Senate Committee on Assessment and Taxation 02/11/2026

Senate Bill 498 Hearing Overview

Introduction of Pages and Committee Members

• Three pages, Averley, Emma, and Catherine, are introduced to the committee.

• Senator Francisco introduces three freshmen from Free State High School: Alex Colly, Weston Graber, and Tong Lee.

Opening of Senate Bill 498 Hearing

• The hearing on Senate Bill 498 is opened; the bill relates to income tax credits for higher ethanol blends.

• The bill proposes discontinuing existing income tax credits for alternative fuel vehicles after December 31st, 2026.

Key Provisions of Senate Bill 498

• Taxpayers can carry over unused credits from previous years until the end of their validity period.

• A new income tax credit will be available for retail dealers selling higher ethanol blends (E15 or above), effective from tax years 2026 through 2031.

• The proposed credit amounts to five cents per gallon sold and has a cap of $2.5 million in total credits per year.

Definitions and Technical Details

• "Higher ethanol blend" defined as E15 or any blend with more than 10% ethanol; "retail dealer" refers to businesses selling these fuels directly to consumers.

• Retail service stations are defined as locations dispensing higher ethanol blends into vehicle tanks.

Implementation and Questions

• The bill will take effect upon publication in the statute book; questions from the committee are invited but none arise initially.

Support for Senate Bill 498

Testimony by Randy Stuckey

• Randy Stuckey represents Renew Kansas Biofuels Association in support of Senate Bill 498.

• Emphasizes collaboration on drafting the bill and repealing an underused alternative fuel tax credit.

Purpose Behind the Legislation

• The bill aims to incentivize retailers to transition from E10 to E15 due to infrastructure challenges associated with this change.

Market Dynamics and Consumer Behavior

• Once retailers switch to E15, it is expected that consumer preference based on price will drive sales; EPA approval allows E15 use in all vehicles manufactured since 2001.

Ethanol and Agriculture in Kansas: The Impact of E15

Importance of Ethanol to Kansas Agriculture

• In 2026, over 95% of vehicles can use E15 or higher blends of ethanol fuel, which is crucial for Kansas as approximately 30-33% of the state's corn is converted into ethanol.

• The demand for corn in the ethanol market significantly influences its price; currently, prices are below the $4 threshold necessary for profitability, highlighting the need to boost market prices.

Transition from Corn to Sorghum

• As water resources diminish in Western Kansas, there is a shift from water-intensive crops like corn to sorghum, which requires less water annually.

• This year saw a decline in Chinese purchases of sorghum, leading to surplus stockpiles in Western Kansas that need new markets.

Economic Implications of E15 Legislation

• The promotion and adoption of E15 will drive demand for both corn and sorghum, benefiting farmers and supporting agricultural economics in Kansas.

• A proposed tax credit legislation aims to replace an outdated alternative fuel tax credit with one focused on promoting E15 usage among retailers.

Benefits of Moving from E10 to E15

• Transitioning from E10 (10% ethanol) to E15 (15% ethanol) offers benefits such as cleaner combustion and cost savings at the pump for consumers with modern engines.

• For farmers, especially those growing corn and sorghum, increased consumption of ethanol translates into better economic stability; sub-$4 corn prices could lead to significant downturns similar to past agricultural crises.

Market Dynamics and Future Prospects

• The growth potential for sorghum as a crop aligns with its utility in producing ethanol; this diversification may help stabilize agricultural revenues amid fluctuating international demand.

• While many crops can contribute to E15 production, corn remains preferred due to its processing efficiency. However, increasing reliance on sorghum could reshape future agricultural strategies.

Ethanol Production and Its Impact on Agriculture

The Role of Sorghum and Corn in Ethanol Production

• Some plants utilize sorghum for ethanol production, which can stabilize corn prices beneficially for farmers.

• The crop mix in a plant's region influences the choice between sorghum and corn; regions with heavy corn production often have contracts with local producers.

• Distillers grains, a byproduct of ethanol production, are used as cattle feed, reducing drying costs and carbon footprint when located near feedlots.

Fuel Efficiency and Ethanol Blends

• There is a common belief that ethanol reduces fuel mileage; however, modern high-compression engines burn higher blends of ethanol more efficiently than older models.

• E15 availability varies by location; some areas have sufficient supply while others may need incentives to promote its use.

Market Dynamics for Retailers

• Small retailers face financial hurdles in adopting E15 due to pump replacement costs; incentives could help them transition.

• The proposed legislation aims to support small retailers without excluding larger ones from benefits.

Benefits of E15 Ethanol

• E15 has been approved for vehicles from 2001 onwards, making it accessible to 95% of vehicles on the road today.

• It offers significant cost savings at the pump—approximately 15 cents cheaper per gallon compared to E10—and contributes positively to farmers' income while being environmentally friendly.

Addressing Food vs. Fuel Debate

• About one-third of Kansas corn is used for ethanol production, allowing it to serve both food and fuel needs effectively. This dual-use helps mitigate concerns over competition between food supply and biofuel production.

Ethanol Production and Its Economic Impact on Kansas Farmers

The Value of Ethanol Production

• Ethanol production generates multiple byproducts, notably dried distiller grains, which provide significant value. Each bushel of corn yields approximately 17 pounds of dried distiller's grains, 2.9 gallons of ethanol, and 17 pounds of CO2 that can be captured for additional revenue.

• The economic benefits extend to the state; a 1% increase in ethanol blending percentage translates to an additional 16 million gallons of ethanol or 5.7 million bushels of corn sold, directly benefiting farmers financially.

Advocacy and Infrastructure Investment

• Kansas corn advocates for increased ethanol blending rates as it directly impacts farmer income and market development efforts. This advocacy includes financial contributions towards infrastructure projects necessary for supporting higher blends of ethanol in fuel supplies.

• Farmers are not solely reliant on government incentives; they actively invest their own resources into infrastructure improvements to facilitate the sale of higher blend fuels, demonstrating a commitment to sustainable agricultural practices.

Personal Testimony from Farmers

Brett Grodderholz's Perspective

• Brett Grodderholz shares his experience as a fifth-generation farmer emphasizing the importance of creating demand for higher ethanol blends as a game changer for rural communities and local economies. He highlights how increased demand allows farmers to reinvest in their operations and communities.

• He illustrates the financial impact by comparing prices between selling corn at different locations; hauling directly to an ethanol plant provided him with $3,000 more over a large haul compared to selling at a co-op, showcasing how direct sales benefit farmers significantly.

Consumer Benefits and Infrastructure Challenges

• Consumers also benefit from higher blends like E-15 due to lower prices at the pump, allowing them more disposable income for other expenses such as local events or necessities—demonstrating that this issue extends beyond just farmers' profits.

• However, many smaller fuel stations lack the infrastructure needed to offer these higher blends consistently; thus, investment credits are crucial for enabling these stations to upgrade their facilities accordingly. This is essential for expanding access to consumers who want alternative fuel options.

Long-term Stability through Legislation

• Grodderholz emphasizes that Senate Bill 498 provides much-needed stability over five years for farmers by potentially increasing revenue through higher ethanol sales—a critical factor in planning future investments in farming operations and community growth initiatives.

• He concludes with a call-to-action urging support for Senate Bill 498 as it promises not only immediate benefits but also long-term sustainability within Kansas agriculture and rural communities overall—highlighting its significance beyond just farming economics alone.

Tax Committee Hearing on Senate Bill 498

Introduction of Travis Gower-Holtz

• Travis Gower-Holtz introduces himself as a representative from Ray Ninerlone Associates, speaking on behalf of Steve Rook and Poet.

• Poet is identified as the world's largest biofuel producer, utilizing about 7% of the US corn crop annually and significantly contributing to Kansas' economy.

Economic Impact of Ethanol Production

• In 2024, Kansas produced over 600 million gallons of ethanol, generating more than $1 billion in combined value from ethanol and feed production.

• Senate Bill 498 is argued to be financially beneficial; a $2.5 million investment could yield approximately $11 million in annual savings for consumers at the pump.

Benefits to Agriculture and Local Economy

• The bill supports farm income, local taxes, capital investments, and increases feed co-products that benefit livestock producers in Kansas.

• Gower-Holtz urges the committee to pass Senate Bill 498 for its potential benefits to both consumers and agriculture.

Testimony from Brian Pulsler

• Brian Pulsler represents FuelTrue, a non-profit trade association for energy distribution companies in Kansas. He expresses support for Senate Bill 498.

• Pulsler highlights that E15 fuel provides higher octane at lower prices, benefiting consumers while also supporting agriculture and oil industries.

Environmental Considerations

• E15 is presented as a sustainable renewable fuel option that can help transition away from traditional fuels with zero ethanol content.

• Retailers face significant upfront costs when transitioning to higher blends like E15 due to necessary infrastructure changes (new tanks, lines).

Support for Tax Credits

• Pulsler advocates for tax credits to incentivize retailers to adopt higher ethanol blends despite initial financial barriers.

Discussion on SB 402

Overview of SB 402

• The committee begins discussing SB 402 related to homestead property tax refunds aimed at providing assistance for seniors facing hardships.

Key Components of SB 402

• Modification of household income definition for homestead refund claims based on total Kansas adjusted gross income.

• Eligibility exceptions are proposed for claimants who must live away from their homestead due to health or hardship reasons.

Homestead Act and Property Tax Freeze Discussion

Overview of Proposed Changes

• The discussion centers around the original Homestead Act and a property tax freeze provision, which aims to simplify the claims process by consolidating two Homestead refund claims into one form.

• A constant household income threshold for the safe senior credit is proposed, changing from 120% of the federal poverty level to a fixed amount of $25,380.

Form Simplification and Eligibility

• Senator Francisco raises a question about how eligibility will be determined on the new form—whether it will require information collection for department assessment or allow users to select their eligibility directly.

• The response indicates that the form will guide users to determine which benefit provides greater financial support based on their input.

Merging Programs and Fiscal Implications

• There is an emphasis on simplifying forms as part of merging programs, allowing individuals to qualify for whichever benefit yields a higher return.

• An amendment related to safe seniors is introduced, aiming to clarify qualification dates while preventing new qualifications after a certain date.

Legislative Process and Amendments

• The committee discusses moving towards expanding program eligibility for more participants in both property tax freeze and homestead programs.

• A motion is made regarding amendments aimed at increasing home valuation limits, with discussions indicating potential fiscal impacts.

Financial Projections and Concerns

• Eddie presents financial projections showing revenue changes over four years due to proposed amendments; initial estimates suggest increased costs associated with expanded eligibility.

• If valuation limits are raised significantly, projected reductions in receipts could reach up to $5.1 million by year five.

Social Security Income Considerations

• Senator Francisco questions how social security income affects household income calculations for program eligibility, noting that high social security incomes could lead many individuals or couples qualifying despite substantial earnings.

Property Tax Programs Discussion

Overview of Property Tax Freeze and Homestead Programs

• The property tax freeze program is based on adjusted gross income, while the homestead program adds back 50% of Social Security to household income.

• There is a proposal to consider 100% of Social Security for the homestead program, which would repeal last year's adjustment that excluded it from adjusted gross income.

Implications of Income Definitions

• A request was made for numerical data comparing scenarios where different percentages of Social Security are considered in both programs.

• Clarification sought on whether to use adjusted gross income or include 50% or 100% of Social Security in defining eligibility for the programs.

Current Definitions and Their Effects

• Under current law, Kansas Adjusted Gross Income captures 50% of Social Security for traditional homestead but allows full capture (100%) for the safe senior program.

• The bill maintains the definition for the safe senior program while changing the traditional homestead to align with SVR definitions.

Financial Considerations and Eligibility

• Including a portion of Social Security as countable income could reduce eligibility or refund amounts under these programs, impacting fiscal outcomes negatively.

• One senator expressed opposition to changes that would complicate eligibility criteria and suggested voting on existing proposals without further amendments.

Concerns About Income Limits

• Questions arose regarding changes in eligibility income limits from 120% of poverty level to a fixed amount, raising concerns about inflation adjustments affecting ongoing participation in programs.

• Assurance was given that once enrolled, individuals wouldn't be removed unless their income exceeds set thresholds; however, inflation adjustments were noted as necessary for maintaining fairness.

Conclusion and Next Steps

• The committee concluded discussions with plans to review additional information related to proposed amendments and financial implications before proceeding with legislation.

Meeting Adjournment and Next Steps

Summary of Meeting Closure

• The meeting will continue with discussions on items 402, 320, and others listed in an email sent over the weekend.

• The email was structured to prevent replies that could disrupt the flow of information during the open meeting.

• Emphasis is placed on ensuring that all relevant information is accessible to the public.

• No further questions or business were raised by attendees before concluding the meeting.

• The meeting was officially adjourned after confirming there were no additional topics to discuss.