This Week in Topeka
February 15-19, 2021
Business, Economic Development & Local Government News from the Legislative Session
With the bill introduction deadline now behind us and “turn around” looming, legislative committees are focused on holding hearings and advancing critical legislation to their respective chambers for further consideration by the full House and Senate.
The House of Origin deadline or “turn around” as it is commonly called in the capitol, is a procedural deadline to keep legislation moving through the process. The March 5 deadline requires legislation be passed out of the house in which it was introduced to remain alive for further consideration this year. As with many legislative deadlines there are exceptions so it’s important to know that no idea is dead until the final gavel sounds.
The focus of next week’s activity will be in legislative committees as they work to amend and pass legislation out to their respective chambers for additional consideration before the following week’s deadline.
Unemployment – the problems with the state’s unemployment system continue to be the center of attention for the House and Senate Commerce committees. The House Commerce, Labor and Economic Development Committee wrapped up several weeks of testimony on HB 2196 and began considering possible amendments to the bill on Thursday. The Committee will do more work on the bill next week before passing it out of committee. The amendments address several concerns including the newly proposed rate tables, the role of the new Unemployment Compensation Modernization and Improvement Council and prescriptive language regarding IT requirements.
On Thursday the Senate Commerce Committee wrapped up hearings on SB 177, its version of the unemployment bill, and began discussions on possible changes it would like. It is expected the Senate will finalize its version of the bill next week after working with conferees to craft amendments for consideration.
Sports Wagering – There continues to be a lot of interest in allowing sports wagering in Kansas but major differences between the House (HB 2199) and the Senate (SB 84) may prove difficult to resolve. Major sticking points include the role that casinos and racetracks would play in any authorized sports betting. HB 2199 allows for sports wagering in more venues than the Senate version, but the House version calls for the state to keep more of the proceeds from wagers.
HB 2199 was the subject of a hearing in the House Federal and State Affairs Committee on Wednesday and Thursday. SB 84 was discussed in the Senate Committee on Federal and State Affairs on February 10 and 11. For a comparison prepared by the Revisor of Statutes, click here.
On Thursday Governor Kelly indicated she would no longer insist that authorization of online lottery sales be included in any sports wagering bill. This stance could improve chances for a sports wagering bill to advance.
Workforce - Employers have continually raised concerns over their struggle to find skilled workers to fill job vacancies. The Kansas Legislature is considering several proposals to help fill the void. Many of the proposals discussed in this section were introduced and discussed last year, but the quick adjournment of the 2020 Legislative Session due to COVID left little time for many bills to get full consideration.
The Kansas Promise Scholarship Act (HB 2287) is one such proposal. The bill would give Kansas high school students the opportunity to take advantage of a new scholarship program with the goal of supporting training and certification in high demand skilled and technical trades. A hearing on this bill was held on Wednesday in the House Commerce, Labor and Economic Development Committee. SB 43 is similar in concept and has been discussed by the Senate Education Committee.
HB 2219 is more specialized in its scope but provides another pathway to help Kansas employers find the workers they need. It has the added benefit of creating job opportunities for Kansans with developmental disabilities who often struggle to find employment. The bill provides businesses tax credits for employing Kansans with developmental disabilities.
Advocates for the developmental disability community testified that those with developmental disabilities are qualified and eager to hold jobs but face barriers to employment through lack of opportunity and low societal expectations. A hearing on the bill was held Tuesday in the House Commerce, Labor and Economic Development Committee.
HB 2351 clarifies liability for students enrolled in work-based learning programs and exempts businesses from certain claims arising from negligent acts of the student. These programs provide hands on learning opportunities for high school students at actual job sites and are intended to give students real world experience in various professions while still in high school. This bill will have a hearing Monday in the House Commerce, Labor and Economic Development Committee.
Substitute HB 2066 has been discussed in previous editions of this report. In short, the bill creates a process for expedited licensure for military service members, their spouses and non-military people moving to Kansas who hold valid professional credentials in other states. The bill contains safeguards to protect public health and safety and currently is on House General Orders awaiting consideration by the full body. SB 137 is the Senate version of the bill and is scheduled for a hearing Tuesday in the Senate Commerce Committee.
Single Factor Apportionment – HB 2186 gives taxpayers in specified agricultural and manufacturing NAICS codes the option to elect single factor apportionment when calculating their tax liability to the State of Kansas. The majority of states currently allow for single factor apportionment and advocates for the bill cite the importance of the Kansas tax code being competitive with neighboring states to promote economic development. The bill was the subject of a hearing in the House Taxation Committee Tuesday.
The current allowable system in Kansas, the three-factor apportionment method, uses ratios of in-state vs. out-of-state calculations on property, payroll, and sales figures to calculate tax liability. Single factor apportionment confines the tax liability calculations to sales figures only.
Economic Development – The Kansas Senate debated two important economic development bills on Thursday. SB 65 decouples the High-Performance Incentive Program (HPIP) from the Kansas Industrial Training Program (KIT) and the Kansas Industrial Retraining Program (KIR) to bring about more efficiency with each program. The bill passed the full Senate on a 38-0 vote Thursday evening.
SB 66 provides for a five-year extension to the Angel Investor Tax Credit that is currently available and enacts programmatic changes to make the program more competitive with other states. After vigorous debate on the bill and contentious discussion on an amendment that failed, the bill ultimately passed 26-12 on Thursday.
Property Tax Refunds – Concerns over government-imposed shutdowns due to COVID gave rise to SB 149 and HB 2142. These bills would require counties, under certain circumstances, to provide property tax refunds to businesses required to shut down or limit the capacity of their operations due to actions of the county.
The content of the two bills stems from a lawsuit filed by a Wichita gym owner who claims language in the Kansas Emergency Management Act entitles him to relief because actions of the state and Sedgwick County caused him to suffer a loss. Both parties agreed a legislative solution was preferable to continued legal action so an agreement between the plaintiff and Kansas Attorney General Derek Schmidt has put the lawsuit on hold to give the Kansas Legislature time to address the situation this session.
Opponents and proponents agree that changes are likely necessary if either bill is to advance. Points of contention include addressing if the bill should be retroactive or prospective, total fiscal impact to the counties and how to address exceptions if a business was forced to close to address health code violations. The fiscal impact to counties could be substantial – perhaps as much as $177 million in Johnson County by some estimates - so look for options, including carryforward provisions against future tax liability, to be considered.
Education – SB 173 extends the sunset on the state’s high-density at-risk student weighting from July 1, 2020 to July 1, 2023. Although the weighting expired last July, a proviso in the budget approved last year extended the program to save it from sunsetting. Several policy revisions are included in the bill as is a requirement that Legislative Post Audit review at-risk educational expenditures and issue an audit report no later than January 15, 2023. The bill was the subject of a hearing on Thursday in the Senate Education Committee.
Another bill dealing with the high-density at-risk student weighting, SB 144, would make the weighting adjustment permanent without the policy changes included in SB 173. This bill is scheduled for a hearing on Friday afternoon.
Memorial Highway Designations – Long-time champions of Johnson County - Senate President Bud Burke and Senator Dennis Wilson - are the subject of two bills to name local highways in recognition of their contributions to the growth and betterment of the region. SB 20 would name a portion of U.S. 69 Highway in Overland Park for Senator Wilson while SB 26 would name a portion of Kansas 7 Highway in Olathe for Senator Burke. Both bills were heard in the Senate Transportation Committee on Thursday. Costs to erect the allowed signage would not be borne by taxpayers.
HB 2391 – The bill would amend current law and allow required businesses to file certain reports on a biennial basis, utilize electronic signatures and allow for other changes to streamline required corporate filings. The bill was scheduled for a Friday afternoon hearing in the House Commerce, Labor and Economic Development Committee.
HB 2395 – Requires marketplace facilitators to collect and remit sales and compensating use taxes.
HB 2042 - Excludes hypothetical leased fee when determining fair market value for property taxation purposes.
SB 222 – Excludes hypothetical leased fee when determining fair market value for property taxation purposes.
SB 233 – Increases sales tax collection thresholds relating to time frames for filing returns and paying sales tax by certain retailers.
SB 263 – Eliminating the reduction of child day care services assistance tax credit in subsequent years and limitations on eligible corporations. Providing a credit for employer payments to organizations for child day care service access.