Weekly Legislative Report
March 1-5, 2021
The Kansas Legislature adjourned for Turnaround break on Thursday and will return to Topeka on Wednesday, March 10. Both chambers completed their work for the first half of the session – the Senate on Wednesday and House on Thursday. Few committees met, leaving most of the week for debating and passing legislation on the floor. Any non-exempt bills that did not pass the first house by yesterday cannot be acted upon this session. Bills advancing to the opposite chamber or having touched an exempt committee (Senate Ways & Means, Federal and State Affairs, or Assessment & Taxation and House Appropriations, Federal and State and Taxation) remain alive for the second-half of the session.
On Wednesday, the Senate Minority Leader Dinah Sykyes (D-Lenexa) offered an amendment to expand Medicaid on a bill dealing with behavioral health. After a healthy debate, the amendment failed by a vote of 12-23, which was one of the strongest anti-expansion votes to date.
When they return next week, lawmakers only have one month to finish all business for the year. First adjournment is scheduled for April 10, followed by a three-week spring break before the Veto Session begins on May 3.
Emergency Utility Loans
The Legislature responded urgently this week to desperate pleas from municipal-owned utilities for state relief from extraordinary electric or natural gas costs incurred during the extreme winter weather in February.
Governor Kelly signed into law on Thursday House Substitute for Senate Bill 88 that creates the City Utility Low-Interest Loan Program, which will provide $100 million in 10-year loans to cities expecting to see their bills spike to up to 20 times higher than usual. These loans will allow smaller communities to spread out their cost instead of hitting customers with outrageous increases all at once.
While both measures ultimately limit and oversee the governor’s powers in declaring and managing a statewide emergency, the Senate’s plan is more comprehensive. SB 273 includes specific provisions around essential/non-essential businesses, school closings, religious gatherings, and duties of the secretary of health and environment that the House’s plan does not.
A conference committee of Senate and House Judiciary Committee leaders met on Thursday to begin negotiations on the differences in the bills. Their work will continue next week. The current emergency declaration law passed earlier this year expires on March 31.
COVID-19 Liability Protections
Lawmakers passed two bills this week that deal with liability protections during the COVID-19 pandemic. Senate Bill 283 would extend the expiration date by one year to March 31, 2022 for immunity for businesses and healthcare providers that the Legislature approved last year.
A more controversial bill that received 37 “Nay” votes in the House is House Bill 2126. It provides new immunity from civil liability for COVID-19 claims for nursing homes and community mental health centers as long as they are found in substantial compliance with public health directives. Adult long term care homes were left out of last year’s liability protection bill and are blamed for nearly half of all COVID-19 deaths in Kansas.
The House passed their unemployment insurance (UI) reform bill this week by a vote of 87-36. Substitute for House Bill 2196 is in response to the fraudulent claim crisis and makes comprehensive changes to the state’s management of the UI system. During House floor debate, several amendments were adopted, including reducing period for disqualification of benefits due to fraud from five years to two years and barring claimant benefits for a second fraud offense.
The bill passed on final action by a vote of 87-36 with most democrats voting against the measure. The democrats voiced concerns about the trust fund repayment mechanism for fraudulent payments as well as a provision to redefine “full employment in Kansas” from 4.5% to a 5 % unemployment rate.
The Senate bill, Senate Bill 177, was “blessed” this week from legislative deadlines. It is expected the Senate Commerce Committee will work HB 2196 the week of March 15th.
Still in play is who will be responsible for replenishing the depleted UI trust fund from fraudulent claims made since last March. Lawmakers are hoping for assistance from federal funds rather than placing the burden on employers or the state general fund.
The House passed a bill this week that was vetoed by Governor Kelly. Senate Bill 13 requires cities and counties to send out public notices and hold hearings when their budgets increase from the “revenue neutral rate” due to higher property valuations. It also repeals the current property tax lid passed in 2017.
Before passing with 120 votes, the House amended the Senate’s proposal by removing all exemptions that were placed in the bill and providing $2 million of state funds to reimburse counties for the cost of mailing the notices.
SB 13 passed the Senate in February and now heads to a tax conference committee. There is some speculation the Governor could veto the measure, but with veto proof vote margins in both chambers it is probably unlikely.
Tax Incentive Programs
Not without debate, the Legislature passed three bills this week that deal with tax incentive programs offered by the Kansas Department of Commerce. The most controversial was Senate Bill 124, extends and makes changes to the Sales Tax as Revenue (STAR) bonds program, that is set to expire this year. STAR bonds have been used on a number of projects across the state, most successfully on the Legends/Speedway park in Wyandotte County. During Senate floor debate several amendments were offered to further restrict the program, however, only one amendment offered by Molly Baumgardner, (Louisburg-R), was adopted. The amendment prohibits any legislator from benefitting from a STAR bonds project either directly or indirectly. The Senate passed the bill 24-11.
The Senate also passed SB 97, which provides for the transferability of high performance incentive program (HPIP) fund tax credits by a vote of 34-5.
The House also passed House Bill 2045 that renews and expands the Angel Investor Tax Credit, House Bill 2097 that removes the training requirement for High Performance Incentive Program eligibility and House Bill 2315 that provides a tax credits for contributions to technical colleges.
A growing number of conservative legislators are speaking out against STAR bonds and other tax credits intended to incentivize business growth, claiming that the state is not seeing its return on investment as expected.
The House passed Substitute for House Bill 2066 this week which expands the military spouse and service member’s expedited licensure law to all occupational license applicants who have established or intend to establish residency in Kansas. The bill also shortens the time required to issue credentials to those seeking licensing reciprocity in Kansas.
During House floor debate, amendments to HB 2066 were offered to address some professional organizations and regulatory boards concerns, however, other professional boards will continue to seek amendments in the Senate. The House amendments removed provisions dealing with telemedicine by out-of-state physicians, tighten language around scope of practice, and gave state boards some discretion on whether or not an applicant meets Kansas standards.
Kansas took a major step this week toward becoming the 21st state to legalize sports wagering. The Senate passed Substitute for Senate Bill 84 by a vote of 26-12. The bill would allow the Kansas Lottery to contract with the four state-owned casinos to manage both in-person and online sports betting.
A competing proposal still remains alive in the House Federal and State Affairs Committee that expands sports wagering to 1,200 retailers and dog and horse track racing facilities. The House’s proposal also has a much higher tax rate that would be collected by the state.
Tax Bills Pass House
Several tax bills passed the Kansas House yesterday. Senate Bill 47 enacts the Kansas taxpayer protection act and requires the signature and tax identification number of a preparer on income tax returns. House Bill 2239 extends the Kansas corporate income tax net operating loss carryforward and House Bill 2106 extends the dates when corporate tax returns are required to be filed. Finally, House Bill 2105 establishes tax withholding requirements when employees work in multiple states.
State Budget Recap
The budget process has reached the half-way point in the session. Both chambers have made their initial decisions on agency budgets. Next week will begin the process of strategizing on how to build a budget both chambers can agree to send to the Governor.
There are differences between the two chambers, especially in high dollar budgets. Budgets for the Department of Children and Families and the Department for Aging and Disabilities have enough differences that there will be major negotiations between the House and Senate. There are also differences for the Department of Health and Environment, the Department of Corrections, and Education.
The budget debates boils down to how to spend state general fund or SGF dollars. How the state spends most federal dollars are predetermined, however there is some debate on how federal COVID relief dollars should be spent.
The Senate Ways and Means committee will meet next week to review a broad range of budget issues while the House Appropriations committee will look at budgets for the state’s universities and special revenue funds such as the Economic Development Initiative Fund.
Lawmakers will return on Wednesday, March 10th to complete their second half of the session. With many lawmakers receiving their second round of the vaccine, we expect the Statehouse to be more open and traditional socializing to begin to pick up.