01 Jun 2021 Kansas Capitol Review – Adjournment
2021 Kansas Legislature Adjourns Sine Die
The 2021 Kansas legislative session formally adjourned Sine Die just before 1:00 p.m., on Wednesday, May 26. The half-day of floor work was uneventful in terms of laws overridden as the Senate successfully Governor Laura Kelly’s veto of a short-term health insurance bill, but the House fell nearly 20 votes short of the 2/3 majority needed to pass the law. Neither chamber attempted any other overrides on bills vetoed.
Lawmakers in both chambers did pass a concurrent resolution to Governor Kelly, urging her administration to end the federally financed $300-a-week COVID-19 pandemic unemployment payments before the Sept. 4, 2021 program closure. The resolution was largely sparked by the Kansas Chamber of Commerce’s mid-May letter to Kelly requesting the program be discontinued due to a labor shortage for its member businesses. Nearly 200 businesses signed onto the Kansas Chamber’s letter. A meeting invitation has been extended to the Kansas Chamber by the Kelly administration to discuss possible solutions.
Barring any unforeseen interim committees the legislature will return to Topeka at 2:00 p.m., on Monday, Jan. 10, 2022.
Senate Leadership Slightly Changes
Following the Senate’s adjournment, the chamber’s 29 republicans caucused to elect a new majority leader and assistant majority leader following former majority leader Gene Suellentrop’s (R-Wichita) legal issues in early March. Nominations for the majority leader post included: acting majority leader Larry Alley (R-Winfield), Richard Hilderbrand (R-Galena) and Jeff Longbine (R-Emporia).
Earning 18 of 29 votes on the second ballot, Alley was officially named majority leader and will serve out the remaining three years of the senate membership in the prominent role. Senators also unanimously elected Renee Erickson (R-Hays) as assistant majority leader following Alley’s promotion.
Lawmakers approve emergency disaster extension
On Friday, the Legislative Coordinating Council extended the governor’s emergency COVID-19 declaration until June 15th. The governor had requested an extension through June 27.
Omnibus Budget Bill Passed, Contains Vaccine Passport Proviso
On May 7, the legislature passed Senate Bill 159, the omnibus budget bill for fiscal years 2021, 2022, and 2023. Governor Kelly has signed this budget bill and the following proviso into law. The bill in its entirety includes changes in economic conditions, federal stimulus, and legislative adjustments which have changed the projected ending balances to $1.1 billion in FY 2021, and $542 million in FY 2022. The language regarding vaccine passports is below:
Sec. 59. (a) Notwithstanding any other provision of law, no state agency named in 2021 House Bill No. 2007, this or other appropriation act of the 2021 regular session of the legislature shall expend any moneys appropriated from the state general fund or from any special revenue fund or funds for each such state agency for fiscal year 2021 as authorized by chapter 5 of the 2020 Session Laws of Kansas, 2021 House Bill No. 2007, this or other appropriation act of the 2021 regular session of the legislature to: (1) Issue a COVID-19 vaccination passport to any individual without such individual’s consent; (2) require an individual to use a COVID-19 vaccination passport within this state for any purpose; or (3) deny housing or refuse access to a place accessible to the general public, or separate from others in a place accessible to the general public, including entry, education, travel and services within this state, based on such individual’s COVID-19 vaccination status: Provided, however, That nothing in this section shall prohibit a state agency from instituting COVID-19 screening protocols in accordance with state and federal law to protect the public health. (b) As used in this section: (1) ”COVID-19 vaccination passport” means written or electronic documentation of an individual’s COVID-19 vaccination status; and (2) ”screening protocol” means a non-invasive method to determine whether an individual has symptoms or other risk factors for developing COVID-19, including, but not limited to, temperature checks, self-reporting of exposure, self-reported vaccination status and questionnaires.
Veto Sustained on COVID-19 Small Business Relief Act
Late on Friday, May 7, the legislature passed Senate Bill 273 creating the COVID-19 Small Business Relief Act. This bill allows certain for-profit Kansas businesses, with 50 or fewer employees, which sustained financial losses due to the pandemic, to apply for reimbursement from a COVID-19 small business relief fund that is financed by federal pandemic funds to Kansas. The bill creates a three-member panel that will have authority to receive, and review, claims for reimbursement from businesses that suffered loss during the pandemic due to restrictions on the business caused by state or local pandemic orders. Money received from the fund can be used for employee pay, salary, compensation or benefits. The state Legislative Coordinating Council will make final decisions on who receives reimbursement from the fund, and how much. Governor Kelly vetoed this legislation and there was no override attempted on Sine Die.
Economic Recovery Linked Deposit Loan Program
Governor Kelly has signed SB 15 into law to create a new Economic Recovery Linked Deposit Loan Program for businesses in response to the economic downturn caused by the COVID-19 pandemic. This 10-year program, administered by the office of the State Treasurer, will make up to $60 million available for low-interest (2% below market rate) loans to business.
Corporate Limited Liability Concerning COVID-19
Governor Kelly has also signed SB 283 into law, a bill that provides liability protections to businesses from claims of injury related to COVID-19 exposure.
Governor Signs Retail Store Front Property Tax Relief
Beginning January 1, 2022, S Sub for HB 2313 will create a COVID-19 Retail Storefront Property Tax Relief Act to provide businesses access to partial property tax refunds if their business is constrained by either a state or local government emergency order. The bill, which is prospective only, would provide for reimbursements from the county general fund to the owner of any building maintaining a business on the property that is shut down or limited in any capacity pursuant to a declared disaster emergency. The reimbursement would be 1/365 of the amount of taxes levied for every day the business is shut down and 1/365 the amount of taxes levied multiplied by the percentage restricted for every day the business is required to restrict operations. “Restricted” would mean any occupancy limitation, limitation on periods of operation, or the exertion by any governmental entity or other significant control on business resources or functionality. If the State or a city, issues an order shutting down or restricting the business, such governmental entity would be required to reimburse the county for the cost of the reimbursement. Governor Kelly signed this bill into law on May 24.
Unemployment Insurance System Overhaul
It was discovered during the early part of the session that during the surge of unemployment claims filed during the pandemic, more than $600 million in fraudulent payments were paid out of the Kansas unemployment insurance fund. In response to this incredible situation, Governor Kelly signed into law Senate Sub for HB 2196. This bill creates the Unemployment Compensation Modernization and Improvement Council to recommend changes to the unemployment insurance system. The bill requires the Kansas Dept. of Labor to modernize its information technology (IT) infrastructure, make changes to the Employment Security Review Board, and alter the employment security rate tables. In addition, the bill provides for certain employer account protections, adjusts thresholds for maximum benefits, and makes other employment security compensation changes. The bill also ensures that employers are held harmless for any fraudulent unemployment claims filed in the business’ name. Employers who have paid for these claims since March 15, 2020, are to be refunded through the unemployment insurance trust fund. The bill will reimburse the unemployment insurance trust fund up to $500 million from federal funds.
Natural Gas Price Spikes from Polar Vortex
In early February, natural gas users across the state experienced historically high prices due to the polar vortex. Stakeholders held numerous conversations with state and federal leadership regarding potential state or federal assistance in current relief of the price spikes and prevention of similar spikes in the future. The result was the passage of Senate Bill 86, which creates the Kansas Extraordinary Utility Costs Loan Deposit Program to allow low-interest loans for businesses and other eligible borrowers to help them cover natural gas bills following the extreme prices following the February polar vortex. “Eligible borrowers” are defined as any wholesale natural gas customer in the state of Kansas which experienced extraordinary prices due to the extreme weather, providing they are not an individual receiving loans for personal reasons. The bill provides $20 million for this new Extraordinary Utility Costs Loan Deposit Program. Eligible borrowers may borrow up to $500,000 from the program. The bill was signed into law by Governor Kelly.
Property Tax Bills
There were more than a dozen bills this session addressing high property taxes. One bill, signed into law by the Governor, was conference committee report on HB 2104. This bill includes contents of other bills Kansas Grain and Feed Association, Kansas Agribusiness Retailers Association and Renew Kansas Biofuels Association supported(Senate Bills 98, 119, and 72). Among other things, the bill ensures that, in a property tax hearing before a Kansas District Court, the county retains the burden of proof on the county appraiser’s valuation and classification. In addition, the bill allows the Governor to temporarily appoint former BOTA members as necessary. The bill also prohibits either the Board of Tax Appeals, or the county commission, from increasing the appraised valuation of property as a result of an appeal or an informal meeting. The bill makes other positive changes to the Kansas property tax system.
Kansas Emergency Management Act (KEMA)
The Governor signed Senate Bill 40 into law. This bill amends the state’s emergency management law, installing new checks on powers of the governor, health officers, and school boards to manage the COVID-19 pandemic and future disasters. The bill limits the power of the Governor, the state health secretary, and local public health officers to issue orders. It also gives Kansans more power to legally challenge emergency orders at all levels of government if they think their rights have been violated. The bill extended the Governor’s existing emergency declaration for the COVID-19 pandemic until May 28, 2021. Under the bill, each executive order that the Governor previously issued was revoked on March 31. For that reason, the Governor reissued 12 of her executive orders on April 1, 2021 which will remain in place until the disaster emergency declaration ends on May 28, 2021.
Easing Consolidation in Local Government
Governor Kelly signed SB 118, a bill which establishes a procedure for cities and counties to more easily assume the responsibilities and duties of any special district located within its boundaries and provide for the dissolution of the special district. This bill should provide efficiencies and consolidation of services in local units of government, which could decrease budgets of local units of government.
Emergency Temporary Employee Withholding Provision
On Monday, May 17, Governor Laura Kelly signed into law Senate Bill 47. The bill, introduced at the request of Watco Railroad and supported by Kansas Grain and Feed Association, Kansas Agribusiness Retailers Association and Kansas Cooperative Council extends for three years an income tax credit for a Single City Port Authority in Southeast and Southcentral Kansas. The tax incentive assists the short line rail to maintain track that services grain and agribusiness facilities. Among other things, the bill also includes a provision on income tax withholding and provides that, for calendar years 2021 and 2022, for wages paid to employees temporarily teleworking in a state other than their primary work location, employers have the option to withhold income taxes based on the state of each employee’s primary work location instead of the state in which the employee is teleworking. Previously, on April 1, 2021, Governor Kelly had issued Executive Order 21-18 providing temporary provisions for employer payment of income tax withholding for work performed in another state.
High Performance Incentive Program
Your association supported Senate Bill 65, which amends the High Performance Incentive Program (HPIP) economic development program to decouple workforce training requirements from the program. Under current law, taxpayers that claim the HPIP investment tax credit are required to participate in either the Kansas Industrial Training (KIT) or Kansas Industrial Retraining (KIR) programs. The bill also includes the contents of Senate Bill 91, which would allow for a company to transfer earned but unused HPIP tax credits to another tax payer. The bill was signed into law by Governor Kelly.
Global Intangible Low-Taxed Income, Net Operating Loss Carry Forward
Senate Bill 50 provides corporate income tax modifications for global intangible low-taxed income, business interest, and capital contributions. The bill also allows net operating losses to be carried forward indefinitely, and extends the deadline for corporate filing deadline. During the Veto Session, the legislature overrode the Governor’s veto of the bill.
Hazardous Chemical Spill Reporting
Currently, all spills of hazardous chemicals must be reported to KDHE, regardless of the amount. RENEW KANSAS supported the passage of House Bill 2155 which authorizes KDHE to establish reportable minimum quantities of hazardous chemical spills and to harmonize those quantities with federal standards. Governor Kelly signed this legislation into law.
KDHE Air Emissions – Proposed Fee Increase
In recent years, the Kansas Department of Health and Environment (KDHE) has looked at increasing the emissions fees to supplement a decrease in Air Quality Fee Fund revenues. Last year, the legislature included a budget proviso which restricted KDHE from raising fees and encouraged it to hold stakeholder meetings to find a compromise. This year, the department brought the proposal forward again, which includes a more than $1 million increase in industry fees. Class 1 and Class 2 emitters continue to work with KDHE and legislative leadership to pursue an agreed fee increase that would likely begin in 2025. Any proposal offered will maintain the integrity of the state program while minimizing the financial impact on industry.
Sales Tax Bill to Eliminate Estimated Payments
Currently, Kansas retailers are required to estimate what they think they will receive in sales tax for the following month and then they prepay that estimated amount to Dept. of Revenue if it exceeds $40,000. Beginning January 1, 2024, House Bill 2143 increased the threshold filing amounts for retailers to submit sales taxes to the Kansas Department of Revenue. The bill was signed by the Governor. During committee work on this bill, it was determined that this practice of pre-payment was not required by Kansas law. Therefore, the agency will be updating its website and procedures so that retailers will no longer be required to prepay an estimated amount of their sales tax liability. Instead, retailers will be required to remit the actual sales tax collected during first 15 days of each month, on the 25th day of that month.
Workforce Development Scholarship
Your association supported House Bill 2064, a workforce development bill that creates the Kansas Promise Scholarship Act to provide education scholarships to students attending a Kansas community college, technical college, or two-year associate degree program or career and technical education programs. The scholarship would be eligible for students pursing certain fields of study, including manufacturing, construction and others. Governor Kelly signed the bill into law.
Nuisance Abatement Bill – Agricultural Exemption
The Governor signed into law Senate Bill 52, a bill that allows the board of Sedgwick County Commissioners to order the removal or abatement of nuisances from any land within an unincorporated area with any incurred costs paid by the owner. Your association worked to successfully secure an amendment to exclude agribusiness facilities from the bill.
BILLS CARRIED OVER TO 2022
Industry Regulations
The Kansas Legislature does not have the authority to veto regulations proposed by state agencies. Kansas Grain and Feed Association, Kansas Agribusiness Retailers Association and Renew Kansas Biofuels Association President and CEO Ron Seeber joined other stakeholders in testifying in support of House Concurrent Resolution 5014. The resolution, brought forward by Attorney General Derek Schmidt, proposes a constitutional amendment to increase legislative oversight of agency regulations. If approved by two-thirds of the legislature, the proposed constitutional amendment would go before Kansas voters during the 2022 election. The bill was passed out of committee to the full House.
Business Liability Exemption for Work-Based Learning Programs
Your association joined other industry groups in supporting SB 91, a bill exempting businesses from certain liability claims from a secondary student engaged in a work-based learning program at the business or work site. The bill would allow school districts to purchase insurance contracts to insure against liability claims and increase school districts’ exposure to liability for students participating in work-based learning programs. Although the bill did not receive final passage this year, it will be primed for final action in 2022.
HB 2087, concerning the review of economic impact statements of proposed agency regulations by the state budget director. Your association successfully amended the bill in the Senate to require a $1 million review threshold. The bill remains below the line in the Senate.
HB 2272, this bill would require the escrow of certain property taxes paid under protest when the valuation was an increase from the previous year. The payment would be held in escrow until after adjudication of the final appeal of the valuation. The bill remains below the line in the House.
SB 279 concerning wind turbine set-back requirements. The bill remains in Senate Utilities Committee.
Sub for SB158 legalizing medical marijuana. The bill passed the House and has been sent to the Senate motion to concur on non-concur.