This Week in Topeka
January 24-28, 2022
Business, Economic Development & Local Government News from the Legislative Session
Activity in the capitol picked up this week including action on a congressional redistricting map and a new economic development incentive aimed at helping Kansas compete for large “mega” projects. The 2022 Legislature seems to be hitting its stride and we can expect a full slate of committee work in the week ahead.
The House and Senate have both acted on a congressional redistricting map known as Ad Astra 2. The bill enacting this map is SB 355 and it was sent to the Governor’s desk for action after first receiving a 26-9 vote in the Senate and later a 79-37 vote in the House. The Governor has not commented on the bill, but many expect her to veto the map.
The map does keep Johnson County whole – a goal that many in this area wanted to see. However, the map divides Wyandotte County into two congressional districts and moves the City of Lawrence into the 1st Congressional District. Opponents of this map have argued that the boundaries divide communities of interest and weaken minority representation.
Should the Governor veto the bill, the Legislature will have a chance to override her veto but both vote counts fell short of the needed number to override a veto so it’s anyone’s guess what will happen. To view the Ad Astra 2 map sent to the Governor or any of the other proposed maps, click here.
While the drama on the congressional map plays out, the House and Senate redistricting committees will turn their attention to the State House and State Senate boundaries that also must be redrawn. Because of population shifts in the state, it is expected Johnson County will pick up 3-4 House seats and 1-2 Senate seats. Like the congressional map, these state maps will create the legislative boundaries that will serve Kansas for the next 10 years.
The Kansas Department of Commerce revealed Kansas is a finalist for a large “mega” project that could transform how Kansas is viewed. While few details of the project can be revealed due to the typical non-disclosure agreements that come with economic development projects, it has been noted the project will produce more than 4,000 permanent jobs paying above-average wages. Additionally, the project will include a 3-million-square-foot manufacturing facility and more than $4 billion in capital investment in our state.
To close the deal, the Legislature is being asked to quickly consider SB 347, a bill creating a new economic development tool to help Kansas compete for these types of transformative projects. While nothing is guaranteed, it is believed the legislation – commonly called APEX because the proposal is called the Attracting Powerful Economic Expansion Act – will give Kansas a distinct edge.
Economic development professionals across the state are supporting the legislation because projects like this one can truly transform the economy. Detractors have raised concerns about the speed this proposal is moving and magnitude of the incentive proposal.
Lawmakers added a provision to the bill that provides a 0.5% reduction in the corporate income tax if a mega project lands in Kansas and they avail themselves of incentives offered in the APEX legislation.
The Senate approved the legislation 32-7 after making modifications to the bill on Thursday afternoon. The bill will be the focus of a hearing on Monday in the House Commerce, Labor and Economic Development Committee.
The Senate and House Commerce Committees heard reports this week from several players in the unemployment and labor arena. Phillip Hayes who serves as Chairman of the Kansas Employment Security Board of Review and is an employer representative to the Kansas Unemployment Compensation Modernization & Improvement Council, presented an overview of employment data. His presentation provided a comprehensive look at the challenges and outcomes related to the labor market because of the pandemic.
Most notably, Mr. Hayes told lawmakers there are early signs of fraud activity increasing again. Last year the Kansas Department of Labor instituted new identity verification procedures after it came to light how many fraud attempts were being waged against the system and against workers throughout the state. Mr. Hayes noted this rise in suspected fraud is not unique to Kansas and he cautioned that employers should be aware of this uptick in activity.
Following the report of Mr. Hays, Kansas Secretary of Labor Amber Schultz and her team provided lawmakers with an overview of the state’s labor department, the programs it administers and an update on the modernization project they are undertaking because of last session’s bill to overhaul the state’s UI system.
Both presentations are lengthy and contain detailed data for consideration.
To review the KDOL presentation, click here.
To review Phil Hayes' presentation, click here.
A new wrinkle emerged in the long-standing effort to expand Medicaid in Kansas. A hearing was held Wednesday on HB 2463, a piece of legislation that would prohibit any state agency from making “substantive or material” changes to the state’s current Medicaid program.
Proponents of the bill believe it is important to allow the next governor and his or her administration to evaluate the program and not be tied to contract terms agreed to by the current administration. Opponents raised concerns with language in the bill they believe is vague and could lead to unintended consequences.
The Kansas Supreme Court announced this week it will take up a Johnson County appeal of a suit between the county and Walmart and Sam’s Club. The lawsuit seeks to resolve how so-called “big box retailers” are appraised. The retailers believe their property should be appraised as if it was sitting vacant – or dark. Conversely, counties engaged in this battle believe the properties should be appraised based on how the property is used and the business that occurs on the property. There is no announced timeline for the case to heard or when to expect a ruling.
The issue is not unique to Kansas or Johnson County and the outcome of the case will have implications throughout the state. There are several similar cases pending and collectively they have tens of millions of tax dollars at stake just in Johnson County.
Food Sales Tax
Two bills, HB 2484 and HB 2487, were the subject of a hearing in the House Taxation Committee on Tuesday. Both bills propose to reduce the state portion of the sales tax on food to zero but still allow local units of government to continue local taxes on food if they wish.
From a practical standpoint, the bills are similar although the details of what is and is not taxed does differ. Both bills include bottled water, candy, prepared foods and soft drinks and they both continue the state sales tax on tobacco and alcohol. Key differences include how food sold at restaurants and farmers’ markets are treated for taxation purposes.
It is important to note that a little more than 16% of the sales tax collected from the sale of food is allocated to the state highway fund. Lawmakers will have to consider this impact and decide how they want to deal with that reduction should they adopt one of these proposals.
Because the proposals have different effective dates, the fiscal note varies but as proposed HB 2484 has a fiscal note of $319 million for FY 23 whereas HB 2487 has a fiscal note of nearly $443 million for FY 23.
Kevin Walker, IOM
Senior Vice President of Public Policy
(913) 766-7602 | (913) 526-6855