This Week in Topeka
February 7-11, 2022
Business, Economic Development & Local Government News from the Legislative Session
Bill introductions hit a fever pitch as deadlines for individual lawmaker and committee bill introductions occurred this week. This doesn’t completely stop the flow of bill introductions as there are still a few ways to bring a new idea for consideration. The next procedural deadline is “Turn Around Day” on February 24 when all bills need to be moved out of their house of origin. Consider it an unofficial half-way point of the process.
The ”turn around” deadline helps to separate ideas that have a legitimate chance of making it through the process from those that may not have much life left in them. Going into next week, committees will really start to move bills out of committee as attention turns to debating bills in the full House and Senate and sending them across the capitol for the second half of the journey toward becoming a law.
With the narrowest of margins, the Kansas House and Senate voted to override Governor Laura Kelly’s veto of SB 355, the bill that spells out the details of the new congressional map known as Ad Astra 2. Former U.S. Attorney General Eric Holder, who heads up the National Democratic Redistricting Committee has indicated intentions to file suit in state court on grounds the map dilutes representation of diverse populations within the state.
Late in the week Senate President Ty Masterson relieved three senators of their committee assignments. The action is widely regarded to be the result of challenges earlier in the week in securing their votes for the veto override. Among the changes made, Senator Mark Steffen and Senator Alicia Straub both lost their roles as committee vice chairs and Senator Dennis Pyle was removed from the Transportation and Utilities committees. This dynamic, on top of the usual twists and turns of politics, could play out in many different ways throughout the remainder of the session.
The Attracting Powerful Economic Expansion Act (APEX) bill was approved by the Senate on Wednesday after the House granted its approval on Tuesday. The legislation (House Sub for SB 347) was presented to Governor Kelly on Thursday who signed the bill later that afternoon. The State Finance Council met late in the day to give their consent to an offer being made to a prospective company that qualifies for the new incentives.
The Department of Commerce put the legislation forward because the state has lost out on 11 “mega projects” over the past few years. The proposal is intended to make Kansas competitive for future projects including one that has named Kansas as a finalist and anticipates making a decision very soon.
The House Taxation Committee heard testimony on HB 2186, a bill that would allow businesses operating in specific agricultural and manufacturing NAICS codes to elect single-factor apportionment over the current three-factor apportionment formula. Kansas is one of only a handful of states using the three-factor approach to calculate corporate income tax liability.
Under the three-factor approach, a corporation uses a formula that considers property, payroll, and sales in the state to calculate their tax liability. Under the single factor approach the calculation relies only on the sales figure.
The bill, as it is written, allows the corporation to choose its preferred option rather than mandating one version over the other.
The Senate Assessment and Taxation Committee held a hearing on a bill (HB 2316) eliminating the prohibition on imposing a surcharge on payments made by credit or debit card. The bill is a holdover from last session where the bill passed the House on a 90-34 vote. Kansas is one of the last remaining states to prohibit this action and the prohibition on imposing the surcharge has suffered numerous legal defeats across the country in recent years. The bill allows retailers the option to assess or not assess the surcharge.
During Wednesday’s review of the Department of Revenue’s budget by the Senate Assessment and Taxation Committee, fireworks were ignited when the Department was questioned about sending a tax bill to providers of internet streaming services like Netflix. The Department was charged with assessing taxes on these types of services without legislative authority. The dispute may ultimately come down to the legal distinction between streaming services and television subscription services. Although the legislature has considered - but not adopted - legislation to allow taxation of the former, the latter can be taxed, and that discrepancy is key in this disagreement.
During hearings on the prior legislation that would have allowed this tax, proponents argued the bill levels the playing field between suppliers of online video entertainment options and local brick-and-mortar stores who must collect taxes on their physical products. Opponents argued the taxation of these types of services was simply an additional tax burden levied on consumers.
The Senate Federal and State Affairs Committee heard testimony on three bills attempting to find options that would support more affordable housing. One of those bills, SB 369, would be applicable to areas in and around Johnson County.
The bill would provide a tax credit for certain entities engaging in developing low-income housing as defined in Section 42 of the federal internal revenue code. Current developers can take advantage of a federal credit and this bill would also allow them to qualify for state credits.
The 2021 Johnson County Community Housing Study found a significant need exists in Overland Park and surrounding communities for more affordable housing options. The other bills, SB 375 and SB 376, were discussed in the committee on Monday.
The House Judiciary Committee heard testimony on HB 2575, a bill that would allow for the automatic expungement of certain criminal records falling under circumstances specified in the bill.
The bill is aimed at helping those with relatively minor brushes with the law clear their records to help fill job vacancies that are plaguing businesses. Often the recognition of crimes on a person’s job application or housing application leads to them being disqualified for further consideration.
The bill contains safeguards to protect public safety and to ensure that businesses have adequate protection against hiring individuals with criminal pasts that are incompatible with the type of job they are seeking.
Proponents of the wind energy industry in Kansas pushed back hard against SB 353 this week during hearings in the Senate Utilities Committee. The issue is a clash of views over property owners’ rights to use their land as they wish versus protecting adjoining landowners’ property rights and safety.
Proponents of the bill argue that shadow flicker and other issues with large wind turbines pose a health and safety risk and that setback provisions in the bill help mitigate those concerns. Opponents believe the remedies called for in the bill go well beyond that scope and risk severely limiting if not shutting down the burgeoning industry in Kansas.
Other bills in the committee also seek to address concerns with alternative energy including SB 383 that deals with property values of landowners near wind and solar farms, and SB 478 that addresses light-mitigation on wind turbines operating in the state.
On an unrelated front, HB 2499 was the subject of a hearing in the House Taxation Committee this week. The bill would assist telecommunications providers in rolling out their communications networks throughout the state through a limited refund on the sales tax they pay on equipment used to expand their wireless, broadband and video services. Proponents argued that similar refunds in other states makes the cost of doing business in Kansas higher and make it more costly to expand and improve services to every corner of the state.
Bills were introduced this week in the House and Senate to provide for Medicaid expansion in the state. Neither bill is likely to advance but advocates continue to push to have Kansas join 39 other states (including Washington, D.C.) in providing Medicaid benefits to adults with incomes up to 138% of the federal poverty rate. In 2021 that amounted to an income of just $17,744 last year.
Related to the bill introduction, the Alliance for a Healthy Kansas, a pro-expansion advocacy coalition, released results of a new poll indicating 78% of Kansans support expansion. To see highlights from the poll, click here.
The budget process continues to ramp up as legislative sub-committees have begun to report out their work to their respective chamber’s budget committees. This work will continue as lawmakers grapple with the budget presented by Governor Kelly and the changes they wish to make to her proposals.
Other committees will continue their focus on bill hearings and deliberating on ideas they want to present to the full House and Senate bodies for further consideration.
We don’t often include a list of bills we’re monitoring but thought offering a glimpse of the ideas we’re tracking would be interesting. If you have interest in a particular piece of legislation or wonder why a particular bill is not included, let us know.
To review the list, click here.
Note: the report is current as of the time it was generated today so the status listed under the heading of “Last Action” may not be the most current.
Kevin Walker, IOM
Senior Vice President of Public Policy
(913) 766-7602 | (913) 526-6855