Weekly Legislative Report
February 22 – 26, 2021
This was the last week for non-exempt committees to meet and complete their work for the first half of the legislative session. From new emergency management powers to unemployment insurance reform, statehouse reporters were not lacking for headlines this week. The Kansas Attorney General also introduced a constitutional amendment that would completely overhaul the way Kansas agencies promulgate rules and regulations – which some media translated into an announcement for a gubernatorial run in 2022.
Legislators will be on the floor all next week working toward Turnaround (half-way point) on Friday. All non-exempt bills that haven’t passed their house of origin by March 6th will be considered dead for the year. Lawmakers will then have a four-day weekend and return to start the second half of the legislative session on Wednesday, March 10th.
Emergency Management Reform
Earlier this year, the Legislature passed a bill that extended the current emergency declaration for COVID-19 through March 31st. This was intended to give lawmakers time to consider long-term, comprehensive reform to the Kansas Emergency Management Act passed in 1975.
The House and Senate Judiciary Committees spent this week considering their respective bills, House Bill 2416 and Senate Bill 273, that modify the procedure for declaring and extending a state of disaster emergency and limit the powers granted to the governor. The proposals give more legislative oversight on business shutdowns and school closings and define the duties and functions of the secretary of health and environment, board of education, and city and county governments. The Judiciary panels are continuing their work today.
Tax Relief for Shutdown Businesses
Kansas attorneys Ryan Kriegshauser and Josh Ney proposed a bill to the Senate Tax Committee on Tuesday that would provide income and property tax relief to businesses shut down or restricted by the government during the pandemic. According to Ney, “the intent is to quickly and efficiently resolve potential Kansas Emergency Management Act claims, using a combination of federal COVID funds and state income and property tax credits.”
The bill is supported by the Kansas Restaurant and Hospitality Association, Kansas Chamber, and House and Senate leadership. A bill number, hearing date and fiscal note are expected soon.
Earlier this month, a similar bill was heard in the House Taxation Committee. House Bill 2142 is narrower in scope and proposed to provide reimbursement of property taxes from local governments for business shutdowns or capacity limitations caused by the county.
Unemployment Insurance
The House Commerce Committee is meeting today to take final action on House Bill 2196 that modernizes the state’s unemployment insurance system. This week, the Kansas Department of Labor estimated that they paid out roughly $290 million in fraudulent claims. However, a legislative post audit (LPA) found it be closer to be $600 million. Both the agency and LPA defend their estimates; and Governor Kelly announced that she will contract for a third, private audit to settle the difference. HB 2169 is expected to be one of the first bills taken up by the House next week.
Sports Betting
The Senate Federal and State Affairs Committee passed out Senate Bill 84, which authorizes the state’s four state-owned casinos to contract with the Kansas Lottery to manage in-person and mobile sports wagering. The bill also allows betting at the Kansas Speedway. The measure could be considered by the full Senate as early as next week.
The committee decreased the percentage of income that would go toward the state general fund to 10% for online bets and 7.5% for bets placed in person. The remaining 2% as originally proposed in the bill will be allocated toward addressing problem gambling. It’s now estimated that the state will generate between $2.1 million and $3.5 million under this new language.
The panel also amended the bill to prohibit sports wagering at greyhound racetracks and on high school sporting events.
Online Sales Tax
The Senate Assessment and Taxation Committee forwarded a bill to the full chamber that would require online retailers and third-party marketplace facilitators with over $100,000 in total sales in Kansas to collect and remit state sales tax. An important amendment was added to Senate Bill 50 before passage that ensures transient guest taxes are also collected from online travel companies, such as Airbnb, to level the playing field with brick and mortar hotels and other lodging.
The House Taxation Committee heard a similar bill earlier this month, House Bill 2173. Both bills are estimated to generate $42.4 million in additional state revenue.
Kansas Tax Incentive Programs
The Senate Assessment and Taxation Committee began receiving a presentation on the state’s tax incentive programs from a senior economist with the Kansas Legislative Research Department (KLRD) on Tuesday. Click here to view the KLRD’s presentation deck.
A growing number of conservative legislators have become critical of several of the programs and feel that the state is not seeing the return on investment as originally expected when the programs were established. It’s expected that the committee will take up this conversation again after Turnaround.
Several tax incentive bills have passed the Senate already this session including the Angel Investor Tax Credit, SB 66, and a KIT/KIR bill decoupling those programs from the HPIP Tax Credits, SB 65. We expected the STAR renewal bill, SB 124, to be worked by the Senate before the turnaround deadline. There are several additional tax incentive bills that are making their way through the process, including a tax credit for contributions to technical schools, HB 2315, and an aviation tax credit bill, HB 2328.
State Budget Recap
This week marks the end of budget committee work for the first half of the 2021 legislative session. All subcommittees have issued their reports on the various state agency budgets, and the House Appropriations and Senate Ways and Means Committees have made their first round of budget decisions.
The Senate took a slightly different tact this year by having some of the policy committees review agency budgets. For example, the Senate Utilities Committee also held meetings on budgets for agencies like the Kansas Corporation Commission (KCC). Their budget recommendations were then reviewed by the Ways and Means subcommittee usually charged with reviewing the KCC’s budget. It was an effort to get more senators involved and familiar with the budget process. The House uses its regular budget subcommittees to do this by having members from outside the Appropriations Committee on the budget subcommittees.
Part of the work in Ways and Means this week was discussion on reimbursement rates for nursing homes and home-based health services. These two issues have been ongoing budget topics for a few years, and the pandemic has amped up that discussion significantly. Home based services for seniors have centered on a higher compensation rate to retain those workers and attract more people into that field. The rates will be a point of negotiation between the House and Senate during final budget deliberations.
The House Appropriations Committee held a meeting on a reading program called the Dolly Parton Imagination Library. Ms. Dolly Parton is the actual sponsor of this initiative. Her foundation partners with local organizations to provide free books to children up to age five. Kids get a different age-appropriate book every month. The program promotes literacy, family time together, and education in general. Kansas could partner with the program and provide books to children across the state. The committee reacted very positively to the presentation and could work on the issue during the second half of the session.
No budget meetings are expected next week as floor action in both chambers will consume most of the Legislature’s time.
