Weekly Legislative Report
March 29-31, 2021
It has been a quick few day in the Kansas Legislature. The House worked on Monday and Tuesday, passing 23 bills from their chamber. The Senate worked an extra day on Wednesday, passing 38 bills. Despite the short week, the Legislature acted on several key issues that have dominated much of this year’s discussions. This clears the path for next week’s final budget negotiations prior to First Adjournment and any potential veto overrides that typically close out the legislative session in May during the Veto Session.
Lawmakers are enjoying an extended Easter weekend break and will return to Topeka on Tuesday, April 6. Conference committees are scheduled to meet next week until first adjournment on Friday, April 9.
Both the House and Senate passed along party lines resolutions this week, sending a message to Governor Kelly the Legislature is strongly opposed to and will reject any new statewide mask mandate. House Concurrent Resolution 6015 passed 84-39, and a similar resolution passed the Senate 29-11.
According to Senate Bill 40 that she signed into law last week, all of the Governor’s current emergency executive orders expired yesterday; and any new orders are now subject to legislative approval. The Governor announced today that she is issuing a new statewide mask mandate, along with 11 other executive orders to remain in effect until the current emergency declaration ends on May 28. The Legislative Coordinating Council met Thursday afternoon and with a 5-2 vote revoked the statewide mask mandate but kept all other newly issued executive orders in place. Mask mandates will now fall under the control of local county commissioners.
Federal Tax Decoupling
The Legislature passed Senate Bill 50 and sent it to Governor Kelly’s desk this week. SB 50 is essentially the tax bill vetoed by the Governor in both 2019 and 2020. It decouples Kansas from several provisions in the federal Tax Cuts and Jobs Act of 2017, most notably prohibiting the state from taxing certain foreign income made by multinational corporations headquartered in Kansas. The bill also increases the standard deduction for all Kansas income taxpayers and allows itemization on state returns regardless federal filing status.
The difference in SB 50 and previous versions sent to the Governor is a requirement for internet marketplace facilitators to collect and remit sales and transient guest taxes when annual sales exceed $100,000. This particular provision is supported by Governor Kelly and lowers the fiscal note on the bill to under $300 million over three years.
The Senate passed the bill this week with a veto-proof majority, 30-10. The House, however, passed it by a vote of 81-43. If indeed the Legislature faces a veto override on SB 50, the House would need to flip three votes to get to a two-thirds majority.
This week the House worked its budget bill on the floor, and Senate Ways and Means worked a bill that will bring in millions to Kansas state government.
On the last day schedule for regular floor action, the House debated their base budget bill and their school finance budget. While much of the debate was held to smaller budget issues, an effort to expand Medicaid was defeated by a vote of 46-78. Another amendment came as a surprise for an across the board 2% cut to the State General Fund money in the budget. The amendment was offered by Democrat Henry Helgerson, Wichita, and got little debate before passing on a voice vote. This gives the House a budget negotiating position much bigger than was previously thought over the Senate when negotiations begin next week.
The school budget bill, Sub for House Bill 2119, narrowly passed Tuesday after a 2-hour floor debate by a vote of 65 to 58. The bill reauthorizes the statewide 20-mill property tax for support of public schools. It also outlines the State Board of Education’s role in distributing federal COVID funding for schools and includes a $500 bonus for teachers from the federal COVID-19 grants to education. A more controversial provision moves the per-pupil dollar amount given to public schools into an education savings account for students to use toward private school tuition. It also limits funding for remote-learning options and expands school-choice options including up to $8,000 in tax credits per student/per year applied in private education circumstances.
Senate Ways and Means worked their bill dealing with the opioid epidemic settlement with the pharmaceutical companies. The Attorney General testified in support of the bill after his office handled the multi-state settlement for Kansas in the courts. Kansas is expecting the settlement to be $4.8 million. The AG wants a Board appointed to oversee the disbursement of the funds to addiction and prevention measures at the state and local level. The split between the state and locals has been a contentious point but will likely be 75% to the state and 25% to local units. The House has their own version of this bill, but it was worked in their Judiciary committee, not their Appropriations committee.
More budget items have been put off till the end of April for what is known as the Omnibus portion of the budget process. There is still plenty of work to be done.
Property Tax Reform
HB 2104 makes the following reforms to appraiser and Board of Tax Appeals (BOTA) state policy:
· Requires all county appraiser continuing education credits to be approved by the Kansas real estate appraisal board.
· Gives authority to the Kansas Department of Revenue’s Property Valuation Division to remove appraisers from their approved list if previously terminated in another county.
· Requires all appraisals follow the uniform standards of processional appraisal practice (USPAP).
· Places the burden of proof on the county appraiser in certain valuation and classification appeal hearings before the district court.
· Allows the governor to appoint former BOTA members in good standing to temporarily fill vacancies and relieve the backlog of cases.
· Prohibits BOTA from increasing the appraised valuation of a property higher than the original amount during an appeal.
· Changes the law from “14 days of receiving the board’s decision” to “14 days after service of the board’s decision” to eliminate ambiguity on the deadline to request a full opinion from BOTA.
· Allows for electronic notice between BOTA and the taxpayer if consent is granted.
After making a few amendments, the Senate unanimously approved Senate Substitute for House Bill 2196 this week. The bill modernizes and reforms an outdated Unemployment Insurance (UI) system in response to widespread identity theft and millions of dollars paid in fraudulent claims made during the pandemic.
The Senate’s changes include giving authorization to the Legislative Coordinating Council to set and extend the deadline for the UI system modification project; clarifying that victims of identity theft are not liable for fraudulent claims; allocating two $250 million payments into the UI Trust Fund from federal relief dollars; and creating a new felony offense for individuals living in other states or countries who commit UI fraud.
It is expected the House will nonconcur on the Senate amendments and will be sent to a conference committee which is expected to begin to meet next week.
Economic Development Incentives
The following economic development tax incentive bills received their final approval by the Legislature this week wrapping up legislative work on economic development bills and are all now headed to the Governor’s desk for her consideration:
Senate Bill 66 extends the Angel Investor program for five years and increases the tax credit received from investments made in small, start-up companies in Kansas. Mostly in the biosciences industry, these companies would also no longer be required to stay in Kansas for 10 years after they receive the investment.
Senate Bill 65 repeals the requirement that businesses participate in either the Kansas Industrial Training (KIT) or Kansas Industrial Retraining (KIR) programs to be eligible for the High-Performance Incentive Program (HPIP) tax credit. It would also allow a company to transfer up to 50% of their HPIP tax credits to another company or individual each year.
Senate Bill 90 amends the Kansas rural housing incentive district act to permit bond funding for vertical residential renovation of older buildings in central business districts.
Senate Bill 124 extends the expiring Sales Tax as Revenue (STAR) bonds program until 2026. The proposal also makes rural development projects eligible, increases the capital investment threshold from $50 million to $75 million, and adds more transparency reporting and visitor tracking of projects.
The House rejected a proposal to legalize sports betting in Kansas this week. House Substitute for Substitute for SB 84 would have allowed wagering at the four state-owned casinos, the Kansas Speedway, and 1,200 lottery retailers across the state. It authorized the Kansas Lottery to operate sports wagering through an online application and taxed those bets by 20%.
Probably the main provision that tanked the bill was re-authorizing a Sedgwick County ballot question relating to the operation of slot machines at the now-closed Greyhound racetrack. The Attorney General advised the state that allowing the revote would violate Kansas’ non-compete clause on expanded gaming with the casinos. Many legislators were not willing to risk potential lawsuits and having to pay back millions of dollars on privilege fees and interest.
The Senate has a much narrower sports wagering proposal that is still in play and could be reconsidered later this session.
Short-term Health Plans
The Senate passed Senate Bill 199 by a vote of 27-6 this week, a bill that provides for short-term, limited-duration health plans in Kansas. The bill would specify the plans should cover a policy period of less than 12 months with renewal or extension periods up to a maximum policy period of 36 months. The bill would also require insurance companies to disclose information to consumers on preexisting conditions and minimum essential coverage. It now heads to the House for their consideration, but since it has passed one body could be inserted into a conference committee report.
On Wednesday, the House Federal and State Affairs Committee after significant debate and several amendments passed out the Kansas Medical Marijuana Regulation Act ultimately by a vote of 13 to 8. The House bill was inserted into Senate Bill 158 to speed up consideration by both chambers.
While amending, the Committee approved measures to expand the list of medical conditions that can be treated under the act. Language also requires tamper-proof Kansas specific packaging while providing guidance on “open container” for marijuana products in a vehicle. Vice-Chair of the Committee, Rep. Tory Arnberger, Great Bend-R, called the question, forcing a deadlock vote of 11-11 forcing the chair to break the tie. Expect proponents to push for House Leadership to go on general orders and take the measure up next week. If they do expect several more amendments to be offered.
As part of a conversation left over from the national November general elections several voting reform bills have been introduced this session.
Senate Substitute for House Bill 2183, contains four different Senate election bills. Provisions include making it unlawful to knowingly alter or backdate postmarks on mail ballots. The bill also expands the definition of “electioneering” as well as removes authority of the Secretary of State to extend advance mail ballots deadline. Violations of the legislation would be a level 9 nonperson felony. After some heated debate on Wednesday, the Senate passed the measure by a vote of 28-12 after several amendments offered by Democrats were rejected.
Also, last Friday the Senate Federal and State Affairs Committee approved Senate Bill 307 that amends the timeframe to return advance ballots to county election offices. Existing law requires ballots be postmarked on or before Election Day count ballots received by Friday of election week. SB 307 proposes to strike the three-day window and require all ballots be received by Election Day. Testimony was given that if this were in place last November, more than 32,000 ballots postmarked would not have been. However, on Tuesday, the committee voted to reconsider their vote on Senate Bill 307 and the bill remains in the committee.
Tourism Moves to Commerce
Governor Kelly announced on Monday that the Kansas Tourism Division will officially be part of the Kansas Department of Commerce, in accordance with the Executive Reorganization Order (ERO) she submitted to the legislature on January 25. The 60-day calendar period has expired without action by either the House or Senate, therefore the reorganization will automatically occur starting July 1.
DOL Secretary Appointment
The Senate voted yesterday to unanimously confirm the appointment of Amber Shultz as the Kansas Secretary of Labor. Shultz will oversee the state Unemployment Insurance, Workers Compensation, Labor Market Information Services, Labor Relations, Legal Services and Industrial Safety and Health divisions.
Since Secretary Shultz began her tenure as Acting Secretary, she has been able to lead the agency through several major initiatives, mainly the recent deployment of a new fraud mitigation software solution that has blocked millions of fraudulent login attempts.