatement measures only upon a finding by the Secretary that any noise abatement benefits would outweigh social, economic, and environmental effects and costs of such measures.

Sections 54, 55--Repealers. These are the repealer sections.

Section 56--Effective Date of the Act. The bill takes effect from and after its publication in the statute book.

Background

The original bill contained the Comprehensive Transportation Program recommended by the Governor. The House Transportation Committee amended the bill to remove new bonded indebtedness authorization proposed by the Governor ($2.1 billion over the eight years) and to insert the new provisions relating to revenue transfers ($1.519 billion over the eight years and $2.687 billion over 11 years). Other amendments were technical in nature.

The House Committee of the Whole amended the bill to increase from $5 million to $10 million the annual amount the Coordinated Public Transportation Assistance Fund receives from the State Highway Fund. A second House Committee of the Whole amendment would have required the Secretary of Transportation to develop and implement a state highway traffic noise abatement program.

Senate Assessment and Taxation Committee amendments included elimination of a proposed revenue transfer from the SGF to the SHF in amounts identical to the moneys attributable to the Governor's tax recommendations; insertion of the provisions relating to $990 million in new bonding authority; insertion of the vehicle registration fee increases; insertion of the motor fuels tax increases; changes in the provisions relating to noise abatement studies and expenditures; and insertion of the language regarding legislative intent with respect to the $1.1 billion in system enhancements.

Senate Committee of the Whole amendments included reducing the annual amount for the Coordinated Public Transportation Assistance Fund from $10 million under the House version to $5 million; clarifying that the $3 million in expenditures in each county had to occur prior to the conclusion of FY 2009; adding information on system enhancements to the annual reporting requirement; clarifying the demand transfer percentages to reflect the intent of the Senate Assessment and Taxation Committee; changing the demand transfer from the SGF to the SHF to a revenue transfer; and prohibiting any SCCHF moneys designated to be spent on footpaths or bicycle paths from being diverted to funding for recreational trails.

Fiscal Considerations re: H.B. 2071, As Amended by

Senate Committee on Assessment and Taxation

Expenditure assumptions are identical to the Governor's plan for maintenance, major modification and priority bridges, modes, and local aid financing. Information provided by the Kansas Department of Transportation suggests that about $100 million more in system enhancements could be provided at the conclusion of the program relative to the Governor's recommendation.

The demand transfer changes relative to current law would be as follows:

• Motor fuels tax receipts would increase by an estimated $905 million over the ten-year life of the program.



• Vehicle registration fees would increase by an estimated $261 million over ten years.



• After adjusting for issue costs, interest earnings, and debt service over the ten-year period, the new bonded indebtedness ($990 million) would provide $474 million in available proceeds through the end of FY 2009.



• KDOT figures indicate $257 million in new interest on funds would be generated through FY 2009.

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.