This Week in Topeka
March 7-11, 2022
Business, Economic Development & Local Government News from the Legislative Session
Just as things were humming along in Topeka, Mother Nature decided to cut things short with another Thursday snowstorm. While the incoming snow didn’t put everything on hold, it did cause quite a few hearings to be pushed into the next week.
At this time of the year, time can be at a premium as lawmakers work their way toward finalizing committee work and moving toward first adjournment. The schedule changes should make for a busy week of committee hearings next week as lawmakers push to get bills heard while there is still time.
On Thursday, the long-awaited State Senate district maps were posted for public view. Look for hearings to be scheduled quickly. To view the Senate Republican map, Liberty 2, click here.
It is expected that Johnson County’s population growth will allow the county to pick up 3-4 House seats and an additional Senate seat. House maps are anticipated to be posted as soon as the coming week.
Last year lawmakers passed a series of measures to help shield businesses and the health care community from liability threats resulting from operating in the COVID environment. The legislation also helped open the door for additional health care workers to work in Kansas during the pandemic and expand the use of telemedicine. These expanded measures are scheduled to expire at the end of this month.
House Substitute for Substitute for SB 286 would extend these emergency provisions into January of 2023. Additionally, the House added language giving health care workers enhanced legal protection from workplace violence like protections offered to other emergency workers. The additional legal protections have been an important goal of health care advocates this session as health care workers have experienced an increase in threats and violence while performing their duties.
Childcare Tax Credit
The Kansas Senate amended HB 2237, a bill that deals with the Rural Opportunity Zone student loan repayment program, to expand an available tax credit for businesses providing childcare services for their employees. Advocates have worked to expand this credit to help remove barriers to workforce participation among parents.
Under current law, the credit is only available to C corporations. The bill expands the tax credit to other business entities and increases the value of the credit from the current 30% to 50%. The program caps the total number of available tax credits to $3 million.
Fueled by a nearly $3 billion budget surplus, there has been a lot of discussion this session about various tax cut proposals but until this week, little has advanced. While more proposals are expected, there has been little clarity so far on what proposal might advance and when those debates would occur.
This week the Senate took up one of the first tax proposals of the session, SB 282. The bill includes several tax-related ideas including:
- Aviation and aerospace tax credits for tuition and program fees to support growth in the aviation sector workforce
- A new housing investor tax credit to support eligibility for federal low-income housing tax credits that are already available
- Tax credits for developers investing in the construction of affordable housing in rural Kansas
- Increasing the property tax exemption of the statewide 20-mill levy for public schools from the current $20,000 of a homeowner’s property to $65,000.
- A $250 tax credit for teachers to compensate for supplies they purchase for their classrooms
The amended bill passed the Senate 33-4 and will now move to the House for further consideration.
There must be a “buy one get one” sale on constitutional amendments this year because what seems like a record number of proposals have been discussed in Topeka this session. Here’s a look at proposals that have momentum:
SCR 1620 would ask November voters to decide if the Kansas Constitution should be amended to require a 2/3 vote of the legislature to approve tax and revenue increases. The proposal was passed out of the Senate Tax Committee and is pending debate by the full Senate.
HCR 5014 would give the legislature oversight over rules and regulations adopted by state agencies. Lawmakers have raised concerns that in some instances agencies have overstepped their bounds and legislative oversight is needed to ensure agencies adopt rules and regulations consistent with the intent granted by the legislature. This proposal passed the House 85-39 and is now making its way through the Senate.
SCR 1621 would change the method Supreme Court justices are confirmed to serve on the state’s highest court. If passed, voters in August would have the chance to adopt this proposal allowing the governor to appoint a justice to serve subject to confirmation by the Kansas Senate. This would replace the current process. The measure was discussed in the Senate Judiciary Committee and recommended for passage.
SCR 1622 is a second proposal to change how Supreme Court justices find their way to the state’s highest court. This proposal, if adopted, would put a question on the August ballot asking if voters want to approve direct, partisan election of Supreme Court justices. The Senate Judiciary Committee recommended this resolution be passed.
HCR 5022 would preserve the right of citizens of each county to elect a county sheriff. The resolution passed the House 97-24. The Senate Judiciary Committee will hold a hearing on the bill on 14 March.
Convention of States
For several years the idea of a convention of states has been discussed in statehouses around the country. While the idea has been discussed in Kansas several times, advocates have not been able to secure the needed votes to get the resolution passed. The issue was dealt another blow this week when HCR 5027 failed to get the 2/3 vote it needed to pass the Kansas House.
A convention of the states is a provision in Article V of the United States Constitution allowing a constitutional convention to be called if 2/3 (34) states adopt a resolution calling for the convention. Despite numerous attempts, the threshold has never been reached.
Advocates for the resolution believe the federal government needs mechanisms for more fiscal restraint and limitations on the power the federal government has imposed on the states. Others have raised concerns about a potential convention and what issues could be addressed should 34 states be successful in calling for a convention of the states.
Revenue Neutral Rate
During the 2021 session the Legislature adopted new policies impacting how property taxes are collected and reported in each local jurisdiction. The new process, known as the Revenue Neutral Rate, puts the emphasis on the actual dollars collected instead of the mill levy rate. Proponents argued the change was necessary to provide more transparency and to hold local elected officials accountable for property tax increases.
SB 542 was the subject of a hearing this week in the Senate Assessment and Taxation Committee. The bill would require several changes to last year’s new law. Among them:
- Requiring a governing body to have a roll call vote on any resolution or ordinance to exceed the Revenue Neutral Rate
- Requiring that the roll call vote be transmitted to the county clerk as well as to the Department of Administration for publication on the Department’s website along with other data points related to the tax vote
- Allow any taxpayer – regardless of where they are located – to file a complaint with the Board of Tax Appeals if a suspected violation of any of the Revenue Neutral Rate procedures were suspected.
The bill was the subject of a hearing in the Senate Assessment and Taxation Committee on Wednesday. Numerous conferees argued that the provision allowing any taxpayer – regardless of their location – to file a complaint would be burdensome and asked that the provision be changed to require that a complainant be a taxpayer in the jurisdiction in which the alleged violation occurred.
Unemployment fell to 2.6% in January - the latest official stats available - according to the KS Department of Labor and U.S. Bureau of Labor Statistics. During the height of COVID the rate peaked at 12.2%. The rates at the highest point of the pandemic were taxing the states unemployment system beyond its limits and led to a system-wide overhaul during the 2021 Legislative Session.
The changes made last year are saving Kansas businesses millions of dollars in unemployment payments and creating a system that will better serve Kansans when interacting with the Kansas Department of Labor in the future.
This year, HB 2703 has been proposed to make modifications to the legislation adopted last year. The changes include fixing numbers in the employer contribution rate tables and amending language to conform with federal employment law. The bill passed the House 121-0 and is the subject of a hearing on Monday in the Senate Commerce Committee.
Members of the House and Senate have adopted competing versions of a bill to allocate $1 billion of the state’s nearly $3 billion surplus to the Kansas Public Employees Retirement System (KPERS). The House action amended SB 421 and allocates the entire $1 billion this fiscal year whereas the Senate version, SB 523, allocates $600 million by the end of June 2022 and the remaining $400 million next fiscal year subject to approval by the State Finance Council.
Using the surplus to get the KPERS fund to the 80% actuarial funding level would allow the state to reduce future payments and save the state money in the long run, say advocates for making the large payment. They further argue that this is perfect use of “one time” money rather than committing it to a recurring expense. While no one argues about the need to fund KPERS at the appropriate level, some have raised concerns that the large payment could limit the legislature’s ability to make other tax cuts.
Kevin Walker, IOM
Senior Vice President of Public Policy
(913) 766-7602 | (913) 526-6855