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Task force reviews funding options: bottled-water fees, sales-tax scenarios and data-center levies
Summary
Legislative research updated revenue estimates for options to support the state water plan: a per-bottle fee (1c per 16.9 oz bottle could yield roughly $72045M if limited to single-serve bottles), increases to state sales tax (0.1% could raise ~ $61M in FY2027), and emerging questions about data-center water use and electricity exports. Legal and administrative complexities were highlighted.
Legislative staff and agency counsel briefed the task force on possible revenue sources to pay for water-plan priorities, updating numbers from a 2017 Blue Ribbon review and adding new context about data centers and electricity exports.
Legislative Research (Luke Drury) summarized receipts flowing to the state water plan fund: long-standing statutory fees (water protection, clean-drinking-water fee, fertilizer/pesticide fees) and statutory transfers. He noted a recent, large General Fund transfer in FY2025 ($51 million) that materially increased the fund for that year and emphasized that many statutory fees date to 1989 and have not been adjusted.
KLRD updated the Blue Ribbon27s bottled-water fee estimates: using 20232025 per-capita bottled-water consumption and assuming 16.9-ounce single-serve bottles, a uniform 1-cent-per-bottle fee on the entire market would yield about $10.7 million in 2025; restricting the fee to the single-serve segment (about 70% of the market) reduces that estimate to roughly $7.5 million for 2025. A 4-cent fee would scale to roughly $43 million (whole market) or about $30 million (single-serve share). Analysts cautioned that definitions (package size, exemption of multi-serve containers) and retail inventory systems affect collection feasibility.
On sales tax, Legislative Research presented consensus-revenue scenarios: a 0.1 percentage-point increase in state sales tax could raise roughly $61 million in FY2027 (growing to the mid-$70-million range in later years); a full 1.0 percentage-point increase would scale roughly tenfold under the same forecast assumptions. Staff reminded members that these are statewide receipt estimates and statutory design would determine how much flows to the water plan fund versus the general fund or other recipients.
Task force members also asked about new industrial users. Presentations showed Kansas exported about 29% of its generating capacity in 2024 per Southwest Power Pool figures, prompting discussion that new data centers and renewable generation create fiscal and water-use questions. Legal review from counsel (Jill Shelley) and the revisor27s office (Kyle Hamilton) found few states with direct water-rate statutes for data centers. They noted existing municipal rate-setting law, judicial limits on discriminatory rates and potential constitutional equal-protection and statutory hurdles for narrowly targeted excise taxes. Staff also highlighted that recent sales-tax exemptions for qualifying data centers might complicate any proposal to tax water used by those facilities.
What members heard and asked: some legislators said new industrial uses are visible and politically salient in districts with proposed data centers; others urged the task force to weigh fairness (who pays) and enforceability. Legal staff recommended carefully crafted statutory language if any new sector-specific fee is proposed.
Next steps: the task force will workshop a funding target and a menu of revenue options — including adjustments to long-standing fees, a per-bottle levy, dedicated sales-tax increments, and possible new levies or franchise-like charges for large industrial water users — and ask legal and fiscal staff to test statutory designs and administrative feasibility.
