This Week in Topeka
April 5-9, 2021
Business, Economic Development & Local Government News from the Legislative Session
The main portion of the 2021 session ended last Friday evening when the House and Senate completed a flurry of votes on last-minute legislation setting the stage for first adjournment.
It was a busy week of conference committee meetings alternating with floor action to finalize legislation and send bills to Governor Kelly for her consideration. While a lot was accomplished, there are still some notable items left on the agenda - including funding for K-12 education - when they return in early May to put the finishing touches on the session during veto session.
Most of the legislation captured in this report has been covered extensively in previous editions so below you will find just a brief status update with the bill numbers as links to official legislative summaries where you can pore over the details of the legislation.
The Angel Investor, HPIP and STAR Bonds bills (SB 66, SB 65, and SB 124 respectively) passed with very strong “veto proof” votes in the House and Senate and were sent to Governor Kelly for her signature. It is expected she will sign all three bills enhancing these important economic development tools.
The bills enhance the programs, provide for greater accountability, and updates the economic development tools used to attract, retain and expand high-quality jobs in Kansas.
HB 2196 was perhaps the centerpiece of pro-business legislation this session. After months of negotiation the House and Senate adopted the conference committee report 122-0 and 38-0 respectively. This bill, now on its way to Governor Kelly, is critically important as it sets up a new IT infrastructure to replace the current antiquated system, updates rate tables that will provide parity and save Kansas business millions in unemployment premiums, give businesses a voice in how the overhauled system will work and infuses up to $500 million in federal relief money to compensate businesses for losses due to fraud.
HB 2066 streamlines the process by which holders of professional licenses and certifications can transfer their-out-of-state credentials to Kansas upon relocating to the Sunflower State.
Current law has a process for expedited licensure that only pertains to military personnel and their spouses. This bill opens the process to civilians using slightly different criteria.
Changes in the bill relating to military personnel allow Kansas to be scored more favorably as future discussion on base realignments and closures are considered. By expanding the streamlined process to civilians, it is hoped that it makes Kansas more attractive to employers and their employees holding occupational licenses. The House adopted the conference committee report 105-17 and the Senate voted favorably 35-4. The bill is now being considered by Governor Kelly.
Regarding future workforce needs, the Kansas Promise Scholarship Program, HB 2064, is a new program that would support high school graduates considering two-year associate degree programs or other programs leading to career and technical education certifications. The bill passed the House 118-4 and the Senate 35-0. The intent of the bill is to support students who are considering a career in the technical and skilled trades – areas that have high employment demand.
SB 50 became somewhat of a “catchall” tax bill this session as it contains numerous tax changes impacting marketplace facilitators, foreign-derived income, business expensing deductions, increases to the standard deduction, decoupling from federal tax code allowing Kansans to itemize their state return regardless of what they do at the federal level and a host of other tax changes.
As previously reported, the bill is not without controversy as some believe the changes are too costly and focuses too heavily on cuts for large, international corporations instead of individual taxpayers. The bill passed the Senate 30-10 where they can safely override a possible veto. The House would have a tougher time overriding a veto as they would need to flip three votes having given the bill an 81-43 approval. It is not known at this time what Governor Kelly will do with the bill so an override attempt may not be necessary.
Property taxes have also been under the microscope this session. In earlier editions we reported that Governor Kelly signed SB 13, the Truth in Taxation bill, eliminating the current property tax lid. The bill replaces it with a new mechanism that many expect will bring more transparency to the local property tax debate and tighter control of rising property taxes.
The legislature also approved Senate Substitute for HB 2104 dealing with appraisers and the Board of Tax Appeals. This bill more broadly addresses property taxes by changing standards and training for appraisers and BOTA members.
While much of the bill is specific to practitioners within the appraisal industry, the implications will impact how appraisals are conducted and how appraisal protests will be carried out. The bill passed the House and Senate 77-42 and 25-14 respectively.
For several years, the owner of a chain of health clubs has argued that not-for-profit and municipal gyms have an unfair advantage over privately-owned facilities. An initial attempt to deal with this failed earlier this year but in the closing days of the session a new angle was floated in the Senate Assessment and Taxation Committee.
The new idea, which has not been acted upon yet, would require cities, counties and the state to provide property tax rebates to for-profit businesses when it is determined that they are in direct competition with governmentally-owned facilities that charge a fee for their services. The bill does not apply to educational institutions and only applies in circumstances where the for-profit business existed before the governmental entity began offering the competing service.
Senators on the Tax Committee had questions about how the law would be applied, exclusions and the impact of the law so more work will be needed for this idea to advance.
Sales taxes have also been discussed this session. The idea of taxing marketplace facilitators to create a level playing field was addressed in SB 50 as we noted earlier. However, sales taxes were also addressed in SB 87, a bill that deals with apportionment of countywide retailers’ sales taxes and how those receipts can be apportioned back to municipalities within the county. Although the issue stems from a long-standing disagreement in Atchison County, lawmakers looked more broadly when crafting their solution.
In a nutshell, the bill would require that counties declare to voters if the revenue gained from a proposed countywide sales tax would be retained solely by the county or distributed per the current city/county sharing formula that is now used. This distinction would have to be included in the ballot language when voters cast their ballots on the tax increase proposal.
The bill was cued up for debate in the Senate, but ultimately was passed over while retaining its place on the general orders calendar so no vote has occurred to date. Cities and counties raised concerns with the legislation and argued that a broad-ranging change to resolve an isolated problem was an overreach.
HB 2201 modifies provisions of 2020’s Eisenhower Legacy Transportation Program or “IKE” as it has come to be known. First, it allows for more projects to be delivered using a time and money-saving process known as alternative delivery by lowering the minimum project cost threshold from the $100 million to $10 million. Secondly, under last year’s approved transportation bill, new IKE projects could not be executed until all projects under the previous T-Works program were started.
The bill provides for an exception to this restriction should federal money be appropriated to Kansas as part of any national transportation stimulus program. Transportation officials wanted to be sure that KDOT was positioned to capitalize on federal appropriations in case money was available before the T-Works restriction was satisfied.
The bill received strong support in the Senate with a 40-0 vote and in the House on a 95-27 vote.
It seems the fight over K-12 education has become an annual tradition and this year was no exception. SB 175 emerged as this year’s K-12 funding bill and having it referred to as “Frankenstein” bill by its detractors may be all you need to know. As usual, the battle lines, perhaps a bit too simplistically, seem to be drawn between accountability and funding.
Advocates for the bill are focused on seeing school funding tied to more accountability and progress toward higher student achievement with one solution being more options for students to leave underperforming schools. Opponents are concerned the options go too far and essentially create a voucher program that will undermine the public K-12 school system across the state.
The bill narrowly passed the House 64-59 but met its demise in the Senate on a 20-20 vote. The tie vote, which means it did not pass, occurred on Friday after it failed and was salvaged on a procedural move the night before.
The larger state budget does not contain K-12 funding so lawmakers will have to address this important issue during the upcoming veto session. It is important to note that approval for the 20-mill state property tax levy to fund schools is also included in this legislation.
On the higher education front, the University Engineering Initiative Act was granted reauthorization for another 10 years with strong votes in the House and Senate, 112-12 and 37-2 respectively, on HB 2101. The program has helped KU, KSU and WSU enhance their engineering programs and produce engineering graduates to satisfy high demand for engineers.
The reauthorization and funding come with a newly required report to the legislature showing how many of the engineering graduates are ultimately employed in Kansas and how the three universities intend to support the retention of the sought-after graduates.
Citing concern over the lack of understanding of our legislative process and low civic mindedness of younger Kansans, the legislature adopted HB 2039 which will require high school students to pass a civics test to graduate. Through the process the legislation was amended to also include a financial literacy program. Both ideas have been discussed off-and-on for several years. The bill, HB 2039 was approved by the Senate 25-13 and the House 72-51.
Critics of the legislation raised concerns that the bill steps on the authority of the State Board of Education and local boards and may also create scheduling problems for students wanting to take advanced coursework in core subjects such as math and science.
Other Business Issues
Several other issues impacting business in one way or another also surfaced this session. How these play out is not clear yet, but they warrant attention as they touch on a variety of political and fiscal themes.
Fairness in Women’s Sports Act – SB 55 would require that sports teams sponsored by public educational institutions be designated based on biological sex. Proponents have focused the issue on fairness to female athletes claiming that biological females could be disadvantaged if they had to compete against transgender women. Opponents argued the legislation is a solution in search of a problem and could likely be economically damaging to Kansas with threats that sports events and businesses may not locate here if such legislation was adopted. The bill passed the House and Senate 76-43 and 26-11 respectively.
Vaccinations – SB 213 would prohibit employers from taking adverse employment actions against employees based on their vaccination status. The business community stepped up and argued successfully that the legislation infringed on the rights of business to establish their own employment policies. The bill was amended into SB 212, another bill dealing with vaccines, but has not been acted upon yet.
Business Filings – HB 2391 gained unanimous approval in both chambers. The legislation updates filing requirements for various reports – including annual reports – that businesses must file with the Secretary of State and would allow for biannual filing to minimize administrative burdens for businesses and the Secretary of State’s office.
Voting – while not directly a business issue, recent events in other states have drawn the business community into discussions regarding voting laws and what some perceive as infringing on voting rights and broader access to voting. To proponents of the law, the new policies safeguard our ballots and elections. HB 2332 passed 27-11 in the Senate and 83-38 in the House. This bill restricts which addresses can be used to register to vote and places new restrictions on advance voting applications.
HB 2183 is seen by some as more onerous than HB 2332 and received slightly fewer votes although it was still approved 80-42 in the House and 27-11 in the Senate. This bill, aimed at the practice of “ballot harvesting,” would require signature validation for advance ballots received by the county election official; takes away the authority of the secretary of state to extend the deadline for receiving advance mail ballots; requires certain voters statistics to be published by the Secretary of State each month and places additional restrictions on who can assist with the marking and delivery of advance voting ballots.
Budget – The budget was approved by both chambers just prior to adjourning on Friday. The Senate passed the budget 21-14 with the House giving 71-52 approval. Late in April the Consensus Revenue Estimating Group will produce its twice-annual budget forecast and it is that forecast lawmakers will use when they consider tweaks to the just-approved budget when they return for veto session.
For a summary of HB 2007, click here.
For a more detailed comparison of the differences between the House and Senate version of the budgets, click here.
For a deeper dive into the state budget, including agency budgets, click here.
Kevin Walker, IOM
Senior Vice President of Public Policy
(913) 766-7602 | (913) 526-6855