The debate over BNSF’s logistics hub moved to Topeka this week as supporters and opponents of Senate bill 693 testified before the Kansas Senate Commerce Committee on Wednesday morning.
As written, the bill would make the state a credit backer on loans for infrastructure improvements that Gardner city officials say are necessary for the intermodal facility.
Under the proposed legislation, the state would assume responsibility to repay the loans should cash flow from the intermodal project fail to meet loan payments. Gardner city officials note that without passage of the bill, the financing package the city council recently approved would be null and void.
The financing, which includes tax abatements totaling 85 percent, will have to be reconsidered if the bill doesn’t pass.
More than 14 citizens attended the committee hearing for the legislation along with representatives from the Gardner Chamber of Commerce, BNSF and The Allen Group. Bryan DeMars, Gardner, testified on behalf of several concerned Gardner residents.
“(The bill) is an unlimited guarantee of loans and bonds to not only this project but whatever intermodal and rail projects are in the state of Kansas,” DeMars told committee members. “There is no cap on the amount of indebtedness the state will take on.”
DeMars also read a letter signed by Gardner Edgerton School District Superintendent Bill Gilhaus and school board president Ron Ragan, although DeMars was not representing the school in an official capacity.
“It is our belief that the proposed financing strategy merely shifts the responsibility for the costs of the intermodal and logisc park infrastructure from those that stand to benefit most, BNSF and The Allen Group, and places the burden firmly on the backs of the taxpayers of our community,” DeMars read. “As such, we question the appropriateness of this particular financing model.”
Peter Solie, president of the Gardner Area Chamber of Commerce, disagreed. He told senators that the Gardner Chamber Board of Directors voted unanimously to recommend passage of the bill.
“This legislation strikes the necessary balance of risk and investment that permits the city, county and state to each meet necessary commitments and benefit from substantial new tax revenues,” Solie told the committee.
Although DeMars was the only person to testify against the proposed legislation, he said the fact that the bill wasn’t passed out of committee is a small victory for his side as the legislative session is quickly coming to a close.
“The Burlington and The Allen Group got a setback today,” DeMars said. “It will either be Monday or Tuesday by the time (the bill) can be brought to the floor. The (April) 5th is the last day of the session… it was a big win for us.”
Sen. Karin Brownlee, who represents Gardner, chairs the Commerce Committee. She said the bill needs to be amended before it can pass from committee to the Senate floor.
“We need to work the bill. At that point it’s not another hearing. It’s just another (committee) meeting to work the bill,” she said.
Of particular concern to members of the Senate committee is that the bill could require a two-thirds majority of the Kansas Legislature to become law.
Norm Furse works in the Kansas Reviser of Statutes Office. He said under Kansas law, the state can only become a party to an internal improvement financing agreement if certain conditions are met.
“We don’t think this bill falls into any of those exceptions. If the state is a party, it could be that the bill itself would need to pass with a two-thirds majority under this provision,” Furse explained.
A two-thirds majority would also be required if the state of Kansas ever needed to make loan repayments.
“This issue is out there and to be on the safe side (the Senate) would be best advised to have a two-thirds vote on the bill itself and on any subsequent appropriation,” Furse said.
Brownlee said the committee will hear testimony from different attorneys to determine whether the bill requires a two-thirds majority vote of the Kansas Legislature.
“We’re trying to sort through how that applies in this situation, because there will be no state funds utilized to pay those loans,” she said.
Brownlee isn’t certain when the committee will next meet to discuss Senate bill 693.
“The next few days and all of next week, we are not on our normal schedule,” Brownlee said. “So it’s a little bit more challenging to set a meeting. Sometimes we don’t know when we’re going to set a meeting until the day before.”
Whenever the committee meets again, opponents of the bill plan to attend the meeting. Mary Peters, former Gardner City Council member, didn’t speak at Wednesday’s committee hearing, however she spent two days trying to meet with every member of the Kansas Senate.
“Many of the senators had not even heard of the bill,” she said. “No one had really had time to look at it and study it in a way that it should be. It appeared to us that they didn’t know the full tax implications of this bill.”
But getting members of the Senate to read Senate bill 693 isn’t Peters’ main reason for spending several days in Topeka.
“If SB 693 doesn’t pass, my understanding is that we will be back to square one, and we’ll be re-examining this 85 percent tax abatement. That’s why I’m up there,” she said.
Intermodal debate moves from Gardner to Statehouse