At the state level, Karnes served as the attorney in charge of the firm's engagement as special tax counsel to the Nebraska Legislature as it revised the state's personal property tax system and, more recently, served as counsel to the State in the development and implementation of Nebraska's Section 529 College Savings Plan. He was a member of the board of directors of the $35 billion Federal Home Loan Bank of Topeka, a principal secured credit source for saving and loans, savings banks, commercial banks, credit unions, and insurance companies in Nebraska, Colorado, Oklahoma, and Kansas.