This Week in Topeka
March 29-31, 2021
Business, Economic Development & Local Government News from the Legislative Session
It was a short week in Topeka as lawmakers in the House wrapped up its work on Tuesday followed by the Senate on Wednesday. The week was dedicated to floor action in both chambers where they decided if legislation was ready for Governor Kelly’s desk or in need of more work in conference committee. Conference committees will continue to meet into next week to reconcile differences in advance of next week’s first adjournment.
To see the bills assigned to conference committees and the designated conferees from each chamber, click here.
Angel Investor Tax Credit – On Monday, the Senate concurred with House amendments to SB 66, the Angel Investor Tax Credit. The bill, having received strong support in both chambers, is on its way to Governor Kelly for her signature. The bill extends the sunset provision through tax year 2026, expands limits on investment caps and modifies clawback guidelines. The House amended the bill to include an increase in the home renovation tax credit for making accessibility modifications to a disabled family member’s home.
High Performance Incentive Fund (HPIP) – On Monday, the Senate gave approval to SB 65 when it concurred with House amendments made earlier in the session. SB 65 originally decoupled the HPIP program from the KIT and KIR programs – a change sought by economic development professionals across the state. The House added provisions of SB 91 during its deliberations on the legislation. SB 91 allows for the transferability of earned HPIP tax credits. The combined legislation is now on its way to Governor Kelly for her signature after receiving strong bipartisan support in both chambers.
STAR Bonds – SB 124 extends the sunset date on the STAR Bonds program to 2026 and makes other modifications to make the program more robust while increasing transparency and accountability. On Tuesday, the House gave 101-23 approval to the bill. The Senate took action Wednesday and voted 30-9 to concur with the House changes, sending the bill to Governor Kelly for her signature.
Marketplace Facilitators – SB 50 was approved by the House on Tuesday after several failed attempts to amend the bill beyond the changes previously approved by the House Taxation Committee. The bill comes in with a roughly $300 million price tag over three years and addresses several tax policies that have been discussed as part of other bills, including HB 2421. Among the included issues are:
- Assessing sales tax on marketplace facilitators who have more than $100,000 in annual gross receipts from Kansas sources.
- Clarifying that victims of identity theft would not owe Kansas income tax on unemployment benefits fraudulently obtained by another individual.
- Allowing individual income taxpayers to itemize their state tax return even if they select the standard deduction at the federal level.
- Increasing the standard deduction, beginning in tax year 2021, to $3,500 for single filers, $6000 for single head of household filers and $8000 for married filers. This represents a $500 increase in each category.
- Allowing for subtraction modification of global intangible low tax income (GILTI) beginning in tax year 2021.
- Allowing for subtraction modification of FDIC premiums paid.
- Allowing for deductibility of certain business meal expenses.
- Allowing for an expensing deduction for the costs of placing certain tangible property and computer software into service beginning in tax year 2021.
- Allow for net operating losses to be carried forward indefinitely rather than just the currently allowed ten years.
- Extension of the corporate tax return filing deadline to coincide with federal changes.
For several sessions lawmakers have wrestled with similar tax packages seeking to find the magic mix of tax changes that didn’t jeopardize the state’s budget. Governor Kelly has already vetoed similar legislation citing budgetary impact, but has not weighed in on SB 50 yet.
Business Immunity - SB 283, which was approved by the House 96-28, extends the COVID-19 Response and Reopening for Business Liability Protection Act to March 31, 2022. In addition to the claim immunity for businesses, the bill also extends other policies enacted to support telemedicine and temporary licensure for professions governed by the Board of Healing Arts during the COVID-19 pandemic. The House made modifications to the scope and duration of immunity provisions within the bill and the Senate concurred with the changes on Wednesday 30-10.
Budget – the House approved its version of the state’s budget for FY 2021-FY 2024. For a detailed summary of the budget, click here.
The Senate version of the budget, SB 267, was approved by the Senate earlier this month, 24-13. For read the Senate’s budget brief, click here. Note: The budget summaries do not reflect the budgetary impact of amendments added during floor debate.
A side-by-side comparison of the two budgets will be prepared prior to the two chambers meeting to reconcile their differences. We will provide a link to that comparison once it is released.
Sports Gaming – After debating several amendments to the underlying bill, the House rejected a motion to approve SB 84 on a voice vote. The issue already faced a tough road to adoption as the Senate and House have significantly different views on where Kansans can place bets and how much authorized betting locations could profit from the bets placed at their facilities. With the legislature approaching first adjournment, it is difficult to predict if there is any chance of bridging the chasm and putting a bill on Governor Kelly’s desk this year.
Unemployment Overhaul – HB 2196 was given 40-0 approval by the Senate on Wednesday after discussing and voting on several amendments the day prior. One unsuccessful amendment would have permanently extended unemployment benefits to 26 weeks rather than tying the benefit period to the unemployment rate as has been recent practice.
Additional amendments addressed how much – and how quickly – federal relief money would be placed into a trust fund to compensate for fraud as well as the penalties that will be imposed on those guilty of fraud. Current plans call for allocating at least $450 million of federal relief funds to the unemployment trust fund to compensate for money lost due to fraud. However, there are strict requirements on how the money can be used once it goes into the fund as well as concerns with the timing of federal relief money flowing into Kansas.
The bill will head to conference committee to iron out these differences. The bill is a major piece of legislation for the session that will overhaul the unemployment system, modify rate tables, and make other changes that will save Kansas employers millions of dollars each year.
University Engineering Initiative Act (UEIA) – HB 2101 extends and expands the UEIA, a program that enhances the engineering programs at KU, KSU and WSU and sets graduation goals for engineering students at those universities. The bill received broad support from the engineering and business community. The House previously approved the bill 112-12 with the Senate giving its 37-2 approval on Wednesday.
Business Filings – The Senate gave 40-0 approval to HB 2391 on Tuesday. The bill, which previously passed the House 121-3, makes several beneficial changes to required business filings with the Secretary of State including annual reports and music licenses.
Transportation – HB 2201, which received 40-0 approval on Wednesday, would authorize the use of federal stimulus money for Eisenhower Legacy Transportation Program (“Ike”) projects in Kansas regardless of the status of remaining T-Works projects. Current law restricts work on new “Ike” projects until older T-Works projects have been started.
It is believed a federal infrastructure relief package is forthcoming and the bill positions Kansas to advance newer transportation projects through the development pipeline in response to the anticipated federal funding.
The bill also reduces the minimum project cost for using alternative delivery from $100 million to $10 million. The House previously approved this legislation 118-6.
Immunizations/Business Rights – Last week we reported on the merging of SB 213 and SB 212. The language in SB 213 specifically thwarts the rights of businesses to establish their own internal policies regarding vaccinations for their employees. This week, a coalition of health care organizations and representatives from the business community – including the Overland Park Chamber – joined to oppose the combined bill. To read the letter, click here. As of this writing, the bill is not scheduled for debate in the Senate.
Executive Orders – The Kansas Emergency Management Act (KEMA) was updated with the passage of SB 40 containing numerous provisions giving the legislature more oversight with emergency declarations and executive orders. One such change gives the legislature the power to revoke executive orders issued by the governor.
Another provision in SB 40 set all COVID-related executive orders to expire on March 31,, 2021. This meant that on April 1, 2021, Governor Kelly had to reissue orders she felt were important as Kansas continues to deal with the fallout from the COVID pandemic. Based on the changes to KEMA, Governor Kelly reissued 12 executive orders – including Executive Order 21-14 requiring masks in public places.
The Legislative Coordinating Council, operating in place of the currently-adjourned legislature, exercised its newly granted authority and revoked the Governor’s new mask order shortly after it was issued on Thursday with a 5-2 party-line vote.
This means there is no mask order in place throughout the state unless counties choose to act on their own, as is currently the case with Johnson County. The executive order has no impact on mask requirements put in place by private entities.
Other executive orders reissued on Thursday by Governor Kelly include:
- 21-09 extending professional and occupational licenses
- 21-10 temporarily allowing notaries and witnesses to act via audio-video communication technology
- 21-11 temporarily suspending certain rules relating to the sale of alcoholic beverages
- 21-13 temporarily prohibiting certain foreclosures and evictions
- 21-16 dealing with drivers’ licenses and identification cards
- 21-17 waiving the normal one week waiting period for unemployment benefits to begin for claimants
- 21-18 providing temporary provisions for employer payment of income tax withholding for work performed in another state
To see the details of these new executive orders and the others not mentioned in this section, click here. Other than the executive order dealing with masks, the LCC chose to let all the other reissued orders remain in place.
Kevin Walker, IOM
Senior Vice President of Public Policy
(913) 766-7602 | (913) 526-6855