LEGISLATIVE UPDATES

BioKansas’ legislative report is provided by Kansas Agribusiness Retail Association. If you have questions or would like additional information, contact us.

April 23, 2021

Legislative Session Interim Report 

Governor Laura Kelly has now signed multiple bills passed by the legislature during the regular session. The Governor has also teed up possible action by the House and Senate during the veto session beginning May 3rd by vetoing key legislation focusing on taxes and social issues. Upon its return, the legislature will also focus on passage of an omnibus budget bill for the balance of the current fiscal year. This budget action comes on the heels of the state having just received positive news on the budget from the Consensus Revenue Estimating Group. This advisory council recently released revenue projections indicating an additional $360 million in revenue for the state during the current fiscal year and the next. These estimates return Kansas to pre-pandemic budget levels, and nearly double the previous estimated ending balance for the 2021 budget. 

Vaccine Bills Could Come Up During Veto 

In late-March, the Senate Public Health Committee took action on two vaccine bills: SB 212 prohibiting the Kanas Secretary of Health and Environment from requiring additional childhood immunizations for daycare or school; and, SB 213 barring businesses from requiring their employees to be vaccinated. The committee placed the contents of SB 213 into SB 212, and passed SB 212 out of committee favorably to be considered by the entire Senate. In response to the move, businesses and associations formed a coalition and have circulated a letter to the Kansas Senate, urging senators to keep employers in charge of business decisions and health professionals in charge of vaccines in Kansas. BioKansas signed the letter. 

During the legislature’s final week of regular session in early-April, Senator Mark Steffen (R-Hutchinson) offered the content of newly-formed SB 212 into HB 2224 as an amendment. With several senators absent from the chamber, the amendment failed on a 17-18 vote. 

SB 212 is below the debate line in the Senate and will remain idle throughout the year unless, as rumors are predicting, Senate leadership opts to conduct general orders during the veto session. Should general orders occur in the Senate, SB 212 would still need to be brought ‘above the line’ for debate and possible voting by the entire body.  

Angel Investor Tax Credit Extended 

On April 15, Governor Laura Kelly signed into law Senate Bill 66. The bill extends the Angel Investor Tax Credit used for investing in biotechnology through 2026. The bill also amends certain definitions, removes certain program restrictions, increases program tax credit amounts, and increases annual program limits. The fiscal note indicates the bill would decrease state general funds by $1.9 million in FY 2022, $6.0 million in FY 2023, and by increasing increments of $0.5 million each year through FY 2026 to $8.0 million. BioKansas, along with other stakeholders and the Kansas Dept. of Commerce, worked throughout the session to ensure the bill received hearings and was passed through both chambers prior to its originally scheduled sunset of summer 2021. Find a full bill summary here. 

Extraordinary Natural Gas Price Relief Signed into Law  

On April 22nd Governor Kelly signed Senate Bill 86 into law. This bill creates the Kansas Extraordinary Utility Costs Loan Deposit Program to allow businesses and other eligible borrowers to apply for low-interest loans to assist them in paying for very high natural gas bills following the February 2021 polar vortex. The bill defines “eligible borrowers” as wholesale natural gas customers in the state who experienced extraordinary prices due to the extreme weather. The bill provides $20 million for this new program. Eligible borrowers may borrow up to $500,000 from the program. The State Treasurer will administer the program, which will become effective following publication of the bill in the Kansas Register. Under the program, eligible borrowers will apply for loans through their participating lending institutions. 

Global Intangible Low-Taxed Income, Posturing for Veto Override 

Senate Bill 50 would provide corporate income tax modifications for global intangible low-taxed income, business interest, and capital contributions. The GILTI provision in Senate Bill 50 would make 100% of GILTI deductible (exempt) beginning in tax year 2021. The bill also includes the contents of HB 2239, allowing net operating losses to be carried forward indefinitely; and HB 2106, extending the deadline for corporate filing deadline. The bill is reported to have an estimated fiscal note of $300 million over three years. On April 6th, Governor Kelly vetoed the billFollowing the release of the updated and improved budget estimates, Speaker of the House Ron Ryckman Jr. (R-Olathe) said the revised surplus strengthens the case for the legislature to override the governor’s veto. The House passed the bill 81-43, which is three votes short of the 84 necessary for the override. The Senate needs 27 votes to override a veto, and had passed the bill 30-10. 

Governor Signs Large Property Tax Bill 

On April 19, Governor Kelly signed into law the conference committee report on HB 2104. This large property tax bill contains the contents of multiple bills, including language from Senate Bills 98, 119, and 72. These property tax bills were supported byKansas Grain and Feed Association, Kansas Agribusiness Retailers Association, and Renew Kansas Biofuels Association. Senate Bill 98 ensures that, in a de novo hearing before a Kansas District Court, the county maintains the burden of proof to establish the county appraiser’s valuation and classification of the property. The bill also extends the time a state board of tax appeals member may continue to serve after such member’s term expires. In addition, the bill allows the Governor to temporarily appoint former board members as necessary. Senate Bill 119, explained in greater detail here, includes many positive changes to the Kansas property tax system that were spread out over a handful of bills last year. Of particular note, the bill prohibits the Board of Tax Appeals from increasing the appraised property valuation as a result of an informal appeal or a formal appeal of the valuation.  

Unemployment Insurance Bill Before the Governor 

Senate Sub for HB 2196 creates the Unemployment Compensation Modernization and Improvement Council to recommend changes to the unemployment insurance system. The bill also requires the Kansas Department of Labor to modernize its information technology (IT) infrastructure, make changes to the Employment Security Review Board, and alter the employment security rate tables. In addition, the bill would provide for certain employer account protections, adjust thresholds for maximum benefits, and make other employment security compensation changes. The bill also ensures that employers are held harmless for any fraudulent unemployment claims filed in the business’ name. Employers who have paid for these claims since March 15, 2020, are to be refunded through the unemployment insurance trust fund. The bill will reimburse the unemployment insurance trust fund up to $500 million from federal funds. Find more information Here. It was also reported this week that Kansas has now reached pre-pandemic levels of unemployment, with rates now even lower than at this same time in 2019. The bill was presented to the governor for consideration on April 16, 2021. 

Emergency Temporary Employee Withholding Language Still Not Passed 

On April 1, 2021, Governor Kelly issued Executive Order 21-18 providing temporary provisions for employer payment of income tax withholding for work performed in another state. Similar language to the executive order was added to House Bill 2106 to place the temporary withholding relief in Kansas law through December 31, 2021. However, this bill did not advance. Additionally, on the last day of the regular session, a conference committee between the House and Senate Tax Committees agreed to place this language in a conference committee report (CCR on SB 47). While the legislature was unable to bring this bill up for action before adjournment, action can still be taken on the bill during the May veto session. 

Sales Tax Bill Eliminates Estimated Payments 

On April 21st Governor Kelly signed into law House Bill 2143, a bill that increases the threshold filing amounts for retailers to submit sales taxes to the Kansas Department of Revenue. Currently, Kansas retailers are required to estimate what they think they will receive in sales tax for the following month and then prepay that estimated amount to the Dept. of Revenue if it exceeds $40,000. During committee work on this bill, it was determined that this practice of pre-payment was not required by Kansas law. Therefore, the agency will be updating its website and procedures so that retailers will no longer be required to prepay an estimated amount of their sales tax liability. Instead, retailers will be required to remit the actual sales tax collected during first 15 days of each month, on the 25th day of that month. Kansas Agribusiness Retailers Association testified in support of this bill.  

High Performance Incentive Program Changes Become Law 

On April 15, the Governor signed into law Senate Bill 65. This bill amends the High Performance Incentive Program (HPIP) economic development program  to remove certain workforce training requirements from the program. Under current law, taxpayers that claim the HPIP investment tax credit are required to participate in either the Kansas Industrial Training (KIT) or Kansas Industrial Retraining (KIR) programs. The bill decouples the tax credit from participating in those programs. Removing the training requirement from HPIP should provide greater flexibility in using the training programs, and increase the number of companies that qualify for the HPIP tax credit. In addition, the bill allows for a company to transfer up to 50% of its unused HPIP tax credits to another individual or entity. 

Kansas Promise Scholarship Bill Presented to the Governor 

The legislature adopted the conference committee report on House Bill 2064, which would create the Kansas Promise Scholarship Act. Administered by the Board of Regents, the Act would make this new scholarship available to students attending any Kansas community college, technical college, or two-year associate degree program or career and technical education program offered by a private postsecondary educational institution with its primary location in Kansas. The scholarship would be eligible for students pursing certain fields of study, including manufacturing, construction and others. The bill was presented to Governor Kelly for consideration on April 16.  

Other Bills of Note 

HB 2066 amending temporary licensure law to all applicants who establish Kansas residency. Governor Kelly signed into law. 

HB 2224 expanding the definition of “infectious disease.” No final action taken on this bill. 

HB 2280 updating statutes relating to the powers, duties and functions of the state board of pharmacy. Passed favorably by Senate Public Health and Welfare. 

April 9, 2021 

On Friday, April 9, the Kansas Legislature adjourned for the last day of the 2021 regular session. The House and Senate will now take a three-week break before returning for a veto session on May 3rd where they will consider bills vetoed by Governor Laura Kelly, work on the omnibus appropriations bill, and possibly take final action on other bills. During the last few days, the House and Senate worked long hours on a flurry of action on bills that will now be sent to the Governor for consideration. The legislature finished the regular session by passing a budget bill for the state’s next two fiscal years. One other headline concerned a change in Senate leadership when the Republican caucus voted to remove Senate Majority Leader Gene Suellentrop (R-Wichita) due to his legal trouble in early-March. 

Vaccine Amendment Fails on Senate Floor 

On Wednesday during the final day of the Senate’s scheduled General Orders to debate bills, Senator Mark Steffen (R-Hutchinson) offered the content of SB 212 to HB 2224 as an amendment. With several senators absent from the chamber, the amendment failed on a 17-18 vote. 

On roll call, the vote was: Yeas 17; Nays 18; Present and Passing 0; Absent or Not Voting 5.  

Yeas: Alley, Baumgardner, Claeys, Erickson, Fagg, Gossage, Hilderbrand, Masterson, Olson, Peck, Petersen, Pyle, Steffen, Straub, Tyson, Warren, Wilborn.  

Nays: Bowers, Corson, Dietrich, Doll, Faust-Goudeau, Francisco, Haley, Holland, Holscher, Kerschen, Kloos, Longbine, McGinn, Pettey, Pittman, Suellentrop, Sykes, Ware.  

Absent or Not Voting: Billinger, Hawk, O’Shea, Ryckman, Thompson 

Budget Bill Sent to Governor 

This week, the Legislature passed to the Governor the major budget bill of the session. The approved budget is $4 billion less than Governor Kelly’s proposed budget, but that shortfall includes about $3 billion in not-yet-passed K-12 education funding. If the Governor signs all of the tax bills sent to her desk, the state could have an ending balance of $648 million on July 1, 2021; a very low $20 million on July 1, 2022, and a projected negative ending balance of $627 million on July 1, 2023. This budget bill will be followed by an Omnibus budget bill to be assembled during the veto session in May. 

Extraordinary Natural Gas Price Relief Bill 

This week, the legislature passed Senate Bill 86, which creates the Kansas Extraordinary Utility Costs Loan Deposit Program to allow low-interest loans for businesses and other eligible borrowers to help them cover natural gas bills following the extreme prices following the February polar vortex. “Eligible borrowers” are defined as any wholesale natural gas customer in the state of Kansas which experienced extraordinary prices due to the extreme weather, providing they are not an individual receiving loans for personal reasons. The bill provides $20 million for this new Extraordinary Utility Costs Loan Deposit Program. Eligible borrowers may borrow up to $500,000 from the program. The bill now advances to Governor Kelly for consideration, and she is expected to sign the bill. 

Electric Utility Securitization/Bonding Authority Becomes Law  

On April 9, Governor Kelly signed into law Sen Substitute for HB 2072. This bill creates the Utility Financing and Securitization Act (UFSA) to allow for the securitization of utility assets to recover energy transition costs for certain regulated electric public utilities. The bill was amended to include language requiring any cost savings realized by the utility through bonding to be passed on to rate payers. The bill would also allow certain regulated electric and natural gas public utilities to pursue securitization to finance certain extraordinary expenses, such as fuel costs recently incurred during the extreme weather events.  

Unemployment Insurance Bill Advances to Governor 

Senate Sub for HB 2196 creates the Unemployment Compensation Modernization and Improvement Council to recommend changes to the unemployment insurance system. The bill also requires the Kansas Department of Labor to modernize its information technology (IT) infrastructure, make changes to the Employment Security Review Board, and alter the employment security rate tables. In addition, the bill would provide for certain employer account protections, adjust thresholds for maximum benefits, and make other employment security compensation changes. The bill also ensures that employers are held harmless for any fraudulent unemployment claims filed in the business’ name. Employers who have paid for these claims since March 15, 2020, are to be refunded through the unemployment insurance trust fund. The bill will reimburse the unemployment insurance trust fund up to $500 million from federal funds. The bill passed the Senate and the House, and now advances to the Governor for consideration. Find more information here. It was also reported this week that Kansas has now reached pre-pandemic levels of unemployment, with rates now even lower than at this same time in 2019. 

Property Tax Legislation To Governor 

This week the Legislature passed conference committee report on HB 2104, a bill that contains the contents of multiple property tax bills, including the language form Senate Bills 98, 119, and 72. These property tax bills were supported by Kansas Grain and Feed Association, Kansas Agribusiness Retailers Association, and Renew Kansas Biofuels Association. The bill has now been presented to the Governor for consideration. Senate Bill 98 would ensure that, in a hearing before a Kansas District Court, the county retains the burden of proof on the county appraiser’s valuation and classification. The bill also extends the time a state board of tax appeals member may continue to serve after such member’s term expires. In addition, the bill would allow the Governor to temporarily appoint former board members as necessary. Senate Bill 119, explained in greater detail here, includes many positive changes to the Kansas property tax system that were spread out over a handful of bills last year. Of particular note, the bill would prohibit the Board of Tax Appeals from increasing the appraised valuation of property as a result of an appeal or an informal meeting concerning the property.  

Emergency Temporary Employee Withholding Language Still Not Passed  

On April 1, 2021, Governor Kelly issued Executive Order 21-18 providing temporary provisions for employer payment of income tax withholding for work performed in another state. In the event that the executive order is revoked by the Legislature, an amendment with similar language was added to House Bill 2106 to place the temporary withholding relief in Kansas law through December 31, 2021. However, this bill did not advance. On another front, on the last day of the regular session, a conference committee between the House and Senate Tax Committees agreed to place this language in a conference committee report (CCR on SB 47). While the legislature was unable to bring this bill up for action before adjournment, action can still be taken on the bill during the May veto session. 

Kansas Promise Scholarship Bill Advances to the Governor 

On Friday, April 9, the House and Senate adopted the conference committee report on House Bill 2064. This bill contains language creating the Kansas Promise Scholarship Act. Administered by the Board of Regents, the Act would make this new scholarship available to students attending any Kansas community college, technical college, or two-year associate degree program or career and technical education program offered by a private postsecondary educational institution with its primary location in Kansas. The scholarship would be eligible for students pursing certain fields of study, including manufacturing, construction and others. The bill now goes to Governor Kelly for consideration. 

Other Bills of Note 

HB 2066 amending temporary licensure law to all applicants who establish Kansas residency. Passed House and Senate, to Governor for consideration. 

HB 2224 expanding the definition of “infectious disease.” No final action taken on this bill. 

HB 2280 updating statutes relating to the powers, duties and functions of the state board of pharmacy. Passed favorably by Senate Public Health and Welfare. 

 

April 2, 2021

With just one week left in the regular legislative session, the House and Senate debated and took action on many bills during this shortened three-day week. Bills of note included: action on the unemployment insurance fund and confirmation of the new Secretary of Labor; final passage of a multi-tiered income tax bill; advancement of a complex property tax bill and the Governor’s signature on a bill repealing the property tax lid; the signing into law of a bill providing limited immunity to businesses in regard to the pandemic; and re-issuance by Governor Kelly of a dozen executive orders related to the COVID-19 pandemic. Next week will bring continued floor debate and the bundling of bills through conference committee work. First adjournment will likely come sometime late Friday, April 9th. The legislature will then take a three-week break before returning for a brief veto session and to work on an omnibus appropriations bill.  

Vaccine Bills Advance Out of Committee, but No Action Taken Prior to Extended Weekend 

Last week, the Senate Public Health Committee took action on two vaccine bills: SB 212 would prohibit the Kanas Secretary of Health and Environment from requiring additional childhood immunizations for daycare or school; and, SB 213 would bar businesses from requiring their employees to be vaccinated. The committee placed the contents of SB 213 into SB 212 and passed SB 212 out of committee favorably to be considered by the entire Senate.  

In response to the move, businesses and associations formed a coalition and circulated a letter to the Kansas Senate, urging senators to keep employers in charge of business decisions and health professionals in charge of vaccines in Kansas.  

The bill, which was anticipated to be brought up for debate this week in the Senate, did not receive discussion during the three days of floor debate prior to the legislature’s extended weekend.  

Angel Investor Tax Credit Sent to Governor 

Senate Bill 66 includes amendments that had been included in House Bill 2045, extends the Angel Investor Tax Credit used for investing in biotechnology through 2026. The legislative fiscal note on the bill shows that State General Fund revenue would decrease by $1.9 million in FY 2022, by $6.0 million in FY 2023, and by increasing increments of $0.5 million each year through FY 2026 to $8.0 million. The House passed the bill 109-12. This week, the Senate voted to concur to the House amendments on a vote of 29-9. The bill is now pending enrollment for the Governor’s consideration. Here is a legislative summary of the bill. 

Governor Kelly Reissues Executive Orders Including Statewide Mask Mandate – LCC Responds 

Under Senate Bill 40, which amended the Kansas Emergency Management Act and was signed into law by the Governor on March 24, each executive order that the Governor previously issued in response to the COVID-19 pandemic became void on March 31, 2021. The bill also granted the Governor authority to reissue new executive orders in response to this pandemic on or after April 1. However, any new executive order issued would be subject to revocation by the Legislature or the Legislative Coordinating Council (LCC). 

On Thursday, April 1st, Governor Kelly announced her reissuance of a dozen executive orders related to the pandemic. One such Order, Exec. Order 21-14, would require Kansans to wear a face covering in certain situations when they are unable to maintain social distance. However, at 1:30 pm on April 1st, the LCC met and revoked Executive Order 21-14. This action by the LCC was consistent with resolutions (House Resolution 6015 and Senate Resolution 1717) passed by the House and Senate earlier in the week urging the LCC to revoke any executive order issued by Governor Kelly that required statewide face coverings. With the revocation of Executive Order 21-14, counties may still issue their own mask mandate or other guidelines.  

Other Executive Orders reissued by Governor Kelly on April 1 

Unemployment Insurance Bill Advances 

Senate Substitute for House Bill 2196 would provide for transfers of federal coronavirus relief aid or State General Funds to the Employment Security Fund in order to recover from the loss of hundreds of millions of dollars in fraudulent payments. It would create the Unemployment Compensation Modernization and Improvement Council to oversee and recommend changes to the unemployment insurance system and the applicant claim process. The bill would also require the Kansas Department of Labor (KDOL) to modernize its information technology (IT) infrastructure by the end of 2022, make temporary changes to the membership of the Employment Security Review Board, and alter the Employment Security Rates tables. In addition, the bill would provide for certain employer account protections, prohibit the continuation of federal unemployment compensation programs using state funds, adjust thresholds for maximum benefits, and make other employment security compensation changes. The bill also ensures that employers are held harmless for any fraudulent unemployment claims filed in the business’ name. Employers who have paid for these claims since March 15, 2020, are to be refunded through the unemployment insurance trust fund. The unemployment insurance trust fund will be reimbursed through federal funds coming into the state, up to $500 million. The Senate passed the bill out unanimously on a vote of 40-0. The bill now goes to the House for consideration. 

New Kansas Secretary of Labor Confirmed 

On Wednesday, the Senate unanimously confirmed Gov. Laura Kelly’s choice of Amber Shultz as the new Secretary of Labor. The position had been filled by acting secretaries following the resignation of Secretary Delia Garcia last summer. Shultz most recently worked as the general manager of the Municipal Services and Operations Department for the City of Lawrence. She had also previously worked as deputy director of public works for the City of Topeka. Shultz takes over as head of an agency that was the focus of weeks of hearings in the House and Senate due to both delays in unemployment payments to Kansans, and on the possibly more than $600 million in reported fraudulent payments from the state unemployment insurance fund during the COVID-19 pandemic. 

Global Intangible Low-Taxed Income, Federal Decoupling   

On Tuesday, Senate Bill 50 was sent to the Governor after passing the House, 81-43, and the Senate concurring, 30-10. Senate Bill 50 would provide corporate income tax modifications for global intangible low-taxed income, business interest, and capital contributions. The GILTI provision in Senate Bill 50 would make 100% of GILTI deductible (exempt) beginning in tax year 2021. The bill also includes the contents of HB 2239, allowing net operating losses to be carried forward indefinitely; and HB 2106, extending the deadline for corporate filing deadline. The bill would also require marketplace facilitators to collect and remit sales tax. Senate Bill 50 is reported to have an estimated fiscal note (cost to the state) of $300 million over three years. The fiscal note on a similar bill, Senate Bill 22, was closer to $500 million. The bill now goes to Governor Kelly, where it could be vetoed. The House vote was 81-43, which is three votes short of the 84 necessary to override a veto. There are concerns by certain conservatives on voting for the bill because they disagree with the internet sales tax piece and see it as a tax increase. In the Senate, 27 votes are needed to override a veto. 

Electric Utility Securitization/Bonding Authority  

This week, the House concurred with Senate amendments to Sen Substitute for HB 2072. This bill would create the Utility Financing and Securitization Act (UFSA) to allow for the securitization of utility assets to recover energy transition costs for certain regulated electric public utilities. The bill was amended to include language requiring any cost savings realized by the utility through bonding to be passed on to rate payers. The bill would also allow certain regulated electric and natural gas public utilities to pursue securitization to finance certain extraordinary expenses, such as fuel costs recently incurred during the extreme weather events. The bill now proceeds to the Governor for consideration. 

Property Tax Measure Signed by Governor Kelly 

On Friday, March 26, Governor Laura Kelly signed Senate Bill 13 into law. This bill repeals the existing property tax lid – put in place by the legislature in 2015 – which generally required voters to approve any local property tax increase higher than inflation over the previous year. While removing the public vote, SB 13 will now require notice and a public hearing in order for any local taxing authority to increase taxes above a revenue neutral rate (no inflation factor). Other provisions in the bill prohibit valuation increases of a property due to normal maintenance and will allow the collection of partial payments or payment plans for property taxes.  

Other Property Tax Legislation 

This week the House and Senate Tax Committees met to consider Senate Substitute for House Bill 2104, a bill that contains the contents of multiple property tax bills, including Senate Bills 98, and 119. The Conference Committee agreed to the provisions of the bill and also added the provisions of Senate Bill 72, concerning qualifications for county appraisers and BOTA members. The conference committee then removed language that would have reauthorized the statewide 20-mill school property tax levy dedicated to schools. On Wednesday, the Senate passed the conference committee report on HB 2104 on a vote of 25-14. The House will take the bill up for action next week.  

Senate Bill 98 would ensure that, in a hearing before a Kansas District Court, the county retains the burden of proof on the county appraiser’s valuation and classification. The bill also extends the time a state board of tax appeals member may continue to serve after such member’s term expires. In addition, the bill would allow the Governor to temporarily appoint former board members as necessary. Kansas Grain and Feed Association and Renew Kansas Biofuels Association were proponents to the bill.  

Senate Bill 119, explained in greater detail here, includes many positive changes to the Kansas property tax system that were spread out over a handful of bills last year. Of particular note, the bill would prohibit the Board of Tax Appeals from increasing the appraised valuation of property as a result of an appeal or an informal meeting concerning the property. Kansas Grain and Feed Association and Renew Kansas Biofuels Association testified as proponents.  

High Performance Incentive Program Changes  

Senate Bill 65 would amend the High Performance Incentive Program (HPIP) economic development program in order to remove certain workforce training requirements from the program. Under current law, taxpayers that claim the HPIP investment tax credit are required to participate in either the Kansas Industrial Training (KIT) or Kansas Industrial Retraining (KIR) programs. The bill would decouple the tax credit from participating in those programs. Removing the training requirement from HPIP will provide more flexibility in using the training programs, and will likely increase the number of companies that qualify for the HPIP tax credit. The House also inserted the contents of Senate Bill 91, which would allow for a company to transfer up to 50% of its earned but unused HPIP tax credits to another individual or entity. The Senate concurred to the House amendments, and the bill will now be presented to the Governor for consideration.   

COVID-19 Business Liability Immunity Signed by Governor 

On Wednesday morning, the Senate voted 30-10 to concur with the House amendments to SB 283. This bill would amend the COVID-19 Response and Reopening for Business Liability Protection Act (Act) to extend the expiration date of the statute governing COVID-19 immunity for persons conducting business in the state, until March 31, 2022. This Act establishes that any business that is acting in accordance with the public health directives that are applicable to the business activity taking place would not be held liable for the exposure. Following passage by the legislature, the bill was quickly enrolled and signed into law by Governor Kelly. 

Emergency Temporary Employee Withholding Language Added to House Bill 

On April 1, 2021, Governor Kelly issued Executive Order 21-18 providing temporary provisions for employer payment of income tax withholding for work performed in another state. However, in the event that the executive order is revoked by the Legislature, an amendment with similar language was added to House Bill 2106 to place the temporary withholding relief in Kansas law through December 31, 2021. This bill will now go to the House to concur or non-concur. 

Other Bills of Note 

SB 308 providing individuals the right to not wear face coverings in places of public accommodation, refuse vaccinations and access off-label medications. House Judiciary. 

HB 2280 Updating statutes relating to the powers, duties and functions of the state board of pharmacy. Passed favorably by Senate Public Health and Welfare. 

HB 2087 amending review of certain regulations by the budget director. Senate Ways and Means amended to $1 million threshold and passed favorably. 

HB 2155 allowing minimum thresholds for reporting chemical spills to KDHE. Passed by House and Senate. To Governor for consideration. 

March 26, 2021

Several days of floor debate by both chambers and final action for most committees made for a full week in the legislature. Much time was spent debating various bills, including a bill allowing regulated energy providers to bond long-term debt; and House Resolution 5015 urging the United States Congress to reject the “For the People Act of 2021.” Next week will bring additional floor debate on bills before the first adjournment on Friday, April 9th. The legislature will then take a three-week break before returning for a brief veto session and to work on an omnibus appropriations bill.  

Angel Investor Tax Credit 

On Thursday, March 25, the House chamber passed Senate Bill 66 on emergency final action. The bill, which includes amendments that had been included in House Bill 2045, extends the Angel Investor Tax Credit used for investing in biotechnology through 2026. The legislative fiscal note on the bill shows that State General Fund revenue would decrease by $1.9 million in FY 2022, by $6.0 million in FY 2023, and by increasing increments of $0.5 million each year through FY 2026 to $8.0 million. The House previously had passed its companion bill, House Bill 2045, which is currently in Senate Committee on Commerce. Due to the amendments in committee, the bill will go to the Senate for concurrence.  

Senate Committee hears bill affecting State Board of Pharmacy 

The Senate Public Health and Welfare Committee spent Friday morning hearing House Bill 2280, relating to the Kansas State Board of Pharmacy updating statutes regarding its powers, duties, and functions. The proposed legislation drew only three conferees, all of whom testified in support of the bill. Highlighting the testimony of Alexandra Blasi, Executive Secretary of the Kansas Board of Pharmacy, the Kansas Association of Chain Drug Stores and the Kansas Hospital Association was the agreeance of implementing a provision creating a framework for telepharmacy in Kansas, of which, the board would oversee. Last updated in 2017, the 46-page bill included more than 10 statutory amendments and would lead to expansion in the board’s authority. Committee chairman Richard Hilderbrand (R-Galena) ended the hearing explaining his reluctance to move forward with the bill due to the expansion it would provide a state agency.  

“There’s a lot of good things in this bill, but me personally, I don’t see an appetite for growing an agency by $400,000 in fee increases,” Hilderbrand said. “There’s an awful lot of new regulations, giving you a lot of rules and regulations (overall). I’m not planning on working this bill unless you can come back and fix those issues I personally have with it.” 

Vaccine Bills Advance Out of Committee 

This week, the Senate Public Health Committee took action on two vaccine bills: SB 212 would prohibit the Kanas Secretary of Health and Environment from requiring additional childhood immunizations for daycare or school; and, SB 213 would bar businesses from requiring their employees to be vaccinated. The committee placed the contents of SB 213 into SB 212, and passed SB 212 out of committee favorably. Business groups are currently circulating a letter for businesses and associations to sign, urging the Kansas Senate to keep employers in charge of business decisions and health professionals in charge of vaccines in Kansas. 

Kansas Emergency Management Act (KEMA) 

This week, the Governor signed Senate Bill 40, a bill amending the state’s emergency management law, installing new checks on powers of the governor, health officers, and school boards to manage the COVID-19 pandemic and future disasters. The bill limits the power of the Governor, the state health secretary, and local public health officers to issue orders. It also gives Kansans more power to legally challenge emergency orders at all levels of government if they think their rights have been violated. The bill extends the Governor’s existing emergency declaration for the COVID-19 pandemic until May 28, 2021. However, under the provisions of SB 40, each executive order that the Governor had previously issued, related to the pandemic, will be revoked on March 31. For that reason, the Governor has announced that she will reissue 12 of her executive orders on April 1, 2021. Those new orders will remain in place until the emergency declarations end or they are rescinded. Any of the new executive orders (issued after March 31) will be subject to revocation by the Legislature. 

Emergency Temporary Employee Withholding Order 

Governor Kelly previously issued Executive Order 21-01 to provide “Temporary provisions for employer payment of income tax withholding for work performed in another State of Kansas.” Under the provisions of SB 40, the Governor has stated she intends to reissue this Executive Order after April 1, 2021. However, in the event that this executive order, and others, are revoked by the Legislature, an amendment with similar language may soon be placed on to House Bill 2106 in order to place the temporary extension of the withholding relief in Kansas law.  

Unemployment Insurance Update 

This week, the Senate Commerce Committee continued its hearing on Sub for House Bill 2196. As amended, this bill would provide for transfers of federal coronavirus relief aid or State General Funds to the Employment Security Fund in order to recover from the loss of hundreds of millions of dollars in fraudulent payments. It would create the Unemployment Compensation Modernization and Improvement Council, require the Kansas Department of Labor (KDOL) to modernize its information technology (IT) infrastructure, make temporary changes to the membership of the Employment Security Review Board, and alter the Employment Security Rates tables as well. In addition, it would provide for certain employer account protections, prohibit the continuation of federal unemployment compensation programs using state funds, adjust thresholds for maximum benefits, and make other employment security compensation changes. On Wednesday, March 24 the committee passed the bill out favorably, as amended.  

Global Intangible Low-Taxed Income – Federal Decoupling 

On Tuesday, the House Taxation Committee acted on House Bill 2421, a bill that would provide corporate income tax modifications for global intangible low-taxed income, business interest, and capital contributions. During the hearing, the Committee placed the contents of House Bill 2421 into Senate Bill 50. The GILTI provision in Senate Bill 50 would make 100% of GILTI deductible (exempt) beginning in tax year 2021. The Committee also inserted into Senate Bill 50 the contents of HB 2239 (allowing net operating losses to be carried forward), and HB 2106 (extension of corporate filing deadline). The committee then passed Senate Bill 50 out of committee favorably for passage, as amended. The House Committee of the Whole will now consider Senate Bill 50. Senate Bill 50 has an estimated fiscal note (cost to the state) of $375 million. The fiscal note on a similar bill, Senate Bill 22, was closer to $500 million.  

Electric Utility Securitization/Bonding Authority 

Kansas has the highest electric utility rates in the Midwest. This week, the Senate passed Sen Substitute for HB 2072, a bill that would create the Utility Financing and Securitization Act (UFSA). The bill would allow for the securitization of utility assets to recover energy transition costs for certain regulated electric public utilities. The bill was amended to include language requiring any cost savings through bonding to be passed on to rate payers. The bill would also allow certain regulated electric and natural gas public utilities to pursue securitization to finance certain extraordinary expenses, such as fuel costs recently incurred during the extreme weather events.  

Property Tax Bills Merge 

In an effort to move efficiently as we near the end of session, many committees have begun to synthesize bills to be under one bill number. This week, the tax committees do so with several key property tax bills. The House Committee on Taxation put the contents of Senate Bill 98 into Senate Bill 119 and then passed it from committee. On the Senate side, the contents of House Bill 2104 were replaced with Senate Bill 98, Senate Bill 119, and Senate Bill 277, detailed below. Senate Substitute for House Bill 2104 was then sent to the Senate Chamber, which passed it on Thursday, March 25.  

Senate Bill 98 would ensure that, in a hearing before a Kansas District Court, the county retains the burden of proof on the county appraiser’s valuation and classification. The bill also extends the time a state board of tax appeals member may continue to serve after such member’s term expires. In addition, the bill would allow the Governor to temporarily appoint former board members as necessary. Kansas Grain and Feed Association and Renew Kansas Biofuels Association were proponents to the bill.  

Senate Bill 119, explained in greater detail here, includes many positive changes to the Kansas property tax system that were spread out over a handful of bills last year. Of particular note, the bill would prohibit the Board of Tax Appeals from increasing the appraised valuation of property as a result of an appeal or an informal meeting concerning the property. Kansas Grain and Feed Association and Renew Kansas Biofuels Association testified as proponents.  

Senate Bill 277 authorizes continuation of the 20 mill statewide property tax levy for schools and the exemption of a portion of residential property from such levy.   

Constitutional Amendment on Agency Regulations 

This week, Kansas Grain and Feed Association, Kansas Agribusiness Retailers Association and Renew Kansas Biofuels Association President and CEO President Ron Seeber joined other stakeholders in testifying in support of House Concurrent Resolution 5014 in a hearing before the House Judiciary Committee. HCR 5014 proposes a constitutional amendment to increase legislative oversight of agency rules and regulations. The resolution was brought forward by Attorney General Derek Schmidt, who has announced his candidacy for the Kansas Governor’s race in 2022. Currently, in Kansas, the Legislature does not have the lawful authority to veto state agency regulations. HCR 5014 would give the Legislature the power to veto administrative rules and regulations which have the force and effect of law. According to Schmidt, the proposed constitutional amendment is intended to give the Legislature “real and meaningful oversight over how regulatory agencies use the power entrusted to them by law.” If approved by two-thirds of the legislature, the proposed constitutional amendment would go before Kansas voters during the 2022 election.  

High Performance Incentive Program Changes 

Senate Bill 65 would amend the High Performance Incentive Program (HPIP) economic development program in order to decouple certain workforce training requirements from the program. Under current law, taxpayers that claim the HPIP investment tax credit are required to participate in either the Kansas Industrial Training (KIT) or Kansas Industrial Retraining (KIR) programs. The bill would decouple the tax credit from participating in those programs. Removing the training requirement from HPIP will provide more flexibility in using the training programs, and will likely increase the number of companies that qualify for the HPIP tax credit. The bill was amended by the House Committee on Commerce to allow transferability of up to 50% of the tax credit to any individual or entity. The committee also inserted the contents of Senate Bill 91, which would allow for a company to transfer earned but unused high performance incentive fund tax credits to another tax payer. The House passed SB 65, as amended, on Thursday, March 25. The bill now advances to the Senate for concurrence. 

HB 2066  amending temporary licensure law to all applicants who establish Kansas residency. Senate amended and conference committee was appointed. 

HB 2087 amending the review of certain regulations by the budget director. Senate Ways and Means amended to $1 million threshold and passed favorably  

HB 2155 allowing minimum thresholds for reporting chemical spills to KDHE. Passed by House and Senate. Will go to Governor for consideration. 

HB 2184 creating the Kansas medical marijuana regulation act. Hearing scheduled in House Federal and State Affairs Committee. 

HB 2287 workforce development bill creating the Kansas Promise Scholarship Act. Passed favorably from Senate Education with new language. 

SB 52 authorizing a Sedgwick County Nuisance Abatement Act with agriculture exemption. Passed by House and Senate. Will go to Governor for consideration 

SB 118 providing for dissolution of special districts. Passed by House and Senate. Will go to Governor for consideration. 

SB 283 extending COVID business liability protections. Passed favorably as amended from House Judiciary Committee on 3/25 

SB 286 recovering damages for businesses that suffered loss from government COVID closure. Hearings held in House Judiciary Committee on 3/26 

SB 295 granting local health officers authority to set vaccine priorities. Passed favorably from Senate Public Health as amended. 

 

March 19, 2021

There was a sense of urgency within the Kansas Legislature this week as the House and Senate continued hearing bills received from the opposite chamber in addition to introducing or taking action on controversial legislation. The House introduced two big-ticket items, including: a House Concurrent Resolution “Intended to protect Kansans from COVID-19 vaccine mandates,” and House Bill 2434 which prohibits the employment of unauthorized aliens and requires employers to use the E-Verify program. In addition, Governor Laura Kelly announced that on March 22 the state will move forward into both phase three and four of the COVID-19 vaccine prioritization plan. Finally, the Senate had strong debate this week when it passed the Fairness in Women’s Sports Act to restrict involvement in women’s sports to biologically female athletes.  

Angel Investor Tax Credit 

On Wednesday, March 17, the House Commerce, Labor and Economic Development held a hearing on Senate Bill 66. The bill extends the Angel Investor Tax Credit used for investing in biotechnology through 2026. The chairman indicated his intentions to adopt the amendments that the House had passed on its version of the bill, House Bill 2045. The expectation is for the Committee to amend Senate Bill 66 with the amendments that it had made to House Bill 2045, and then advance the bill out of committee. The legislative fiscal note on the bill shows that State General Fund revenue would decrease by $1.9 million in FY 2022, by $6.0 million in FY 2023, and by increasing increments of $0.5 million each year through FY 2026 to $8.0 million. The House companion bill, House Bill 2045is scheduled to be heard by the Senate Commerce Committee on Wednesday, March 24. 

Global Intangible Low-Taxed Income Bill 

On Wednesday, March 17 the House Committee on Taxation held a hearing on House Bill 2421, a bill which includes corporate income tax modifications for global intangible low-taxed income, business interest, capital contributions, and FDIC premiums; allows an individual to itemize deductions despite not itemizing their federal return; and exempts from income compensation due to unemployment insurance ID fraud. A similar bill, Senate Bill 22, was passed by the Senate but seems to have stalled due to amendments which created a large fiscal note. 

Polar Vortex Spikes Natural Gas Prices 

In early February, natural gas users across the state experienced historically high prices due to the polar vortex. Since then, Kansas Grain and Feed Association, Kansas Agribusiness Retailers Association, and Renew Kansas Biofuels Association have had numerous conversations with state and federal leadership regarding potential assistance in current relief of the price spikes and prevention of similar spikes in the future. As conversations continue, please contact your association if you have been impacted so we can best advocate for you.  

Proposed Air Emissions Fee Increase 

In recent years, the Kansas Department of Health and Environment has looked at increasing the emissions fees to supplement a decrease in Air Quality Fee Fund revenues. Last year, the legislature included a budget proviso which restricted KDHE from raising fees and encouraged it to hold stakeholder meetings to find a compromise. This year, the department brought the proposal forward again, which includes a $1 million increase in revenues from fees. The House Agriculture Budget subcommittee will hear a presentation from KDHE about its proposed increase in fees and expected expenditures. Industry stakeholders will continue to work to find a solution which maintains the integrity of the fund while minimizing the financial impact on those which it regulates.  

Kansas Emergency Management Act (KEMA)  

This week, the Legislature passed Senate Bill 40, a bill amending the state’s emergency management law, installing new checks on powers of the governor, health officers, and school boards to manage the COVID-19 pandemic and future disasters. The Senate passed the bill 31-8 and the House by a vote of 118-5. The bill limits the power of the Governor, the state health secretary, and local public health officers to issue orders. It also gives Kansans more power to legally challenge emergency orders at all levels of government if they think their rights have been violated. The Legislature passed the bill about two weeks before the state’s existing emergency declaration expires on March 31. Passage of the bill would repeal the more than 60 executive orders issued by Governor Laura Kelly under the pandemic. The measure now goes to Governor Kelly for consideration.  

Senate Passes Budget Bill 

Senate Bill 267, passed by the Senate on final action on March 17, includes fiscal year 2021 expenditures of $21.3 billion, with $7.6 billion financed through the State General Fund (SGF). The Senate Ways and Means Committee previously adopted an amendment to direct $60,000 of SGF to the Kansas Dept. of Agriculture’s Grain Warehouse Program in order to supplement the fee increases proposed by the agency in Senate Bill 143. While on the floor, the bill was amended to include a provision which requires contractors with state agencies to use the E-Verify system to confirm the eligibility of their employees to work in the United States. The provision would apply to state contractors that do at least $50,000 in business with the state. Once the House has compiled and passed its version of the budget, the two chambers will go to conference committee to work out the differences.  

Unemployment Insurance Update 

On Wednesday, the Senate Commerce Committee continued its hearing on Sub for House Bill 2196. As amended, this bill would provide for transfers of federal coronavirus relief aid or State General Fund moneys to the Employment Security Fund in order to shore up the fund following the loss of hundreds of millions of dollars in fraudulent payments; create the Unemployment Compensation Modernization and Improvement Council; require the Kansas Department of Labor (KDOL) to modernize its information technology (IT) infrastructure; make temporary changes to the membership of the Employment Security Review Board; make changes to Employment Security Rates tables; require the Secretary of Labor to provide tax notifications and certain Employment Security Fund Data Reporting; provide for certain employer account protections; prohibit the continuation of federal unemployment compensation programs using state funds; adjust thresholds for maximum benefits; modify the shared work program; and make other employment security compensation changes. The Senate Committee on Commerce will take final action on the bill next week. 

Workforce Development Scholarship 

On March 16, the House passed House Bill 2287 on a vote of 115-9. This is a workforce development bill that would create the Kansas Promise Scholarship Act to provide postsecondary education scholarships to students attending any Kansas community college, technical college, or two-year associate degree program or career and technical education program offered by a private postsecondary educational institution accredited by the Higher Learning Commission with its primary location in Kansas. The bill was supported by Kansas Grain and Feed Association, Kansas Agribusiness Retailers Association, and Renew Kansas Biofuels Association.  

Occupational Licensing Bill Advances 

Substitute for House Bill 2066 would expand the military spouse and service member’s expedited licensure law to all applicants who have, or intend to establish Kansas residency. On Wednesday, March 17 the Senate passed the bill on emergency final action. The enactment date was amended on the Senate floor so the bill will now go to conference committee. 

Other Bills of Note: 

HB 2316 eliminating the prohibition of a surcharge for payments made with credit and debit cards. House Taxation Committee advanced bill favorably  

HB 2434 requiring business entities and public employers to register and use the e-verify program. Introduced this week  

HCR 5017 establishing a Covid-19 vaccine bill of rights 

SB 118  providing for dissolution of special districts. Advanced from House Local Government Committee on 3/17  

SB 212 prohibiting KDHE from requiring additional childhood immunizations for daycare or school. Senate Public Health hearing scheduled for Monday, 3/22 

SB 283 extending COVID business liability protections. Hearing held in House Judiciary Committee on 3/18  

SB 286 recovering damages for businesses that suffered loss from government COVID closure. Heard in Senate Taxation Committee on 3/19  

SB 295 giving local health officers authority to set vaccine priorities. Heard in Sen Public Health on 3/18 

SB 296 lowering the food sales tax hearing. Hearing in Senate Tax Committee on Tuesday, 3/23

 

March 12, 2021

Week Nine of the Kansas Legislative Session 

This was a short week in the Kansas Legislature, with the House and Senate returning to committee work on Wednesday. Highlights for this week include the swearing in of a new Senator Ron Ryckman Sr., from Southwest Kansas (father of House Speaker Ron Ryckman, Jr.), additional committee work on the state budget, and passage on final action of a property tax transparency bill that will now be sent to Governor Laura Kelly. Next week will bring hearings on many bills passed by the opposite chamber.  

Angel Investor Tax Credit 

On Wednesday, March 17, the House Commerce, Labor and Economic Development will hold a hearing on Senate Bill 66. Both chambers previously passed Angel Investor Tax Credit renewal bills. It’s being reported lawmakers wish to move forward with the Senate’s version, however, rather than go to a conference committee to sort out the differences, an official hearing on the bill in the opposite chamber must take place. The expectation is for the bill to be kicked out of the House Commerce Committee next week and then the Senate Commerce Committee is expected to simply concur on passage. The bill extends the Angel Investor Tax Credit used for investing in biotechnology through 2026. The legislative fiscal note on the bill shows that State General Fund revenue would decrease by $1.9 million in FY 2022, by $6.0 million in FY 2023, and by increasing increments of $0.5 million each year through FY 2026 to $8.0 million. The House passed its companion bill, House Bill 2045which has been referred to the Senate Commerce Committee. 

Kansas Emergency Management Act (KEMA) Revisions 

This week, a conference committee between the House and Senate Judiciary Committees met to discuss compromise language on amendments to the Governor’s powers under the Kansas Emergency Management Act when responding to a pandemic or natural disaster. The conference committee worked from language in bills (House Bill 2416 and Senate Bill 273) previously passed by the House and Senate on language to modify the procedure for declaring and extending a state of disaster emergency, limit powers granted to the governor during a state of disaster emergency, authorize the legislative coordinating council and the legislature to take certain action related to a state of disaster emergency, and prohibit the governor or the state board of education from closing private schools during a state of disaster emergency. The compromise language will be placed into Senate Bill 40. Timing is of the essence on this bill, because the legislature will need to attempt to override any veto by the Governor prior to March 31 – the day the current emergency declaration expires. 

House and Senate Work on Budget Bills 

The House Committee on Appropriations, and the Senate Ways and Means Committee, are working bills that include appropriations to state agencies for the remainder of the current fiscal year and fiscal year 2022. House Bill 2396  and Senate Bill 267 include fiscal year 2021 expenditures of $21.3 billion, with $7.6 billion financed through the State General Fund (SGF). The Senate Ways and Means Committee continued hearings on Senate Bill 267 this week, adopting an amendment to direct $60,000 of SGF to the Kansas Dept. of Agriculture’s Grain Warehouse Program in order to supplement the fee increases proposed by the agency in Senate Bill 143. In addition, the Committees are holding hearings on bills making supplemental appropriations for fiscal years 2021 through 2032 for various state agencies in House Bill 2397 and Senate Bill 268. 

New Global Intangible Low-Taxed Income Bill 

On Wednesday, March 17th the House Committee on Taxation will hold a hearing on House Bill 2421, a bill which includes corporate income tax modifications for global intangible low-taxed income, business interest, capital contributions, and FDIC premiums; allows an individual to itemize deductions despite not itemizing their federal return; and exempts from income compensation due to unemployment insurance ID fraud. A similar bill, Senate Bill 22, was passed by the Senate but seems to have stalled due to amendments which created a large fiscal note. 

Other Bill Updates: 

  • SB 50requiring marketplace facilitators to collect and remit sales, use and transient guest taxes. Passed the Senate on a vote of 35-3 on Thursday, 3/11.   
  • SB 149: provides reimbursement of property taxes for business shutdown or capacity limitation caused by the county. Heard in Senate Tax Committee on Thursday, 3/11. 

March 5, 2021

This week was Turnaround – the initial deadline for each chamber to pass its own bills. Any bill not passed by the full House or Senate this week is now dead for the year, unless it was introduced in one of a few select committees. This means that the House and Senate spent much of the week on the floor debating bills that had advanced favorably from committees, including expanded sports gambling, and emergency passage of a bill to provide municipalities with financial assistance for increased natural gas prices. After taking a few days off, the legislature will return next week to begin committee work on the state budget and on the many bills that were just passed by the opposite chamber. Please find updates on specific legislation, below. 

Employment Vaccine Bill Survives Turnaround 

The Senate Commerce Committee previously held a hearing on Senate Bill 213, which would prohibit employers from mandating vaccinations for their employees. Senator Mark Steffen, R-Hutchinson – who introduced the bill – has framed it as a way of preserving the decision-making process for individual employees. At least 23 states have considered similar requirements, although none have advanced in the legislative process. Kansas may be the first state to impose such a requirement through this bill. Both Governor Kelly and the Kansas Chamber have recorded their opposition to this legislation, stating that this legislation is unnecessary. This week, Senate Bill 213 was referred to the Senate Committee on Federal and State Affairs in order to survive the Turnaround Day in the legislative process. The bill will likely be referred back to Senate Commerce Committee. 

Childhood Immunizations 

This week, Senate Bill 212 was withdrawn from the Committee on Public Health and Welfare and referred to Committee on Federal and State Affairsin order to survive the Turnaround Day in the legislative process. The bill would authorize the Kansas Department of Health and Environment (KDHE) to declare that certain immunizations required for admittance to a child care facility or school are no longer required if KDHE determines that the vaccines are unsafe.  

Angel Investor Tax Credit 

On Thursday, the House passed House Bill 2045 on a vote of 112-11. The bill extends the Angel Investor Tax Credit used for investing in biotechnology through 2026, amends the definition of qualified securities, changes the tax credit limitations, amounts, and investor requirements, and extends the date that credits may be allowed. Find a full summary of the bill here. The legislative fiscal note on the bill shows that State General Fund revenue would decrease by $1.9 million in FY 2022, by $6.0 million in FY 2023, and by increasing increments of $0.5 million each year through FY 2026 to $8.0 million. During House action, the bill was amended to allow for an increase in the maximum tax credit for home renovations made for a disabled family member’s access. Last week, the Senate passed its companion bill Senate Bill 66 on a vote of 26-12. 

Low Interest Loans Allowed for Municipal Electric and Natural Gas Bills 

Following historic increases in natural gas prices during the February polar vortex, many Kansas municipalities faced gas bills that would likely be unpayable. The municipalities risked losing access to natural gas within days if they did not pay their bills. In response, the legislature quickly passed a bill this week to provide $100 million in low-interest loans to Kansas municipalities to help spread out the cost of their natural gas bills over time. House Sub for Senate Bill 88 establishes a low-interest loan program which allows cities to apply to the State Treasurer for loans from state unencumbered funds. These loans must be for the purpose of lowering the immediate impact of the spiked electric and gas costs. The interest rate would be set at 2.0 percent below the market rate with a minimum of 0.25 percent. The bill was structured similar to Senate Bill 15 which created an Economic Recovery Linked Deposit Loan program for businesses in response to the economic downturn caused by the COVID-19 pandemic. The legislation was heard and passed by the House and Senate and then signed into law by Governor Laura Kelly.   

Kansas Emergency Management Act (KEMA) Revisions 

This week, the House and Senate passed bills which would amend the Governor’s powers under the Kansas Emergency Management Act when responding to a pandemic or natural disaster. House Bill 2416 and Senate Bill 273 would modify the procedure for declaring and extending a state of disaster emergency, limiting powers granted to the governor during a state of disaster emergency, authorizing the legislative coordinating council and the legislature to take certain action related to a state of disaster emergency, and prohibiting the governor or the state board of education from closing private schools during a state of disaster emergency. The House passed HB 2416 on a vote of 81-40, and the Senate passed SB 273 on a vote of 27-12. A conference committee between the two chambers has started to meet, and we anticipate compromise language to be placed into Senate Bill 40. 

Unemployment Insurance Update 

During the House Session on Thursday, March 4thSub for House Bill 2196 passed on an 87-36 vote. This bill would hold Kansas employers harmless for fraudulent unemployment claims, require the department to modernize its information technology infrastructure, and allow for the creation of an Unemployment Compensation Modernization and Improvement Council and provide for reimbursement of the Unemployment Insurance Trust Fund with money from the state general fund (SGF) or CARES Act funding. In addition, it would prohibit the continuation of federal unemployment compensation programs using state funds and other provisions. 

Net Operating Loss Bill Advanced 

On March 4, the House passed House Bill 2239 on a unanimous vote. The bill would allow Kansas income taxpayers to carry forward net operating losses, indefinitely, beginning with losses incurred in tax year 2018. The bill will allow taxpayers to better account for business expenses and remove a competitive disadvantage for job creation and capital investments in Kansas. Kansas Grain and Feed Association, Kansas Agribusiness Retailers Association, and Renew Kansas Biofuels Association joined other stakeholders in supporting the bill.  

High Performance Incentive Program 

This week, the Senate passed Senate Bill 91 on a vote of 34-5. This bill would allow for the transferability of High Performance Incentive Program (HPIP) fund tax credits. Under current law, HPIP provides certified companies a 10.0 percent non-refundable income tax credit for eligible capital investments that exceed $50,000 ($1.0 million in five metro counties) that can be carried forward for the next 16 tax years as long as the company is recertified in the tax year that the carry forward is used. SB 91 would allow taxpayers to transfer up to 50 percent of those tax credits for projects placed into service on and after January 1, 2021. The transferred tax credits would be required to be claimed in the same year as the transfer and the remaining tax credits for the original taxpayer would be allowed to be carried forward for up to 16 tax years. The taxpayer or transferee would be required to notify the Department of Revenue about the tax credit transfer. If the HPIP tax credits are later disallowed in whole or in part, the original taxpayer would be liable for repayment to the state. 

Also, on HPIP this week, the House unanimously passed House Bill 2097. Under current law, taxpayers that claim the HPIP investment tax credit are required to participate in either the Kansas Industrial Training (KIT) or Kansas Industrial Retraining (KIR) workforce training programs. The bill would decouple the tax credit from participation in those programs. This change is intended to provide more flexibility in using the training programs and increase the number of companies that qualify for the HPIP tax credit. Last week, the Senate passed a companion bill, Senate Bill 65, on a unanimous vote. 

COVID Liability Business Protections 

This week, the Senate heard, and passed, Senate Bill 283 on a vote of 31-8. The bill amends the COVID-19 Response and Reopening for Business Liability Protection Act to extend the expiration date of the statute governing COVID-19 claim immunity for persons or agents of persons conducting business in the state by one year, until March 31, 2022. 

Other Bill Updates: 

  • HB 2066: expands the military spouse and service member’s expedited licensure law to all applicants who have, or intend to, establish Kansas residency. Passed by the House 103-21. 
  • HB 2106extending the filing date for corporate income tax returns. House passed the bill on Thursday with an unanimous vote.  
  • SB 149: provides reimbursement of property taxes for business shutdown or capacity limitation caused by the county. Hearing scheduled in Senate Tax Committee on Thursday, 3/11 

February 26, 2021 

Week Seven of the Kansas Legislative Session 

This week marked the close of hearings on most bills in their chamber of origin. Next week is the Turnaround Day for bills, which means that the House and Senate will be busy most of the week with floor debate on bills that were advanced favorably from Committees. Any bill that is not passed by the full House or Senate will be dead for the year, unless it was introduced in one of a few select committees. This week was filled with high-profile issues, to include: the introduction of a constitutional amendment on executive agency regulatory powers; a legislative study report indicating up to $600 million in fraudulent payments from our state unemployment security fund last year; a proposal to prohibit businesses from requiring employees to receive vaccines; legislative discussion of the February 2021 natural gas price spikes of more than 300 percent; hearings on bills amending the Governor’s authority under the Kansas Emergency Management Act; and, the signing by Governor Kelly of a low-interest loan economic development bill.  

Employment Vaccine Bill 

This week, the Senate Commerce Committee held a hearing on Senate Bill 213, which would prohibit employers from mandating vaccinations for their employees. Nursing home facilities in other states have required employees to get the vaccine because of their work with high-risk individuals. Senator Mark Steffen, R-Hutchinson, who authored Senate Bill 213, has framed it as a way of preserving the decision-making process for individual employees. At least 23 states have considered similar requirements, although none have advanced in the legislative process. Kansas may be the first state to impose such a requirement through this bill. Both Governor Kelly and the Kansas Chamber have recorded their opposition to this legislation, stating that this legislation is unnecessary. 

Medical Marijuana Bill Receives Hearing 

This week, the House Committee on Federal and State Affairs held a hearing on House Bill 2184, which would create the Kansas medical marijuana regulation act. The bill would permit the growing, harvesting, processing, dispensing and use of marijuana under specific conditions. The Kansas Department of Health and Environment would register patients and caregivers, the Kansas Department of Agriculture would license growers and laboratories, and the Alcohol and Beverage Control of the Kansas Department of Revenue (KDOR) would license dispensaries. The bill had multiple proponents. 

Natural Gas Price Spike Discussed, Relief Bill Introduced 

This week the Senate Utilities Committee received a briefing from the utilities industry on the issue of the natural gas price spike this month. Beginning after working hours on the evening of Friday, February 12, 2021, as a historically cold polar vortex began to settle over the Midwest, natural gas prices began to sharply increase. The increase continued over the weekend, ratcheting up more than 350 times the normal price $3/unit. This occurred after the municipalities had already locked in at index price plus 5-10 cents. They indicated that, although natural gas production did come to a halt for a couple of days due to the weather in certain areas, this was not the cause for most of the price hike. On Friday, a bill was introduced in the House Appropriations Committee to provide a tool to municipal utilities to shield their customers from the gas price hike. The bill would allow the municipalities to release 10-year bonds to help pay their gas bill over time. It was stated that one city in Kansas saw a monthly gas bill of more than $5.5 million, when its usual bill this time of year was around $110,000. Earlier this week, Governor Laura Kelly submitted a letter to the Federal Energy Regulatory Commission (FERC) urging it to take all necessary and possible steps to investigate the causes of the system failures during the recent extreme-weather event in Kansas and protect Kansans from natural gas and electricity price surges resulting from increased demand. Kansas Corporation Commission (KCC) Chair Andrew French, Commissioner Dwight D. Keen, and Commissioner Susan K. Duffy also signed onto the letter. 

Kansas Emergency Management Act (KEMA) Revisions 

This week, both the House and Senate Judiciary Committees held hearings on bills which would amend the Governor’s powers under the Kansas Emergency Management Act when responding to a pandemic or natural disastersHouse Bill 2416 and Senate Bill 273 would modify the procedure for declaring and extending a state of disaster emergency, limiting powers granted to the governor during a state of disaster emergency, authorizing the legislative coordinating council and the legislature to take certain action related to a state of disaster emergency, and prohibiting the governor or the state board of education from closing private schools during a state of disaster emergency. Find more details, Here. 

Unemployment Fraud Audits Show Conflicting Reports 

On Wednesday, February 24, legislative auditors announced their estimate of $600 million in fraudulent unemployment payments made during 2020 and the first two months of 2021. However, the Kansas Department of Labor challenged that report with its own estimate of $290 million in fraudulent payments. The legislative auditors’ estimate was made using the 157,000 potentially fraudulent cases and finding them to be 24% of all claims paid out in 2020. That rate was then used on the total state and federal benefits paid out in 2020. The department asked the auditors to withdraw their estimate, stating that the process did not consider the variation between state and federal unemployment programs or their operations during the pandemic. Legislative auditors said they stand by their estimate until further data is brought forward. Both the House and Senate Commerce Committees have continued hearings this week on bills (House Bill 2196 and Senate Bill 177) addressing this issue. The bills would hold Kansas employers harmless for fraudulent unemployment payments and would use money from either the state general fund, or federal CARES act funding, to reimburse the Kansas’ Unemployment Insurance Trust Fund. The actual amount to be transferred from SGF would be determined following the certification of all fraudulent claims.  

Governor Kelly signs Economic Recovery Linked Deposit Loan Program 

On Friday, Governor Kelly signed Senate Bill 15, creating a new Economic Recovery Linked Deposit Loan Program for businesses in response to the economic downturn caused by the COVID-19 pandemic. This 10-year program, which will be administered by the office of the State Treasurer, will make up to $60 million available for low-interest (2% below market rate) loans to business. Renew Kansas Biofuels Association joined with other stakeholders in supporting the legislation. 

Constitutional Amendment on Agency Regulations Announced 

This week, Attorney General Derek Schmidt and GOP statehouse leadership announced a proposed constitutional amendment that would give the Legislature the power to veto administrative rules and regulations. According to Schmidt, the proposed constitutional amendment is intended to give the Legislature “real and meaningful oversight over how regulatory agencies use the power entrusted to them by law.” Rules and regulations of state agencies have the force and effect of law. Currently, in Kansas, the Legislature does not have the lawful authority to veto state agency regulations. The proposed constitutional amendment, if approved by two-thirds of the Legislature, would still need to be approved by Kansas voters during the November 2022 election. 

Net Operating Loss Bill Advanced 

This week, the House Tax Committee amended, and passed out favorably, House Bill 2239. As amended, the bill would allow Kansas income taxpayers to carry forward net operating losses, indefinitely, beginning with losses incurred in tax year 2018. The bill will allow taxpayers to better account for business expenses and remove a competitive disadvantage for job creation and capital investments in Kansas. Kansas Grain and Feed Association, Kansas Agribusiness Retailers Association, and Renew Kansas Biofuels Association joined other stakeholders in supporting the bill.  

Employer Sponsored Retirement Plans 

This week the Senate Tax Committee held a hearing on Senate Bill 46, a bill which would allow the amounts received by retired individuals under employer-sponsored retirement plans to be subtracted from Kansas income tax income beginning in tax year 2021. The bill was amended to include all retirement funds, not just employer-sponsored, which increased the bill’s fiscal note to over $213 million. The bill passed favorably from the committee, as amended. 

Business Liability Exemption for Work-Based Learning 

On Monday, February 22, the House Commerce Committee held a hearing on House Bill 2351, a bill which would exempt any business that accepts a secondary student in a work-based learning program from certain claims arising from a student’s negligent act as a result of participating in the program at the business or work site. Except for incidents arising from gross negligence or willful misconduct, a student’s school district would be solely responsible for civil liability for these claims. The bill would allow school districts to purchase insurance contracts to insure against liability claims and increase school districts’ exposure to liability for students participating in work-based learning programs. The bill was supported by multiple business interests, including: Kansas Grain and Feed Association, Kansas Agribusiness Retailers Association, Renew Kansas Biofuels Association, Kansas Cooperative Council, and the Kansas Chamber. 

February 20, 2021  

Week Six of the Kansas Legislative Session 

This week brought further committee hearings, and debate and action on numerous bills by both the House and Senate Chambers. Find more details on this week’s legislative action, below.  

Angel Investor Tax Credit Passes the Senate Cleanly 

Senate Bill 66 extends the Angel Investor Tax Credit used for investing in biotechnology through 2026 and amends the definition of qualified securities, changes the tax credit limitations, amounts, and investor requirements, and extends the date that credits may be allowed. On Thursday, February 18, the Senate Chamber passed the bill on a final action vote of 26-12, following a debate and a failed attempt to amend the bill by first-year senator Mark Steffen (R-Hutchinson). The House Commerce Committee has passed the companion bill House Bill 2045 out favorably with three technical amendments recommended by the Kansas Dept. of Commerce.  

Unemployment Insurance Trust Fund Hearings Continued 

House Bill 2196 was worked on by the House Committee on Commerce, Labor, and Economic Development on Thursday, February 18th. This bill would hold Kansas employers harmless for fraudulent unemployment claims and requires the Kansas Department of Labor to immediately and fully credit employers’ accounts who had not been reimbursed for fraudulent charges in the 20 years leading up to July 1st, 2021. It would also allow for the creation of an Unemployment Compensation Modernization and Improvement Council and provide for reimbursement of the Unemployment Insurance Trust Fund with money from the state general fund (SGF). The actual amount to be transferred from SGF would be determined following the certification of all fraudulent claims but could be as high as $500 million. The committee will continue to work the bill next week.  

The Senate Commerce Committee held a series of hearings for Senate Bill 177. This bill would amend the employment security law by, inter alia: creating an unemployment compensation modernization and improvement council; developing a new unemployment insurance information technology system; providing tax information to claimants; requiring publication of trust fund data; transferring money from the state general fund to the unemployment insurance trust fund to cover fraudulent benefit payments; and amend the shared work compensation program and other unemployment trust fund provisions. The Kansas Department of Labor testified neutral with concerns about security requirements being included in the bill, and the feasibility of a 20-year fraud payback provision. The committee is expected to take action on the bill next week. Kansas Grain and Feed Association, Kansas Agribusiness Retailers Association and Renew Kansas Biofuels Association supported this bill and House Bill 2196. 

Electric Utility Securitization Bill Heard 

Kansas has the highest utility rates in our region. This important issue resulted in the Legislature commissioning a study in 2019 to determine the reasons for these high electric rates and ways in which they might be lowered. On Thursday, the Senate Committee on Financial Institutions held a hearing on Senate Bill 245. Referred to as “securitization” this bill would create the Kansas Grid Resiliency, Innovation and Dependability Act. The bill would authorize the Kansas Corporation Commission to regulate and authorize issuance of ratepayer-backed securitized bonds for the financing of capital expenditures that are currently included (recovered) in the rates assessed by an investor-owned utility in the state (Evergy). Proponents to the bill included a large utility company and the Sierra Club. Proponents indicated that the bonds proceeds would not have to go toward renewable investments. Opponents indicated that the bill does not specifically require any cost savings to be passed along to rate payers. 

High Performance Incentive Program 

This week, the Senate Chamber passed Senate Bill 65 on a vote of 38-0. Amending the High-Performance Incentive Program (HPIP) economic development program, the bill would decouple certain workforce training requirements from the program. Under current law, taxpayers that claim the HPIP investment tax credit are required to participate in either the Kansas Industrial Training (KIT) or Kansas Industrial Retraining (KIR) programs. The bill would decouple the tax credit from participating in those programs. Removing the training requirement from HPIP will provide more flexibility in using the training programs and will likely increase the number of companies that qualify for the HPIP tax credit. 

Corporate Income Tax Apportionment Bill Heard 

On Tuesday, February 16, the House Committee on Taxation held a hearing on House Bill 2186, a bill which would allow corporate taxpayers the option to elect how to apportion their corporate income tax liability between Kansas and other states in which it operates. Kansas currently uses a three-factor system for apportioning income between states for corporate income tax purposes. The proposed legislation would allow certain taxpayers, based on NAICS codes, to elect to use a single-factor apportionment formula based on sales to determine corporate income tax liability. The fiscal note on this bill is estimated to be $20.5 million annually. The following NAICS codes will be included in an amendment to the bill: 541690, Other Scientific and Technical Consulting Services (biofuel facilities), and 112210, hog farming / certain agricultural activities. Kansas Grain and Feed Association was joined by Cargill and the Kansas Chamber in providing proponent testimony. There were no opponents, but the committee asked many questions about the bill and the fiscal note. 

Other Bills of Interest: 

HB 2239: providing an extension of the net operating loss carryforward for corporations. Hearing held in House Taxation Committee, 2/17 

HB 2244: relating to regulation of industrial hemp and registration of processors by the state fire marshal. Passed out favorably by House Committee on Agriculture 

February 12, 2021 

Scores of new bills were introduced again this week on a wide range of issues as the Kansas Legislature approached the February 12 deadline for non-exempt committee bill introductions. This week also brought further committee hearings on bills relating to the state unemployment insurance trust fund. Numerous hearings have already been scheduled for the coming week which may be shortened due to pending winter weather. 

Angel Investor Tax Credit 

Last week, the Senate Commerce Committee passed Senate Bill 66 out favorably. The bill was initially placed on the Senate consent calendar, but then a motion was made to remove it and place it on the debate calendar. The bill, which extends through 2026, the Angel Investor Tax Credit used for investing in biotechnology, will likely be debated next week. The bill would also amend the definition of qualified securities, change the tax credit limitations, amounts, and investor requirements, and extend the date that credits may be allowed. The House Commerce Committee passed companion bill House Bill 2045 out favorably with three technical amendments recommended by the Kansas Dept. of Commerce. 

Two vaccination bills introduced in Senate 

Late in the week first year Senator Dr. Mark Steffen (R-Hutchinson) introduced two separate bills, SB 212 and SB 213, concerning vaccinations which were referred to the Senate Public Health and Welfare Committee and Senate Commerce Committee respectively. 

SB 212 is largely a duplicative bill from the 2020 legislative session in which childhood immunizations required for attendance at a childcare facility or school are regulated by statute and not by the Kansas Department of Health and Environment. BioKansas submitted written testimony and met with officials in the House of Representatives in 2020 and successfully stopped action being taken on that particular bill. 

SB 213 would establish an unlawful employment practice for an employer to take any adverse action against an employee because of such person’s decision to either receive or not receive a particular vaccination. Upon passage, the bill would award a plaintiff actual damages or $1,000, whichever is greater, for each employer violation.  

Representatives on behalf of BioKansas have contacted both Senate Public Health and Welfare Committee Chairman Richard Hilderbrand (R-Galena) and Senate Commerce Committee Chairman Robert Olson (R-Olathe) on their intentions moving forward hearing or acting on the bills. 

Kansas Economic Recovery Bill Sent to Governor 

This week, the House passed Senate Bill 15 on a vote of 122-1. This bill creates a new Economic Recovery Linked Deposit Loan Program for businesses in response to the economic downturn caused by the COVID-19 pandemic. This 10-year program, administered by the State Treasurer, would allow up to $60 million available for low-interest businesses loans (2 percent below market rate). The loans would be capped at $250,000. The bill had passed the Senate on a vote of 39-0. BioKansas member, Renew Kansas Biofuels Association joined other industry stakeholders in supporting the bill. The bill will now be sent to Governor Kelly for consideration. 

Unemployment Insurance Trust Fund Hearings Continued 

This week brought additional hearings on the unemployment insurance fraud issue through House Bill 2195 and House Bill 2196House Bill 2195 which would hold Kansas employers harmless for fraudulent unemployment claims and provide for reimbursement of the Unemployment Insurance Trust Fund with money from the State General Fund (SGF). The actual amount to be transferred from SGF would be determined following the certification of all fraudulent claims but could be as high as $500 million. Hearings were also continued on House Bill 2196. Along with the provisions in HB 2195, this bill allows for the creation of an Unemployment Compensation Modernization and Improvement Council. BioKansas members; Kansas Grain and Feed Association, Kansas Agribusiness Retailers Association and Renew Kansas Biofuels Association provided testimony in support of both bills. 

Next week, the Senate Commerce Committee has scheduled three days of hearings for Senate Bill 177. This bill would amend the employment security law by, inter alia: creating an unemployment compensation modernization and improvement council; developing a new unemployment insurance information technology system; providing tax information to claimants; requiring publication of trust fund data; transferring money from the state general fund to the unemployment insurance trust fund to cover fraudulent benefit payments; and amending the shared work compensation program and other unemployment trust fund provisions. 

Federal Decoupling of Corporate Taxation, Bill Advanced 

On Tuesday, the Senate debated into the evening, heavily amended, and then passed, Senate Bill 22 on a vote of 24-15. The bill, which had been heavily amended by the Senate Committee on Taxation, would exempt certain types of foreign corporate income from taxation (repatriated income and global intangible low tax income/GILTI) that is now taxable at the state level following passage of the federal tax cuts and jobs act of 2017. The various amendments to the bill on the Senate floor can be found here. As passed by the full Senate, the bill would decouple from federal income tax deductions, allowing Kansans who do not itemize on their federal income taxes to itemize on their state returns. It also cleans up fraudulent unemployment compensation reports and will allow some non-state pension benefits to be income tax-exempt. In its current form, the bill is essentially just a vehicle for the House and Senate to discuss further in conference committee. While an official fiscal note on the amended bill was not available by Friday, it was announced during Senate floor debate that an estimated revised fiscal note on the bill was $634 million in the first year, and more than $1 billon over first three years. 

The Senate Tax Committee had removed a provision that would have allowed businesses to seek refunds for taxes they paid in previous years. As it left the Senate Tax Committee, the bill would also: 

  • Exempt global intangible low-taxed income starting in 2021. However, businesses would not be able to capture money from the GILTI tax going back in time. Under the original bill, in the two years before 2020, global intangible low-taxed income would have been treated as a foreign dividend and only 20 percent of the income would have been taxed. The committee removed that provision, reducing the cost to the state by around $57 million in 2022. 
  • The committee removed a section that would have allowed taxpayers to carry back their net operating losses as provided by tax code changes made by the CARES Act. Under the original bill, a net operating loss from tax years beginning in 2018, 2019 or 2020 could have been carried back five years and carried forward indefinitely. The carryback element of the bill would have cost the state about $100 million in the first year, and $20 million in each of the following two years. 

Electric Utility Rate Relief  

Kansas has the highest utility rates in our region. This important issue resulted in the Legislature commissioning a study in 2019 to determine the reasons for these high electric rates and ways in which they might be lowered. Last year, legislation was successfully passed which removed the income tax assessment on certain public utilities and required the savings to the utilities to be passed on to rate payers. This measure was estimated to save Kansas residential and industrial rate payers over $40 million annually. This week, the Kansas Grain and Feed Association, Kansas Agribusiness Retailers Association, and Renew Kansas Biofuels Association, joined other stakeholders in supporting the following legislation to address high utility rates: 

  • Senate Bill 80 and House Bill 2180, requiring energy companies to have any transmission delivery rate changes approved through the Kansas Corporation Commission (KCC),and 
  • Senate Bill 81 and House Bill 2181, requiring the KCC to provide the legislature with an annual report covering electric public utility rates across the region. 

High Performance Incentive Program 

This week, the Senate Commerce Committee passed Senate Bill 65 out favorably for passage. Amending the High Performance Incentive Program (HPIP) economic development program, the bill would decouple certain workforce training requirements from the program. Under current law, taxpayers that claim the HPIP investment tax credit are required to participate in either the Kansas Industrial Training (KIT) or Kansas Industrial Retraining (KIR) programs. The bill would decouple the tax credit from participating in those programs. Removing the training requirement from HPIP will provide more flexibility in using the training programs and will likely increase the number of companies that qualify for the HPIP tax credit. 

Proposed Constitutional Amendment Granting Counties Power of Home Rule 

On Tuesday, February 16, the Senate Local Government Committee will hold a hearing on SCR 1606, which would allow for the amendment of Article 9 of the Kansas Constitution to provide a constitutional basis for county home rule. A county could enact a charter resolution to exempt itself from non-uniform state laws that apply to the county and provide substitute or additional provisions to that law. The legislature could preempt counties from exercising home rule powers by the passage of uniform state laws that apply to all counties in the exact same manner. Counties could pass home rule resolutions to legislate locally on matters not covered by state law. 

Corporate Income Tax Apportionment Bill To Be Heard 

On Tuesday, February 16, the House Committee on Taxation will hold a hearing on House Bill 2186, a bill which would allow corporate taxpayers the option to elect how to apportion their corporate income tax liability between Kansas and other states in which it operates. Kansas currently uses a three-factor system for apportioning income between states for corporate income tax purposes. The proposed legislation would allow certain taxpayers, based on NAICS codes, to elect to use a single-factor apportionment formula based on sales to determine corporate income tax liability. The fiscal note on this bill is estimated to be $20 million annually. The following NAICS codes will be included in an amendment to the bill: 541690, Other Scientific and Technical Consulting Services (biofuel facilities), and 112210, hog farming / certain agricultural activities. Testimony on House Bill 2186 can be emailed to House Tax Committee Assistant Lea Gerard, at: Lea.Gerard@House.ks.gov. 

Other Bills of Interest: 

  • HB 2105: new withholding requirements for multi-state employees. Final Action in House Taxation Committee on Monday, 2/15 
  • HB 2239: providing an extension of the net operating loss carryforward for corporations. Hearing in House Taxation Committee, Wednesday, 2/17 
  • HCR 5007: constitutional amendment concerning initiative and referendum, introduced, referred to House Committee on Elections 
  • SCR 1605constitutional amendment concerning initiative and referendum, introduced, referred to Senate Judiciary Committee 

February 9, 2021

This week brought continued discussions in multiple committees on the issue of fraud on the Kansas state unemployment fund. It is thought that fraudulent claims paid-out over the last year could be as high as $400 million. Regarding the total number of new unemployment claims, Kansas is second only to the state of Illinois. Governor Laura Kelly has budgeted money for IT system upgrades for the Kansas Dept. of Labor (KDOL) to respond to the problem, and legislation has been introduced to hold Kansas employers harmless on rebuilding the fund. Other news this week saw passage of a Senate resolution urging Governor Kelly to rescind her policy on providing COVID-19 vaccines to prisoners before other Kansans; the roll-out of legalized gaming bills, the passage of which would likely bring in new revenues to the state; and an announcement by Governor Kelly supporting the possible legalization of medical marijuana in Kansas to help pay for expanding Medicaid to uninsured Kansans. 

Action Taken on Angel Investor Tax Credit Bills 
This week, the Senate Commerce Committee held a hearing on Senate Bill 66, an economic development bill that would extend the Angel Investor Tax Credit. The bill extends, through 2026, a tax credit for investing in biotechnology. The bill would also amend the definition of qualified securities, change the tax credit limitations, amounts, and investor requirements, and extend the date that credits may be allowed. On Thursday, the Senate Committee advanced the bill to the full Senate, with Chairman Rob Olson (R-Olathe) casting the deciding yes vote. The bill was placed on the Senate Consent Calendar, although there may be a motion made to remove it from the consent calendar. The House Commerce Committee had previously passed out favorably House Bill 2045, a companion bill to SB 66. The House Committee amended the bill with three minor technical amendments recommended by the Kansas Department of Commerce. 

Step Therapy Protocols 
On Wednesday, February 3, the House Committee on Health and Human Services held a hearing on House Bill 2157, a bill establishing restrictions on the use of step therapy protocols by health insurance plans. The bill would require health insurance plans to consider available recognized evidence based and peer-reviewed clinical practice guidelines when establishing a step therapy protocol. Step therapy protocol is defined as a protocol or program that establishes the specific sequence in which prescription drugs for a specified medical condition, including self-administered and physician-administered drugs, are medically appropriate for a particular patient and are covered under a health insurance plan. The bill would require a clear, readily accessible and convenient process to request a step therapy exception and outlines when a health insurance plan would grant an override to the step therapy protocol. The patient or prescriber could appeal the denial of a step therapy exception. A health insurance plan could require a patient to try a generic equivalent drug prior to providing coverage for equivalent branded prescription drugs. The bill would not mandate coverage for prescription medication if the coverage is not already a covered benefit by the patient’s health insurance plan. Proponents included, inter alia, St. Luke’s Hospital, and Nami Kansas. The following provided opposition testimony: Prime Therapeutics, Blue Cross Blue Shield of Kansas, PCMA, and America’s Health Insurance Plans. Blue Cross Blue Shield of Kansas City provided neutral testimony. 

Unemployment Insurance Trust Fund 

This week saw additional hearings on the unemployment insurance fraud issue, where the KDOL testified that, after implementing additional security measures, the agency had stopped more than 500,000 fraudulent log-in attempts to the state’s unemployment insurance system. In addition, the House Appropriations Committee heard House Bill 2195 which would hold Kansas employers harmless for fraudulent unemployment claims and provide for reimbursement of the Unemployment Insurance Trust Fund through with money from the State General Fund (SGF). The actual amount to be transferred from SGF would be determined following the certification of all fraudulent claims, but estimates could be as high as $400 million. The bill also includes a 20-year review into past fraud claims to ensure that the credits are applied to employer accounts regardless of whether the reimbursements from fraudulent parties have been secured. Also, the House Commerce Committee held hearings on a similar bill, House Bill 2196. Along with the provisions in HB 2195, this bill allows for the creation of an Unemployment Compensation Modernization and Improvement Council. BioKansas members: Kansas Grain and Feed Association, Kansas Agribusiness Retailers Association, and Renew Kansas Biofuels Association provided testimony in support of both bills. 

Corporate Taxation – Federal Decoupling 
This week, the Senate Tax Committee amended Senate Bill 22 and advanced the bill to the full Senate. The bill would exempt certain types of foreign corporate income from taxation (repatriated income and global intangible low tax income/GILTI) that is now taxable at the state level following passage of the federal tax cuts and jobs of 2017. The bill emerged from committee with an estimated cost of $175 million in the first year, compared to $326 million in the original bill. Over three years, the amended bill would cost an estimated $422 million. Governor Kelly has intimated that she would likely veto this legislation due to its cost to the state. The committee amended the bill to remove a provision that would have allowed businesses to seek refunds for taxes they paid in previous years. Other amendments include: 

GILTI: The bill exempts global intangible low-taxed income starting in 2021. However, businesses would not be able to capture money from the GILTI tax going back in time. Under the original bill, in the two years before 2020, global intangible low-taxed income would have been treated as a foreign dividend and only 20 percent of the income would have been taxed. The committee removed that provision, reducing the cost to the state by around $57 million in 2022. 

Net Operating Loss: The committee also removed a section that would have allowed taxpayers to carry back their net operating losses as provided by tax code changes made by the CARES Act. Under the original bill, a net operating loss from tax years beginning in 2018, 2019 or 2020 could have been carried back five years and carried forward indefinitely. The carryback element of the bill would have cost the state about $100 million in the first year, and $20 million in each of the following two years. The bill retains the carryforward component. 

Electric Utility Rate Relief 
Kansas has the highest utility rates in our region. This important issue resulted in the Legislature, in 2019, commissioning a study to determine the reasons for these high electric rates and ways in which they might be lowered. Last year, legislation was successfully passed which removed the income tax assessment on certain public utilities and required the savings to the utilities to be passed on to rate payers. This measure was estimated to save Kansas residential and industrial rate payers over $40 million annually. New legislation has been introduced this year to seek further reductions in the high utility rates. Senate Bill 80 and House Bill 2180 would require energy companies to have any delivery rate changes approved through the Kansas Corporation Commission (KCC). The House Committee on Energy and Utilities will hear House Bill 2180 on Thursday, February 11. Senate Bill 81 and House Bill 2181 would require the KCC to provide the legislature with an annual report covering electric public utility rates across the region. The Senate Utilities Committee will hear SB 81 on Wednesday, February 10 while the House Energy and Utilities Committee will hear HB 2181 on Tuesday, February 9. 

Kansas Economic Recovery Bill 
This week, the Senate passed Senate Bill 15, a bill that would create a new Economic Recovery Linked Deposit Loan Program for businesses in response to the economic downturn caused by the COVID-19 pandemic. This 10-year program, administered by the State Treasurer, would allow up to $60 million available for low-interest businesses loans (2 percent below market rate). The loans would be capped at $250,000. Renew Kansas Biofuels Association joined other industry stakeholders in supporting the bill. Senate Bill 15 will now be heard by the House Committee on Financial Institutions and Rural Development on Monday, February 8. 

Corporate Income Tax Apportionment 
House Bill 2186 has been introduced and referred to the House Tax Committee. This bill would allow corporate taxpayers the option to elect how to apportion their corporate income tax liability between Kansas and other states in which it operates. Kansas currently uses a three-factor system for apportioning income between states for corporate income tax purposes. The proposed legislation would allow certain taxpayers, based on NAICS codes, to elect to use a single-factor apportionment formula based on sales to determine corporate income tax liability. The fiscal note on this bill could be as high as $20 million annually. 

High Performance Incentive Program Amended 
On Thursday, the Senate Commerce Committee held a hearing on Senate Bill 65, a bill relating to the High-Performance Incentive Program (HPIP) economic development program. The bill would decouple certain workforce training requirements from the program. Under current law, taxpayers that claim the HPIP investment tax credit are required to participate in either the Kansas Industrial Training (KIT) or Kansas Industrial Retraining (KIR) programs. HB 2097 would decouple the tax credit from participating in those programs. Removing the training requirement from HPIP will provide more flexibility in using the training programs and will increase the number of companies that qualify for the HPIP tax credit. On Tuesday, the House Commerce Committee passed companion bill House Bill 2097 favorably out of committee.  

Other Bills of Interest: 

SB 50requiring marketplace facilitators to collect and remit sales, use and transient guest taxes. Heard in Senate Tax Committee on Wednesday, 2/3. 

HB 2106extends the filing date for corporate income tax returns. Bill passed favorably out of the House Tax Committee on Tuesday, 2/2 

HCR 5007: constitutional amendment concerning initiative and referendum, introduced, referred to House Committee on Elections. 

SCR 1605constitutional amendment concerning initiative and referendum, introduced, referred to Senate Judiciary Committee. 

January 29, 2021

Many new bills were introduced and heard by committees in the third week of the Kansas legislative session. The House and Senate also continued hearings on the status of the Kansas unemployment insurance fund, attempting to find answers on the amount of fraud against the fund and how the program might be buoyed. On Friday evening, Governor Laura Kelly appointed Amber Schultz as the new Secretary of Labor. Schultz, pending confirmation from the Senate, steps into the position with the need to update the Kansas Department of Labor’s 40-year-old IT infrastructure following, potentially, hundreds of millions of dollars being paid to fraudulent unemployment claims amid the pandemic. Final action in the Senate this week resulted in passage of highly-prioritized legislation for House and Senate leadership in the form of a proposed constitutional amendment concerning the right to regulate abortion services in the state.  

Angel Investor Tax Credit, Action Taken 

On Thursday, January 28, the House Commerce Committee continued its hearing on House Bill 2045, an economic development bill that would extend the Angel Investor Tax Credit. The Committee received testimony on the measure from BioKansas President and CEO, Sonia Hall. The bill would extend, through 2026, a tax credit for investing in biotechnology. The bill would also amend the definition of qualified securities, change the tax credit limitations, amounts, and investor requirements, and extend the date that credits may be allowed. Following hearing, the committee passed the bill out favorably with three minor technical amendments recommended by the Kansas Dept. of Commerce. A hearing is also scheduled in the Senate Commerce Committee, on Monday, February 1, on a companion bill, Senate Bill 66. Hall, representing BioKansas, is slated to address the committee verbally, while industry proponents BioNexus KC, Clara Biotech, and Fennik Life Sciences have submitted written testimony in support of renewal.  

COVID-19 Vaccine Shortage 

Governor Kelly announced this week that the state has administered more than 2 million COVID-19 tests. Most recent numbers in Kansas include 272,517 positive cases resulting in 8,268 hospitalizations and 3,718 deaths. The Governor referenced a national vaccine shortage as a cause of the slowed pace of immunization in Kansas. She is encouraged, however, that states will soon receive a 16 percent increase in vaccines and that the Biden administration has committed to a three-week distribution.  

COVID-19 Business Liability Provisions Extended 

On January 25, the Governor signed Senate Bill 14, a bill extending certain provisions of the governmental response to the pandemic in Kansas. Specific to businesses, it provides that if a business was in compliance with public health directives then it is not liable for contraction of COVID-19. Any civil action would require actual injury, not merely exposure, require a higher threshold of exposure than inherent risk. The bill also provides liability protections for companies manufacturing COVID-related PPE. The legislature will use the extended timeline from this bill to make additional changes to the Kansas Emergency Management Act this session.  

Kansas Economic Recovery Bill 

This week, the Senate Committee on Financial Institutions passed Senate Bill 15 favorably. This bill would create a new Economic Recovery Linked Deposit Loan Program for businesses in response to the economic downturn caused by the COVID-19 pandemic. This 10-year program, administered by the State Treasurer, would allow up to $60 million available for low-interest businesses loans (2 percent below market rate). The loans would be capped at $250,000. BioKansas member Renew Kansas Biofuels Association joined other industry stakeholders in supporting the bill. On Monday, January 25, the House Committee on Financial Institutions and Rural Development held a hearing on a companion bill, House Bill 2069. 

Kansas Employment Trust Fund – Unemployment Insurance 

This past week, multiple House and Senate Committees continued informational hearings on the Kansas Employment Trust Fund (KETF) – the state unemployment insurance fund. The committees received information on the balance, solvency, number of applicants, and challenges such as fraud on the fund. At the beginning of calendar year 2020, KETF had a balance of approximately $1 billion. As of January 9, 2021, however, the fund had been spent down to $302 million. While the Kansas Department of Labor (KDOL) has indicated that the fund would be solvent through June 30 of this year, republican legislators are beginning to question whether its sustainable. This decrease was largely due to the increase in unemployment claims during the COVID-19 pandemic. Last June, KDOL reported a backlog of 25,000 applicants to the fund. This has now been reduced to just 40 applicants. According to Jeff Oswald, President of Unemployment Insurance Services, Kansas is unique in its vast number of fraudulent claims. Since October 1, 2020, 16,600 fraudulent claims have been filed in Kansas, and 4,000 have been filed since January 1st of this year. Employer payments into the fund have held at a set rate. Committee discussion on how to mitigate fraud on the fund focused on improving fraud tools, stronger verification of applicant identity, and securing more funding for improved technology.  

Corporate Income Tax Apportionment  

This week, a bill was introduced to allow corporate taxpayers the option to elect how to apportion their corporate income tax liability between Kansas and other states in which it operates. Kansas currently uses a three-factor system for apportioning income between states for corporate income tax purposes. The proposed legislation would allow certain taxpayers, based on NAICS codes, to elect to use a single-factor apportionment formula based on sales to determine corporate income tax liability. No bill number had been assigned as of Friday, January 29. 

Promise Scholarship Program / Liability Coverage for Apprenticeship Programs 

Both the Senate and House have introduced bills regarding a Promise Scholarship Program which provides scholarships for students working toward certain two-year degree programs, career and technical certificates, and other stand-alone programs. The program is intended to increase available workforce and meet the needs of business and industry. The Senate Committee on Education heard the measure as Senate Bill 43. The House Committee on Commerce, Labor, and Economic Development will hear a similar measure in House Bill 2182. This bill includes the same scholarship program, but it also authorizes schools to pay tuition to post-secondary schools for dual or concurrently enrolled students. In addition, it includes a provision from previous legislation which requires school districts to provide injury or loss insurance for work-based student learning programs.  

Agency Regulations Sunset Bill Heard 

On Tuesday, January 26, the Senate Committee on Federal and State Affairs held a hearing on Senate Bill 34, a bill that would create an automatic sunset, or repeal, of each current agency rule and regulation after five years. In order for a rule or regulation to not be repealed, the bill would require that legislature, at that time, pass new legislation to renew or retain the rule or regulation. The bill received mixed reviews from stakeholders with many organizations lining to support or oppose the bill.  

High Performance Incentive Program, Changes 

On Monday, January 25, the House Commerce Committee held a hearing on House Bill 2097, relating to the High-Performance Incentive Program (HPIP) economic development program. The bill would decouple certain workforce training requirements from the program. Under current law, taxpayers that claim the HPIP investment tax credit are required to participate in either the Kansas Industrial Training (KIT) or Kansas Industrial Retraining (KIR) programs. HB 2097 would decouple the tax credit from participating in those programs. Removing the training requirement from HPIP will provide more flexibility in using the training programs and will likely increase the number of companies that qualify for the HPIP tax credit. 

Other Bills of Interest 

  • SB 24: relating to public utilities, prohibiting requirements that impact customer use of energy. Heard in Senate Utilities Committee on Wednesday, 1/27 
  • HB 2106: extending the filing date for corporate income tax returns. Final action scheduled in House Taxation on Thursday, 2/4 

January 22, 2021

Security issues with the capitol building caused a slow-down of activity for a couple of days during a week which also saw a flood of new bills introduced on dozens of issues. Many of these bills were being given new life following the shortened session last year. Of note this week, was the quick passage, by both the Senate and the House, of a bill extending the current emergency declaration under the Kansas Emergency Management Act (KEMA). That bill will be advanced to the Governor for review. In addition, the House held multiple in-depth hearings on the status of the Kansas unemployment insurance fund, receiving testimony from the Kansas Department. of Labor on the solvency of the fund, the backlog of cases, and the issue of the burgeoning level of fraudulent unemployment claims in Kansas and other states. The House finished business this week with a lengthy and heated floor debate on a proposed constitutional amendment concerning the right to regulate access to abortion. 

Continuation of Angel Investor Tax Credit Bill Hearing

On Thursday, January 28, the House Commerce Committee will continue a hearing on House Bill 2045, an economic development bill that would revise the Kansas angel investor tax credit act. The bill would extend the life of the program to tax year 2026, amend the definition of qualified securities, change the tax credit limitations, amounts, investor requirements, and extend the date that credits may be allowed. The Committee will receive a presentation on the measure from BioKansas President and CEO, Sonia Hall. Following the hearing, the committee will take the bill up for final action. Pending amendments and passage out of the committee following final action, the bill will go to the House Committee of the Whole where expectations are that it will be debated and passed to the Senate for consideration.

COVID-19 Business Liability Provision Extensions

Last week, the Senate debated, and passed, Senate Bill 14, a bill extending certain provisions of the governmental response to the pandemic in Kansas. This week, the bill was heard by the House Judiciary Committee and quickly referred to the House Committee of the Whole, where it was passed by a vote of 119-3. The bill now goes to the Governor for consideration. Specific to businesses, it provides that if the business was in compliance with public health directives then it is not liable for contraction of COVID-19. Any civil action would require injury, not merely exposure, require a higher threshold of exposure than inherent risk, and offers liability limitations for companies manufacturing PPE. It is expected that the legislature will use the extended timeline from this bill to make additional changes to the Kansas Emergency Management Act later this session. 

Corporate Income Tax Apportionment

On Wednesday, January 27, a bill will be introduced to allow corporate taxpayers the option to elect how to apportion their corporate income tax liability between Kansas and other states in which it operates. Kansas currently uses a three-factor system for apportioning income between states for corporate income tax purposes. The proposed legislation would allow certain taxpayers, based on NAICS codes, to elect to use a single-factor apportionment formula based on sales to determine corporate income tax liability.

Corporate Income Tax Decoupling

On Thursday, January 21, the Senate Tax Committee held a hearing on Senate Bill 22. This bill would exempt certain types of foreign corporate income (repatriated income and GILTI) that is now taxable at the state level following passage of the federal tax cuts and jobs and of 2017. The bill would also exclude unemployment compensation benefits from gross income if the benefits were secured with a fraudulent identity and the taxpayer did not receive the benefits. In addition, the bill would increase the amount of net operating losses deduction for corporations. The fiscal note on the bill (cost to the state) is estimated to be $330 million in the first year, and over $600 million over the first three years. Last year, Governor Kelly vetoed similar legislation due to the high fiscal note.

Economic Recovery Linked Deposit Loan Program

On Thursday, January 21, the Senate Committee on Financial Institutions held a hearing on Senate Bill 15, a bill which would create a new Economic Recovery Linked Deposit Loan Program for businesses in response to the economic downturn caused by the COVID-19 pandemic. This 10-year program will make up to $60 million available for low-interest (2% below market rate) loans to business. BioKansas member, Renew Kansas Biofuels Association, joined other industry stakeholders in supporting the bill. The House Committee on Financial Institutions and Rural Development will hold a hearing on a companion bill, House Bill 2069, on Monday, January 25.

Agency Regulations Overhaul

The Senate Committee on Federal and State Affairs will hold a hearing on Senate Bill 34, a bill that would create an automatic sunset, or repeal, of all current agency rules and regulations after five years unless the legislature passes legislation to specifically renew such rule or regulation. The hearing will be on Tuesday, January 26.

Other Bills of Interest

SB 43: creating the Kansas promise scholarship act, program and fund for postsecondary education scholarships. Hearing in Senate Education on Monday, 1/25

HB 2066: expanding military servicemember’s expedited licensure law to all applicants who establish or intend to establish residency in Kansas. Hearing held in House Commerce Committee

HB 2106: extending the filing date for corporate income tax returns. Hearing in House Tax Committee on Wednesday, 1/27

2021 Legislative Session Commences – January 15, 2021

The Kansas legislature gaveled in on Monday, January 11, 2021, and BioKansas government affairs team was at the capitol monitoring and weighing in on bills affecting our industry.  

It was a busy week in Topeka, which saw the swearing in of new members following the 2020 elections, a virtual State of the State address by Governor Laura Kelly, and the introduction of many new bills. Heading into the session, several issues have been gearing up for prime time.  

The Senate started off quickly out of the gate, passing two key legislative items to the House during the first week. Expect to see the most attention on amendments to the Kansas Emergency Management Act (KEMA) to respond to the COVID-19 pandemic, Medicaid expansion, property taxes, and a proposed constitutional amendment concerning the right to regulate access to abortion.  

The end of the first week brought new security measures to the Capitol building – following the unrest in Washington D.C. – greatly restricting public access to the statehouse.  

Angel Investor Tax Credit Bill Heard 

On Wednesday, the House Commerce Committee held a hearing on House Bill 2045, an economic development bill revising and renewing the Kansas Angel Investor Tax Credit Act, set to sunset in 2021. The Kansas Dept. of Commerce worked with BioKansas to draft and introduce similar legislation which passed the House 103-12 in 2020. The bill was scheduled to receive a hearing in the Senate Commerce Committee until COVID-19 shut down the 2020 legislative session.  

The bill introduced this year would extend the life of the program to tax year 2026, amend the definition of qualified securities, change the tax credit limitations, amounts, and investor requirements, and extend the date that credits may be allowed.  

Wednesday’s hearing drew numerous conferees to testify in support of renewing the program including: BioKansas, the bill’s sponsor Rep. Stephen Owens (R-Hesston), Kansas City Tech Council, BioNexus KC, Artio Medical, Enterprise Center in Johnson County, Fennik Life Sciences, and Women’s Capital Connection. The bill’s only oral conferee in opposition, Dave Trabert, of the Flinthills Policy Institute, argued the bill is targeted to help special interests and that Kansas as a whole needs a flatter, fairer tax policy instead. 

Due to the large number of conferees testifying in support of a renewal, House Commerce Committee Chairman Rep. Sean Tarwater (R-Stilwell) has tentatively scheduled a continuation of the hearing for January 28, 2021. Tarwater has conveyed his intention to work the bill and pass it out of his committee to the House Committee of the Whole at the hearing’s conclusion. 

Governor Kelly Gives Virtual State of the State Address 

Governor Kelly gave her annual State of the State address virtually this year, due to COVID-19 concerns.  

In her address, Governor Kelly focused on the impact of the COVID-19 pandemic and presented a – Framework for Growth – focusing on five key areas: small businesses, infrastructure, new job creation, agriculture, and broadband. She shared the accomplishments of the state in the past year, from small business grants to $12 million invested in the food supply system. She also commented on some of the highlights of her proposed budget, such as Medicaid.  

The proposal would expand Medicaid for 165,000 Kansans utilizing a cost-share program with $19 million from the state and $541 million in federal funds. The Governor’s budget proposal also includes a 10-year extension in the payment schedule for KPERS (reamortization), unlocking $159 million for Fiscal Year 2022, but costing Kansans $4.6 billion in the long run.  

Additionally, the budget would stop using state highway funds for state general fund expenses by 2023 – with a $133 million and $66.9 million draw in fiscal years ‘21 and ’22, respectively. At $600 million, the proposed budget maintains the required state general fund ending balance of proposed expenditures at 7.5%.   

Corporate Taxation – Federal Decoupling 

On Wednesday, the Senate Tax Committee held a hearing on Senate Bill 22, a bill that would exempt certain types of foreign corporate income from taxation (repatriated income and global intangible low tax income/GILTI) that is now taxable at the state level following passage of the federal tax cuts and jobs of 2017.  

The bill, which is revised slightly from previous versions, would remove the state from rolling conformity with federal tax law for corporations. In addition, concerning the ability to carry net operating losses forward, the bill brings Kansas law in line with federal corporate tax law. The bill also contains a provision to ensure that Paycheck Protection Program (PPP) loans to businesses, through the U.S. Small Business Administration, are not taxable at the state level.  

The Governor, in her State of the State address, intimated that she would likely veto this legislation again if it made it to her desk.  

Corporate Income Tax Apportionment 

Kansas currently uses a three-factor system for apportioning income between states for corporate income tax purposes. A bill will soon be introduced to allow corporate taxpayers the option to elect how to apportion their corporate income tax liability between Kansas and other states in which it operates.  

The proposed legislation would allow certain taxpayers, based on NAICS codes, to elect to use a single-factor apportionment formula based on sales to determine corporate income tax liability. 

COVID-19 Business Liability Provision Extensions 

On Wednesday, the Senate Judiciary Committee held a hearing on Senate Bill 14 and the House Judiciary committee did the same with House Bill 2048. These bills extend certain provisions of the governmental response to the pandemic in Kansas.  

Specific to businesses, it provides that if the business was in compliance with public health directives then it is not liable for contraction of COVID-19. Any civil action would require injury, not merely exposure, require higher threshold of exposure than inherent risk, and offers liability limitations for companies manufacturing PPE. In an effort to make the extension prior to its sunset date of Jan. 26th, the Senate Judiciary Committee advanced SB 14 to the Senate Committee of the Whole, which passed the measure on Thursday with emergency final action.  

It is expected that the legislature will use the extended timeline from this bill to make additional changes to the Kansas Emergency Management Act this session.  

Property Tax Transparency Measure Advances Early 

On Tuesday, the Senate Committee on Taxation held a hearing on Senate Bill 13, a bill which would require notice and public hearings for any taxing authority to increase taxes above their revenue neutral rate.  

However, the bill also automatically repeals the existing property tax lid which requires a vote of the public to increase property taxes above a certain threshold. Other provisions in the bill would prohibit valuation increases due to normal maintenance and allow the collection of partial payments or establishing payment plans for property taxes.  

To move the bill quickly, the Senate Committee advanced the bill to the Senate Committee of the Whole, which passed the measure on Thursday with emergency final action. The bill will be heard in the House Tax Committee on Wednesday, January 20, 2021. 

Economic Recovery Linked Deposit Loan Program 

Last year, the legislature passed a bill which would have created a new Economic Recovery Linked Deposit Loan Program for businesses in response to the economic downturn caused by the COVID-19 pandemic.  

This 10-year program will make up to $60 million available for low-interest (2% below market rate) loans to business. The bill was vetoed by the Governor. The measure has been re-introduced this year in the form of Senate Bill 15 and House Bill 2069 and will be heard soon. 

Census Data Reporting Behind Schedule 

The Senate Committee on Local Government heard from representatives of the National Conference of State Legislatures who reported that the Census Bureau is significantly behind in processing and distributing the 2020 census data.  

Apportionment data for congressional districts was due to be distributed by December 31st, but proposed bills move that deadline forward to April. More specific data relating to demographics will likely not be made available until late summer or early fall.  

Initial reports, however, indicate that Kansas is not likely to lose a congressional district. No official announcement will be available until the apportionment data is released. 

Interim Session – April 21, 2020

In March, the Legislature passed a budget for the remainder of fiscal year ’20 (through June 30) and for fiscal year 2021. At the time, the state’s ending balance June 30 would have been $927 million, and was projected to be $730 million at the end of 2021.

On Monday, April 20th, the Consensus Revenue Estimating Group (CRE) met and provided an updated estimate on state revenue. The Consensus Revenue Estimating Group, or CRE, is composed of representatives of the Division of the Budget, Dept. of Revenue, Legislative Research Dept., and economists from the University of Kansas, Kansas State University, and Wichita State University.

According to the CRE report, following the COVID-19 outbreak, it is estimated that revenues to the state will decrease dramatically, leaving the state with only $200 million in the bank at the end of June 2020, and with a projected deficit of more than $600 million in June of 2021. These projected shortfalls are primarily due to decreases in individual income taxes (down $295 million), corporate income taxes (down $165 million) and sales taxes (down $110 million).

This massive decline in state revenues will require dramatic changes to the state budget for this fiscal year and next when lawmakers return for the wrap-up session, possibly as early as next week. Governor Kelly has already instructed state agencies to eliminate discretionary spending, shelve salary increases, leave open vacant jobs, and identify other cost saving measures.

Looking ahead, the CRE will meet again in the fall to revise estimates. If the COVID-19 recovery begins quickly in Kansas, there is hope that the projected decline in state revenues will have leveled off.

Final Week of Regular Session – March 20, 2020

On Thursday evening, the Legislature wrapped up regular session business, adjourning nearly a full week before its regularly scheduled adjournment date as concerns of COVID-19 exposure continue to grow. This shortened session prevented final legislative action on many bills. However, the adjournment resolution is scheduled to bring the legislature back on Monday, April 27, and allow one final week of possible action on bills — all of which is dependent on the broader COVID-19 pandemic.

Angel Investor Tax Credit Extension

House Bill 2689. This bill extends the sunset on the Angel Investor tax credit to tax year 2026. The annual cap on tax credits would increase in $0.5 million increments annually, from $6.0 million in tax year 2021 to $8.0 million in tax year 2025 and thereafter. The balance of unissued tax credits, as allowed by continuing law, may be carried over in future tax years. The bill would increase the amount of tax credits claimed on a qualified business investment from $50,000 to $100,000. The total amount of tax credits an investor could claim in any one tax year would increase from $250,000 to $350,000. Currently, tax credits are issued to qualified investors at an amount equal to 50.0 percent of the investment. The bill would revise the credit to an amount up to 50.0 percent of the investment, as negotiated between the qualified investor and the qualified Kansas business. The bill would allow bioscience businesses in Kansas to qualify for the tax credit. If a qualified business or bioscience business fails to be in substantial compliance within five years or ten years, respectively, that business would be required to repay the financial assistance to the Secretary of Revenue. Under current law, qualified businesses must be in compliance for ten years. As amended, this bill would also increase an existing tax credit to allow disabled family members more home accessibility. The House passed this bill on a vote of 103 to 12. A hearing had been scheduled in the Senate Commerce Committee, but due to unforeseen circumstances did not occur. We will work to keep the bill alive for the remainder of the session, however, given the current situation, nothing is certain.

Legislature Passes Budget for fiscal years ’20 and ’21

On Thursday, March 19, following multiple rounds of conference committee meetings between the House and Senate, the legislature passed, and sent to the Governor for consideration, Conference Committee Report (CCR) on Senate Bill 66, which contains the approved state budget for fiscal years 2020 (remaining), and 2021. The budget contains appropriations for $6.4 million in funding for the State Water Plan Fund, and also contains a proviso limiting the regulatory authority of the Kansas Dept. of Health and Environment from increasing fees on industries to fund its Bureau of Air Quality. The agency had previously stated its intention to increase fees on Class I and Class 2 air emitters up to an additional $1.7 million in 2020. Additional proviso language extends the sunset on the underground petroleum storage tank fund; and maintains $650,000 in the Ag Marketing Division of the Kansas Department of Agriculture that had been slated for transfer to another state agency.

Fiscal year 2020 budget includes total expenditures of $18.7 billion, including $7.8 billion from the State General Fund. This is an all funds increase of $7.1 million, or less than 0.1 percent, and a State General Fund increase of $6.9 million, or 0.1 percent. Some of the highlights in the fiscal year 2020 budget include:

    • $50.0 million for the coronavirus response in FY 2020.
    • $15.0 million to the Kansas Division of Emergency Management for coronavirus response in FY 2020.
    • Does not include the Governor’s proposed transfer of $54.0 million for the Local Ad Valorem Tax Reduction Fund.

Fiscal year 2021 budget includes total expenditures of $19.9 billion, including $8.0 billion from the State General Fund. The recommendation is an all funds increase of $127.7 million. The FY 2021 projected ending balance is $627.8 million, or 8.0 percent of expenditures. Some of the highlights of the fiscal year 2021 budget include:

    • Medicaid Expansion Proviso – language was added to prohibit the expansion of the Kansas Medicaid program without express consent of the Legislature.
    • $17.5 million to the Coronavirus Prevention Fund of the State Finance Council if Medicaid expansion is not passed into law.
    • $5 million for the Cancer Center Research Fund at the University of Kansas Medical Center, bringing the total amount in the fund to $10.0 million for FY 2021.
    • $2 million from the State General Fund to the State Water Plan Fund, bringing the total transfer to $6 million for FY 2021, and $413k from the Economic Development Initiatives Fund.
    • $2.4 million to the Kansas Dept. of Agriculture, mostly from the State Water Plan Fund, for a variety of cost share water projects including: conservation ($250,000), Watershed conservation ($300,000), streambank stabilization ($250,000), watershed dams ($200,000), conservation reserve enhancement program ($297,699), Water Injection Dredging ($660,000), Dewatering in Hayesville ($200,000).
    • Reduces Governor’s proposed transfer from the State Highway Fund to the State General Fund by $25 million – leaving a transfer to SGF of $133 million for FY 2021.
    • Does not include the Governor’s proposed transfer of $54.0 million for the Local Ad Valorem Tax Reduction Fund.

 

Legislature Passes State Transportation Plan – Renamed “Eisenhower Legacy” Plan

Following much debate in conference committees, on Thursday, March 19, the legislature passed, and sent to the Governor, House Sub for Senate Bill 173. Now known as the Eisenhower Legacy Transportation Program, this bill sets forth the state’s next 10-year transportation plan. The final plan will: specify the types of projects authorized, address local funding and new and continuing grant programs, authorize alternative procurement methods under certain circumstances, increase city connecting links payments, add reporting requirements, require at least $8 million to be spent in each county through FY 2030, state 16.154 percent of sales tax shall be levied for the State Highway Fund (SHF), and make additional changes to law. In addition, the plan includes a new $15 million, 3-year, 70/30 cost-share grant program for improvements to short line rail and rail siding owned or leased industry. Kansas Grain and Feed Association, Kansas Agribusiness Retailers Association, and Renew Kansas Biofuels Association requested inclusion of this language for its member companies.

 

Bills Passed, Advanced to the Governor:

Unemployment Insurance Benefits Extended

House Sub for Senate Bill 27. This bill was passed by both chambers, and then signed into law by Governor Kelly on Thursday, March 19. The bill extends the total number of benefit weeks for unemployment insurance for Kansas workers, which is currently adjusted for the seasonal average unemployment rate. Kansas’ unemployment insurance system currently allows for 16 weeks of benefits at our current unemployment rate. The bill would increase the maximum benefit to 26 weeks. The bill would sunset on April 1, 2021. Kansas went through $800 million in six months during the 2008 recession. There is currently $1 billion in Kansas’ unemployment insurance fund.

High Performance Incentive Program Amendments

On Tuesday, March 17, the Senate passed HB 2702 favorably on a vote of 39-0. The bill decouples the High Performance Incentive Program tax credit from the requirement to participate in either the Kansas Industrial Training (KIT) or Kansas Industrial Retraining (KIR) workforce training programs. The Division of the Budget states the bill would give the Department flexibility in using dollars from both the KIT and KIR programs. It is assumed that there would be an increase in those who qualify for the HPIP investment tax credit since there is no longer a training requirement and only the wage standard requirement. The Department of Commerce determines who would be qualified for the High Performance Incentive Program. The bill is advanced to the Governor for consideration. The bill was amended by the Senate Commerce Committee, and will head to conference committee.

Local Government Consolidation Bill

On Tuesday, March 17, the Senate passed House Bill 2510 favorably on a vote of 39-0. This bill would establish a procedure for a city or county to assume the powers, responsibilities, and duties of any special district located within the city’s corporate limits or county’s boundaries and dissolve such a special district if approved by a joint resolution adopted by the city or county and the special district. The bill was supported by the Kansas Grain and Feed Association, Kansas Agribusiness Retailers Association, and Renew Kansas Biofuels Association.

Select Bills Awaiting Final Passage 

Public Utilities Income Tax Exemption for Rate Relief

Senate Bill 126. This bill would permanently exempt certain public utilities from paying an income tax and also exclude the utility from factoring the cost of this income tax in setting their utility rates. The purpose of the bill is to lower utility rates and make Kansas more competitive. The measure could save over 2 million Kansas residential and industrial rate payers over $40 annually in lower energy rates. The bill, which passed the Senate 40-0, awaits final action in the House Committee on Utilities. In addition, on a procedural motion, the Senate Committee on Utilities placed the contents of SB 126 into Senate Substitute for House Bill 2585, along with the contents of Senate Bill 339 concerning special contract rates for electricity.

Utility Securitization Bill Receives Hearing

Senate Bill 437. The bill would give the Kansas Corporation Commission the authority to authorize the issuance of ratepayer-backed securitized bonds in order to finance the retirement of existing generating assets in the state, as well as any replacement generation facilities necessary to replace the lost capacity and energy from the retired generation facility. The goal of the bill is lower utility rates by Kansas rate payers. A hearing on the bill was held in the Senate Utilities Committee.

Net Operating Losses Carried Forward

House Bill 2490. This bill would extend the net operating loss carried forward period to 20 years (currently 10 years) beginning in tax year 2018. The bill was passed by the House on a vote of 118 to 2.

Postsecondary Scholarship Act

Senate Sub House Bill 2515. This bill would create the Kansas Reinvest in Postsecondary Education Act (RISE Act), and amend the Kansas Private and Out-of-State Postsecondary Education Institution Act (KPOPEIA). The bill would also establish the Kansas RISE Scholarship Program (Program), which would be administered by the Kansas Board of Regents (KBOR). The Program would, subject to appropriations, provide a scholarship to eligible students for up to two years to attend a public or private eligible postsecondary educational institution in an associate degree program, career and technical education program, or baccalaureate degree completion program. The bill, which passed the House on a vote of 116-6, was supported by the Kansas Grain and Feed Association, Kansas Agribusiness Retailers Association, and Renew Kansas Biofuels Association. The Senate Committee on Education advanced the bill favorably for passage.

Vocational Training Liability

House Bill 2507. This bill limits a business’ exposure to liability from injury to a student participant in a school-sponsored vocational programs at the business’ worksite. The intent of the bill is to cover students during these vocational training activities in the same manner as they would be covered during school-sponsored sports activities. The bill was supported by the Kansas Grain and Feed Association, Kansas Agribusiness Retailers Association, and Renew Kansas Biofuels Association. The bill was passed by the House 97-27, and was advanced favorably for passage from the Senate Commerce Committee.

Broadband Deployment Grant Program

House Bill 2618. This bill would establish the state broadband deployment grant program in the department of commerce to encourage the deployment of broadband in the state. The bill was introduced following multiple meetings of a legislative broadband task force in 2019. Funding for this cost-share grant program is included in the state transportation plan. The bill had passed the House on a vote of 120-5, and was then recommended favorably for passage by the Senate Utilities Committee.