LEGISLATIVE UPDATES

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April 29, 2022

2022 Legislative Session, Veto Session 

The 2022 Kansas Legislature returned on Monday, April 25 to begin its Veto Session. Legislators continued work on unfinished legislation and took action to attempt to override vetoes of various bills by Governor Laura Kelly. The legislature finished its work late on Thursday, with the Senate finally adjourning around 2:20 am early Friday morning.  

 

The Legislature passed a resolution to adjourn until May 23, 2022, at which time it will return and take any action necessary to pass a new Congressional redistricting map following a review by the Kansas Supreme Court of the map adopted earlier this session.  

 

Sales Tax Cut on Food 

CCR on House Bill 2106 would phase out the state’s 6.5% sales tax on groceries by cutting the tax to 4% by Jan. 1, 2023, 2% in 2024, and then to zero by 2025. The cost of the tax cut to the state is estimated at $80 million in fiscal year 2023, $250 million in 2024, and $400 million in 2025 and each year beyond. The tax cut does not apply to most prepared foods at restaurants or grocery stores. The phaseout would be paid for by increases in internet sales taxes. The House passed the bill on a vote of 114-3, and the Senate on a vote of 39-0. The measure now goes to Governor Kelly who has indicated she will sign the bill. 

 

Income and Sales Tax Bundle Bills 

During the Veto Session, the Tax Conference Committee met multiple times and reached tentative agreement on a bill (CCR on SB 2136) that would have included portions of CCR on House Bill 2597, a larger bill that had been previously agreed to by the committee containing income and sales tax provisions: sales tax exemption on utility services; a provision to allow net operating losses to be carried forward; a provision providing property tax relief for small businesses that were forced to close by the state during the COVID-19 pandemic. Late in the evening on Thursday, during the final minutes of the veto session, there was a motion by the Senate to take action on CCR on House Bill 2597. However, a substitute motion led to adjournment and no final action was taken. There is a possibility the legislature may consider the bill when they meet again on May 23, 2022. 

 

Corporate Income Tax Apportionment 

Kansas currently uses a three-factor system for apportioning income between states for corporate income tax purposes. House Bill 2186 would allow corporate taxpayers the option to elect which methodology to use when apportioning their corporate income between Kansas and other states in which it operates. The 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 House Tax Committee amended the bill to add NAICS codes 541690 and 112210.  The Tax Conference Committee met during the veto session but did not consider this bill for further action.  

 

Credit and Debit Card Surcharge Fees 

Kansas law prohibits the seller or lessor in any sales or lease transaction or any credit or debit card issuer from imposing a surcharge on a card holder who elects to use a credit or debit card in lieu of payment by cash, check or similar means. A surcharge is defined as any additional amount imposed at the time of the sales or lease transaction by the merchant, seller or lessor that increases the charge to the buyer or lessee for the privilege of using a credit or debit card. House Bill 2316 was introduced to eliminate this prohibition and allow the imposition of a surcharge. The Senate Tax Committee placed the contents of HB 2316 into Sub SB 462. During the veto session, the Tax Conference Committee placed the contents of SB 462 into Conference Committee Report on Senate Bill 331. The House passed CCR SB 331 on a vote of 91-26. While the Senate did not take the bill up for a vote, there is a possibility that it may consider the bill when it meets again on May 23, 2022. 

 

State Level Preemption of Plastic Regulation 

Senate Bill 493 would prohibit cities and counties from regulating plastic and other containers designed for the consumption, transportation or protection of merchandise, food, or beverages. After receiving a veto by Governor Kelly, the Senate overrode the veto on a vote 27-12. However, the House did not take action to override and the veto was eventually sustained. 

 

Career Technical Education Credential and Transition Pilot Program 

House Bill 2631 would enact the Career Technical Education (CTE) Credential and Transition Incentive (CTI) pilot program. The bill would provide a new category of state aid to school districts for students obtaining a CTE credential. In addition, a school district that offers CTE and has students that obtain a CTE credential would receive state aid payments subject to the availability of appropriations. During the veto session, an Education Conference Committee placed contents of HB 2631 into Conference Committee Report on Sub HB 2466. The conference committee report was passed 29-6 by the Senate, and 109-10 by the House. The bill now goes to Governor Kelly for consideration. 

 

Workforce Development Scholarship 

Last year, Governor Kelly signed into law a workforce development bill creating the Kansas Promise Scholarship Act which provides educational scholarships to students attending a Kansas community college, technical college, or two-year associate degree program or career and technical education programs. The scholarship would be eligible for students pursing certain fields of study, including manufacturing, construction, and others. This year, Senate Bill 340 was introduced to authorize additional programs and fields of study. During the veto session, an Education Conference Committee placed contents of SB 340 into Conference Committee Report on S Sub for HB 2567. The conference committee report was passed 24-14 by the Senate, and 75-45 by the House. The bill now goes to Governor Kelly for consideration.  

 

Rural Housing Incentive and Child Care Tax Credit 

Conference Committee Report on HB 2237 includes multiple economic development provisions. It would enact the Kansas Housing Investor Tax Credit, and the Kansas Affordable Housing Tax Credit, to incentive rural and urban housing construction. The bill would also enact the Kansas Rural Home Loan Guarantee Act. In addition, the bill would authorize appraisers to exclude the sales comparison approach in rural county mortgage financing appraisals if the property is unique in style or square footage and if there exists a lack of available comparable sales. The bill also creates an income tax credit for child day care services. The conference committee report was passed 34-3 by the Senate, and 109-12 by the House. The bill now goes to Governor Kelly for consideration.  

 

Government Response to COVID Pandemic 

CCR on Senate Bill 286 would amend and extend the expiration dates and effectiveness of provisions regarding the governmental response to the COVID-19 pandemic; amend certain healthcare provider immunity provisions related to the COVID-19 public health emergency; create the crime of interference with the conduct of a hospital; and increase the penalty for the crime of battery when committed against a healthcare provider. After receiving a veto by Governor Kelly, the Senate did not take override action and the veto was sustained. 

 

Multi-Part Public Health Bill Addressing KEMA Powers, COVID Testing, COVID passports, Face Mask and Quarantine Orders 

Late in the evening on Thursday, the Legislature passed Conference Committee Report on Sub SB 34, which includes provisions from Senate Bill 541 and Senate Bill 489. The new bill would create law regarding actions by governmental entities or public officials affecting face mask requirements as a response to a contagious or infectious disease and would prohibit a COVID-19 vaccination passport be required. The bill would amend the Kansas Emergency Management Act (KEMA) and public health statutes regarding face mask requirements and judicial review of governmental action in response to state of disaster emergencies and state of local disaster emergencies. The bill would remove the authority of the Secretary of Health and Environment (Secretary) or a local health officer to order any law enforcement officer of the state or any subdivision to assist in the execution or enforcement of any order regarding infectious and contagious diseases. The bill would also amend student health statutes regarding certification of tests or inoculations for first-time enrollment in a school or preschool or day care program operated by a school to specify the tests or inoculations the Secretary would be prohibited from requiring. The bill passed the Senate on a vote of 23-17 and the House on a vote of 64-53. The bill now goes to the Governor for consideration, where it faces a likely veto. 

 

COVID Vaccines and Off-Label Medications 

Sen Substitute for HB 2280 was amended in the Senate Committee on Public Health and Welfare to insert the contents of Senate Bill 381, allowing for the prescribing and dispensing of medications for off-label use to prevent and treat COVID-19 infections; and Senate Bill 398 requiring a childcare facility or school to grant religious exemptions from vaccination requirements without inquiring into the sincerity of the religious beliefs. The Senate had passed the bill on a vote of 21-16, but the House did not take it up for consideration and it did not receive further action during the veto session. 

 

April 22, 2022

2022 Legislative Session, First Adjournment Update 

The 2022 Kansas legislature was adjourned until Monday, April 25 when it began the Veto Session where it continued work on unfinished legislation and reconsider bills vetoed by Governor Laura Kelly. Please find, below, an update on bills reviewed by the Governor during the interim, and legislation yet to be completed this year.  

 

Biological Lab Accidents 

Senate Bill 441 would enact the biological laboratory accident transparency act and would require institutions and organizations to report accidents and near miss accidents at high-risk biological laboratories. The bill drew only one proponent, who testified from Israel and stated he, “Had no ties to Kansas.” The bill passed the Senate and was referred to the House Committee on Health and Human Services but received no further action.  

 

Pharmacy Act, Prescription Monitoring Program, K-TRACS 

CCR on Senate Bill 200 would amend the Kansas Pharmacy Act to include point-of-care testing for and treatment of certain health conditions (therapy). The bill also would also amend provisions of the Prescription Monitoring Program Act to add to the list of information a dispenser may submit to the Prescription Monitoring Program (K-TRACS), amend the list of individuals who may request and receive data from K-TRACS, amend how data is stored outside of K-TRACS, and add one member to the K-TRACS Advisory Committee. The bill was passed by both chambers and signed into law by Governor Kelly. 

 

Over-the-Counter Sales Tax Exemption  

House Bill 2721 would provide for a sales tax exemption on sales of over-the-counter drugs. During the House Taxation Committee hearing, there was one proponent and no opponents. The fiscal note on the bill was estimated at $20.5 million, and the bill did not move forward. 

 

Midwest Stem Cell Therapy Center 

Senate Bill 373 would make appropriations of $500,000 for the University of Kansas Medical Center for COVID-19 clinical trials at the Midwest Stem Cell Therapy Center. The funds could be used any time before June 30, 2024. The bill passed the Senate and was referred to the House Committee on Appropriations. It does not appear that the funds were included in the budget bill. 

 

Pharmacy Benefits Manager 

House Sub for SB 28 concerns the regulation of pharmacy benefit managers (PBMs). The bill ends registration of PBMs in the state and instead moves to a licensure system overseen by the Kansas Department of Insurance. Additionally, the bill amends maximum allowable cost (MAC) pricing and the appeals process. The bill was passed by both chambers and signed into law by Governor Kelly. 

 

COVID and Vaccines 

Sen Substitute for HB 2280 was amended in the Senate Committee on Public Health and Welfare to insert the contents of Senate Bill 381, allowing for the prescribing and dispensing of medications for off-label use to prevent and treat COVID-19 infections; and Senate Bill 398 requiring a childcare facility or school to grant religious exemptions from vaccination requirements without inquiring into the sincerity of the religious beliefs. The Senate Committee of the Whole passed the bill on a vote of 21-16, which would not be enough to override a potential veto by the Governor. Last week, the bill was referred to a House and Senate conference committee where multiple amendments were offered and debated by both sides. The bill remains in the conference committee and may see further action during the veto session. 

 

Senate Bill 489 would remove certain regulatory authority concerning infectious or contagious diseases from the secretary of health and environment. The Senate Committee Public Health and Welfare Committee held a hearing on the bill where, despite only two proponents and 10 opponents, it was amended to allow local health officers to only recommend a quarantine or patient isolation in the event of a public health emergency. The Senate passed the bill on a vote of 24-15, which would not be enough to override a potential veto by the Governor. The bill was referred to the House Committee on Health and Human Services and did not receive further action. 

 

State Budget 

Governor Kelly has signed House Sub for Senate Bill 267, the budget for state agencies for fiscal years 2022, 2023, and 2024. The bill leaves an ending balance projection of $1.4 billion in fiscal year 2022, and $895 million in fiscal year 2023. A previous Senate version of the budget included a provision requiring use of the federal E-Verify system for all state hiring and contracts of more than $50,000. The final agreed language in the budget bill, however, does not include the E-verify provision. Governor Kelly exercised her line-item veto authority on only two sections of the budget.  

 

This week, state economic forecasters boosted their tax revenue estimates by $760 million over two years, leaving Kansas with a projected ending balance of $3.1 billion for this year and firing up the debate on elimination of the state sales tax on food. The state is anticipated to receive $9.3 billion in taxes for the current fiscal year ending June 30, up from estimates last fall of about $8.9 billion. 

 

Corporate Income Tax Apportionment 

Kansas currently uses a three-factor system for apportioning income between states for corporate income tax purposes. House Bill 2186 would allow corporate taxpayers the option to elect which methodology to use when apportioning their corporate income between Kansas and other states in which it operates. The 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 House Tax Committee amended the bill to add NAICS codes 541690 and 112210. During a Tax Conference Committee, the House requested to include the contents of HB 2186 in a tax committee report. However, the Senate, which had not held a hearing on the bill, has continued to refuse the request stating the bill’s fiscal cost ($20 m) and that the bill was a policy change that should not be made without a full hearing. Other tax bills will likely be considered during the veto session, and proponents of this bill will continue to seek its passage. 

 

Industry Regulations 

House Concurrent Resolution 5014 proposes an amendment to the Kansas Constitution that would increase legislative oversight of agency regulations. Having been approved by two-thirds of the legislature, the amendment will now go before Kansas voters as a ballot question during the November 2022 election. In addition, House Bill 2087 amends current law by requiring the state budget director to review any proposed agency regulation with an economic impact of $1 million or more over a two-year period. The legislature amended the bill to include the contents of Senate Bill 34, a bill that requires each state agency to review its regulations at least once every five years to determine if they are still necessary. The bill also allows for a 15-day quick repeal process for outdated regulations. The bill was passed by both chambers and signed into law by Governor Kelly. 

 

Unlawful Legal Solicitation 

Senate Bill 150 defines and prohibits certain deceptive lawsuit advertising practices and restrict the use or disclosure of protected health information to solicit individuals for legal services. The bill, supported by business and industry, was signed into law by Governor Kelly. 

 

Major Tax Relief Bills 

CCR on House Bill 2239 contains myriad provisions concerning income taxes, property taxes, and sales taxes, and was the only bill to be passed by the legislature during the regular session. The bill, which was signed into law by Governor Kelly, contains inter alia the following: 

  1. Short Line Railroad Investment Tax Credit. This provision provides a transferable income tax credit for qualified railroad track maintenance expenditures of short line railroads and associated rail siding owners or lessees. Short line rail investments would qualify for a tax credit of $5,000 per mile of rail, up to 50 percent of the railroad’s annual total income tax bill. Rail siding would qualify for $5,000 per rail project. The tax credit exists from 2022 through 2031.  
  1. Sales Tax Exemption for Delivery Services. This provision excludes separately stated delivery charges from sales and compensating use tax. 
  1. Rural Opportunity Zones (ROZ) Program. This provision extends the sunset on the ROZ student loan repayment program to July 1, 2026, and extends the sunset on the income tax credit to January 1, 2027. 
  1. Property Tax Abatement for Disaster-Destroyed Property. This provision grants county commissions the authority to abate property taxes for all buildings and agricultural improvements listed as real property in situations where such property has been damaged in a gubernatorial-declared disaster, and restoration costs would equal or exceed 50 percent of the pre-damage market value. The bill would be retroactive to tax year 2019, and applications would be permitted until December 20, 2022, for natural disasters occurring in 2019 or 2020. 
  1. Salt (State And Local Tax) Parity Act. This provision allows a S corporation or partnership to annually elect to be subject to income tax at the entity level for the taxable period beginning in tax year 2022. The S corporation or partnership would make the election on the return filed by the S corporation or partnership. The filing of the return would be binding on all electing passthrough entity owners. Find more information Here. 
  1. Research and Development Income Tax Credit. This provision establishes a research and development tax credit from 6.5 percent to 10.0 percent for LLCs and small businesses. Currently, Kansas law provides this tax credit for corporations only, and has a one-time, non-refundable transferability. 
  1. Agricultural Fencing Sales Tax Exemption. This provision allows for a sales tax exemption for purchases to reconstruct, repair or replace fencing used to enclose agricultural land that was damaged or destroyed by wildfire or other natural disaster occurring on or after January 1, 2021. To be eligible for the exemption, the property containing the fence would be required to be located within an area declared to be a disaster by the federal, state, or local government and the purchases would be required to be made within two years of the date of the applicable disaster declaration. For applicable purchases already made, taxpayers would be entitled to a refund of sales tax upon provision of appropriate documentation. In addition, beginning July 1, 2022, the bill exempts from sales tax all sales of tangible personal property and services necessary to construct, reconstruct, repair, or replace any fence used to enclose agricultural land. 

 

In addition, the Tax Conference Committee reached agreement on two other tax bills that will likely be taken up for final action: 

  • CCR on House Bill 2106 would phase out the state’s 6.5% sales tax on groceries by cutting the tax to 4% by Jan. 1, 2023, 2% in 2024, and then to zero by 2025. The cost of the tax cut to the state is estimated at $80 million in fiscal year 2023, $250 million in 2024, and $400 million in 2025 and each year beyond. The tax cut does not apply to prepared food at restaurants. The phaseout would be paid for by increases in internet sales taxes. While the measure seems to have broad support in the legislature, Republican leadership have voiced concerns about the state’s ability to continue covering this lost revenue.  
  • CCR on House Bill 2597 would amend various income and sales tax provisions, including a provision to allow a sales tax exemption on utility services; a provision to allow net operating losses to be carried forward; and a provision providing property tax relief for small businesses that were forced to close by the state during the COVID-19 pandemic. The legislature may take this bill up during the veto session.  

 

Unemployment Insurance  

House Bill 2703 modifies the My Reemployment Plan Program and, with certain exceptions, make use of the program mandatory for those receiving unemployment insurance benefits. The bill also lowers credit rate schedules for payments made by employers into the Employment Security Fund, which will potentially save employers millions of dollars in payments to the fund. Both chambers passed Conference Committee Report on HB 2703 and the bill was signed into law by Governor Kelly. 

 

Bill Opposing Sanctuary Cities 

House Bill 2717 prohibits any Kansas municipality from preventing the enforcement of federal immigration laws, requiring municipal law enforcement agencies to provide written notice to each law enforcement officer of the officer’s duty to cooperate with state and federal agencies in the enforcement of immigration laws and requiring any municipal identification card to state on its face that it is not valid for state identification. The bill was signed into law by Governor Kelly. 

 

State Level Preemption of Plastic Regulation 

Senate Bill 493 would prohibit cities and counties from regulating plastic and other containers designed for the consumption, transportation or protection of merchandise, food, or beverages. The bill was passed by both chambers but then was vetoed by Governor Kelly. 

 

Credit and Debit Card Fees 

Kansas law prohibits the seller or lessor in any sales or lease transaction or any credit or debit card issuer from imposing a surcharge on a card holder who elects to use a credit or debit card in lieu of payment by cash, check or similar means. A surcharge is defined as any additional amount imposed at the time of the sales or lease transaction by the merchant, seller or lessor that increases the charge to the buyer or lessee for the privilege of using a credit or debit card. House Bill 2316 was introduced to eliminate this prohibition and allow the imposition of a surcharge. The Senate Tax Committee placed the contents of HB 2316 into Sub SB 462, but the bill did not advance further this year. 

 

Retailer Tax Credit for Collection of State Sales Tax 

Senate Bill 463 would allow retailers to retain 1.5 percent of the retail sales and compensating use tax that they collect each month up to $300. Any retailer that files a consolidated return for reporting retail sales and compensating use tax prior to January 1, 2022, would be subject to the $300 per retailer limitation. The bill would decrease sales tax revenue to the state by an estimated $50 million in fiscal year 2023. The Senate Tax Committee passed the bill out favorably, but the bill did not advance further this year. 

 

Student Work-Based Learning Program Liability 

House Sub for SB 91 was introduced with the purpose of providing businesses with immunity from general liability for participating in work-based learning programs with students. Under the bill, schools will be able to insure against this liability in the same way that they insure students during field trips and sporting events. This reasonable legislation is beneficial for businesses as they seek to increase the Kansas workforce. Both chambers passed Conference Committee Report on SB 91 and the bill was signed into law by Governor Kelly. 

 

Career Technical Education Credential and Transition Incentive 

House Bill 2631 would enact the Career Technical Education (CTE) Credential and Transition Incentive (CTI) for Employment Success Act. The bill would provide a new category of state aid to school districts for students obtaining a CTE credential. In addition, a school district that offers CTE and has students that obtain a CTE credential would receive state aid payments subject to the availability of appropriations. The Education Committee amended the bill this week to: Specify reimbursement rates for approved standard CTE credentials and approved high-value CTE credentials; provide reimbursement for assessments for standard CTE credentials exclusively for students with an IEP, 504 plan, or as identified by the discretion of the school district. The House passed the bill on a vote of 122-0. The Education Conference Committee may continue discussions on the bill during the veto session. 

 

Workforce Development Scholarship 

Last year, Governor Kelly signed into law a workforce development bill creating the Kansas Promise Scholarship Act which provides educational scholarships to students attending a Kansas community college, technical college, or two-year associate degree program or career and technical education programs. The scholarship would be eligible for students pursing certain fields of study, including manufacturing, construction, and others. This year, Senate Bill 340 was introduced to authorize additional programs and fields of study. The Education Conference Committee may continue discussions during the veto session. 

 

KEMA Disaster Emergency Powers 

Senate Bill 541 would, inter alia, limit the authority of the governor, and other governmental entities in issuing and enforcing orders for face mask mandates, gathering limitations, and business restrictions related to a contagious or infectious disease. The bill would also prohibit post-secondary educational institutions, the State Board of Education, local boards, schools, and school officials from requiring a COVID-19 vaccination and from issuing or requiring a COVID-19 passport. Schools would be required to recognize exemptions for mask requirements and alternative measures regarding religious exemptions for vaccinations. The bill would also give local boards of education and governing bodies of community and technical colleges the authority to issue orders or policies for contagious or infectious diseases instead of the current authority given during the state of disaster emergency related to the COVID-19 health emergency. SB 541 would also remove the sunset for the Contact Tracing Privacy Act. The bill would prohibit schools and childcare facilities from denying access to their facilities unless there were reasonable grounds that a person was infected with a disease suspected of being infectious or contagious. The Senate passed the bill favorably on a vote of 24-14. The bill was then referred to the House Committee on Judiciary but received no further action. The contents of the bill may be considered in conference during the veto session. 

 

Government Response to COVID Pandemic 

CCR on Senate Bill 286 would amend and extend the expiration dates and effectiveness of provisions regarding the governmental response to the COVID-19 pandemic; amend certain healthcare provider immunity provisions related to the COVID-19 public health emergency; create the crime of interference with the conduct of a hospital; and increase the penalty for the crime of battery when committed against a healthcare provider. After passage in both chambers, the bill was vetoed by Governor Kelly. 

March 25, 2022

2022 Legislative Session, Week 12

Last week was the final week of regular session for the 2022 Kansas legislature. Both chambers deliberated for hours, with final action on Friday concluding about 1:30 am. Legislators will take off most of the month of April before returning on Monday, April 25 for a, likely brief, veto session to consider bills vetoed by Governor Laura Kelly. In addition, multiple bills of significant interest that failed to be passed Friday evening could still be addressed during the veto session. 

Biological Lab Accidents

Senate Bill 441 would enact the biological laboratory accident transparency act and would require institutions and organizations to report accidents and near miss accidents at high-risk biological laboratories. The bill drew only one proponent, who testified from Israel and stated he, “Had no ties to Kansas.” The bill passed the Senate and was referred to the House Committee on Health and Human Services but received no further action. 

Pharmacy Act, Prescription Monitoring Program, K-TRACS

CCR on Senate Bill 200 would amend the Kansas Pharmacy Act to include point-of-care testing for and treatment of certain health conditions (therapy). The bill would also amend provisions of the Prescription Monitoring Program Act to add to the list of information a dispenser may submit to the Prescription Monitoring Program (K-TRACS), amend the list of individuals who may request and receive data from K-TRACS, amend how data is stored outside of K-TRACS, and add one member to the K-TRACS Advisory Committee. Last week, the bill was passed by both chambers and will be presented to the Governor for consideration.

Over-the-Counter Sales Tax Exemption

House Bill 2721 would provide for a sales tax exemption on sales of over-the-counter drugs. During the House Taxation Committee hearing, there was one proponent and no opponents. The fiscal note on the bill was estimated at $20.5 million, and the bill did not move forward.

Midwest Stem Cell Therapy Center

Senate Bill 373 would make appropriations of $500,000 for the University of Kansas Medical Center for COVID-19 clinical trials at the Midwest Stem Cell Therapy Center. The funds could be used any time before June 30, 2024. The bill passed the Senate and was referred to the House Committee on Appropriations. It does not appear that the funds were included in the budget bill.

Pharmacy Benefit Manager Licensure Act to Governor

The legislature sent House Sub for SB 28 concerning the regulation of pharmacy benefit managers to Governor Laura Kelly on Friday, April 1. As passed, the bill ends registration of PBMs in the state and instead moves to a licensure overseen by the Kansas Department of Insurance. 

COVID and Vaccines

Sen Substitute for HB 2280 was amended in the Senate Committee on Public Health and Welfare to insert the contents of Senate Bill 381, allowing for the prescribing and dispensing of medications for off-label use to prevent and treat COVID-19 infections; and Senate Bill 398 requiring a childcare facility or school to grant religious exemptions from vaccination requirements without inquiring into the sincerity of the religious beliefs. The Senate Committee of the Whole passed the bill on a vote of 21-16, which would not be enough to override a potential veto by the Governor. Last week, the bill was referred to a House and Senate conference committee where multiple amendments were offered and debated by both sides. The bill remains in the conference committee and may see further action during the veto session.

Senate Bill 489 would remove certain regulatory authority concerning infectious or contagious diseases from the secretary of health and environment. The Senate Committee Public Health and Welfare Committee held a hearing on the bill where, despite only two proponents and 10 opponents, it was amended to allow local health officers to only recommend a quarantine or patient isolation in the event of a public health emergency. The Senate passed the bill on a vote of 24-15, which would not be enough to override a potential veto by the Governor. The bill was referred to the House Committee on Health and Human Services and did not receive further action.

Workforce Development Scholarship

Last year, Governor Kelly signed into law a workforce development bill creating the Kansas Promise Scholarship Act which provides educational scholarships to students attending a Kansas community college, technical college, or two-year associate degree program or career and technical education programs. The scholarship would be eligible for students pursing certain fields of study, including manufacturing, construction, and others. This year, Senate Bill 340 was introduced to authorize additional programs and fields of study. The Senate passed the bill out on a unanimous vote. The bill may be given further consideration during the veto session along with House Bill 2631. 

State Budget Passed

The House and Senate agreed on a budget for state agencies in House Sub for Sub Senate Bill 267 for fiscal years 2022, 2023, and 2024. The budget bill includes an allotment of $60,000 from state general funds for the KDA grain warehouse inspection program for fiscal years 2023 and 2024 which was included at the request of the Kansas grain industry. The bill leaves an ending balance projection of $1.4 billion in fiscal year 2022, and $895 million in fiscal year 2023. A previous Senate version of the budget included a provision requiring use of the federal E-Verify system for all state hiring and contracts of more than $50,000. The final agreed language in the budget bill, however, does not include the E-verify provision. The bill now goes to Governor Laura Kelly, where line-item veto authority may be exercised over any portion of the budget.

Corporate Income Tax Apportionment

Kansas currently uses a three-factor system for apportioning income between states for corporate income tax purposes. House Bill 2186 would allow corporate taxpayers the option to elect which methodology to use when apportioning their corporate income between Kansas and other states in which it operates. The 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 House Tax Committee amended the bill to add NAICS codes 541690 and 112210. During a Tax Conference Committee last week, the House requested to include the contents of HB 2186 in an agreed tax committee report. However, the Senate, which had not held a hearing on the bill, refused the request stating that the bill had a high ($20m) fiscal note and was a policy change that should not be made without a hearing. Additional tax bills could be considered during the veto session, and proponents of HB 2186 will continue to seek its passage.

Industry Regulations

House Concurrent Resolution 5014 proposes an amendment to the Kansas Constitution that would increase legislative oversight of agency regulations. Having been approved by two-thirds of the legislature, the amendment will now go before Kansas voters as a ballot question during the November 2022 election. In addition, House Bill 2087would amend current law by requiring the state budget director to review any proposed agency regulation with an economic impact of $1 million or more over a two-year period. The legislature amended the bill to include the contents of Senate Bill 34, a bill that would require each state agency to review its regulations at least once every five years to determine if they are still necessary. The bill would also allow for a 15-day quick repeal process for outdated regulations. The bill was passed by both Chambers with a veto-proof majority, and will now be forwarded to the Governor for consideration.

Unlawful Legal Solicitation

Senate Bill 150 would define and prohibit certain deceptive lawsuit advertising practices and restrict the use or disclosure of protected health information to solicit individuals for legal services. The bill, supported by business and industry, passed both chambers favorably and will be presented to the Governor for consideration.

Major Tax Relief Bills

Late last week, members of a House and Senate tax conference committee reached agreement on three different tax bills. CCR on House Bill 2106 would phase out the state’s 6.5% sales tax on groceries by cutting the tax to 4% by Jan. 1, 2023, 2% in 2024, and then to zero by 2025. The cost of the tax cut to the state is estimated at $80 million in fiscal year 2023, $250 million in 2024, and $400 million in 2025 and each year beyond. The tax cut does not apply to prepared food at restaurants. The phaseout would be paid for by increases in internet sales taxes. While the measure seems to have broad support in the legislature, Republican leadership have voiced concerns about the state’s ability to continue covering this lost revenue in the out years. The legislature ran out of time last on Friday to debate the agreement, but it will likely take the measure up for action during the veto session.

In addition, the conference committee reached agreement on Sub for House Bill 2597 which would amend various income and sales tax provisions, including a provision to allow a sales tax exemption on utility services; a provision to allow net operating losses to be carried forward; and a provision providing property tax relief for small businesses that were forced to close by the state during the COVID-19 pandemic. The legislature may consider this bill during the veto session. 

A third bill, CCR on House Bill 2239, includes myriad provisions concerning income taxes, property taxes, and sales taxes, and was the only bill to be passed by the legislature and presented to the Governor for consideration. The bill contains, inter alia, the following:

  1. Short Line Railroad Investment Tax Credit. This provision provides an income tax credit for qualified railroad track maintenance expenditures of short line railroads and associated rail siding owners or lessees. Short line rail investments would qualify for a tax credit of $5,000 per mile of rail, up to 50 percent of the railroad’s annual total income tax bill. Rail siding would qualify for $5,000 per rail project. The tax credit is transferable to any eligible customer or vendor of the railroad. The tax credit would exist from 2022 through 2031, and the total value of the program could not exceed $8.7 million each year. Find more information Here.
  1. Rural Opportunity Zones (ROZ) Program. This provision extends the sunset on the ROZ student loan repayment program to July 1, 2026 and extends the sunset on the income tax credit to January 1, 2027.
  1. Property Tax Abatement for Disaster-Destroyed Property. This provision grants county commissions the authority to abate property taxes for all buildings and agricultural improvements listed as real property in situations where such property has been damaged in a gubernatorial-declared disaster, and restoration costs would equal or exceed 50 percent of the pre-damage market value. The bill would be retroactive to tax year 2019, and applications would be permitted until December 20, 2022, for natural disasters occurring in 2019 or 2020.
  1. Research and Development Income Tax Credit. This provision establishes a research and development tax credit from 6.5 percent to 10.0 percent for LLCs and small businesses. Currently, Kansas law provides this tax credit for corporations only, and has a one-time, non-refundable transferability.
  1. Salt (State And Local Tax) Parity Act. This provision allows a S corporation or partnership to annually elect to be subject to income tax at the entity level for the taxable period beginning in tax year 2022. The S corporation or partnership would make the election on the return filed by the S corporation or partnership. The filing of the return would be binding on all electing passthrough entity owners. Find more information in the Conference Committee Report Here.
  1. Agricultural Fencing Sales Tax Exemption. This provision allows for a sales tax exemption for purchases to reconstruct, repair or replace fencing used to enclose agricultural land that was damaged or destroyed by wildfire or other natural disaster occurring on or after January 1, 2021. To be eligible for the exemption, the property containing the fence would be required to be located within an area declared to be a disaster by the federal, state, or local government and the purchases would be required to be made within two years of the date of the applicable disaster declaration. For applicable purchases already made, taxpayers would be entitled to a refund of sales tax upon provision of appropriate documentation. In addition, beginning July 1, 2022, the bill would exempt from sales tax all sales of tangible personal property and services necessary to construct, reconstruct, repair, or replace any fence used to enclose agricultural land.
  1. Sales Tax Exemption for Delivery Services. This provision excludes delivery charges that are separately stated on an invoice from retail sales and compensating use tax.

Credit and Debit Card Fees

Kansas law prohibits the seller or lessor in any sales or lease transaction or any credit or debit card issuer from imposing a surcharge on a card holder who elects to use a credit or debit card in lieu of payment by cash, check or similar means. A surcharge is defined as any additional amount imposed at the time of the sales or lease transaction by the merchant, seller or lessor that increases the charge to the buyer or lessee for the privilege of using a credit or debit card. House Bill 2316 was introduced to eliminate this prohibition and allow the imposition of a surcharge. The Senate Tax Committee placed the contents of HB 2316 into Sub SB 462, but the bill did not advance further this year.

Retailer Tax Credit for Collection of State Sales Tax

Senate Bill 463 would allow retailers to retain 1.5 percent of the retail sales and compensating use tax that they collect each month up to $300. Any retailer that files a consolidated return for reporting retail sales and compensating use tax prior to January 1, 2022, would be subject to the $300 per retailer limitation. The bill would decrease sales tax revenue to the state by an estimated $50 million in fiscal year 2023. The Senate Tax Committee passed the bill out favorably, but the bill did not advance further this year.

Unemployment Insurance

House Bill 2703 would modify the My Reemployment Plan Program and, with certain exceptions, make use of the program mandatory for those receiving unemployment insurance benefits. The Secretary of Commerce would be allowed to require claimants to participate in reemployment services. The bill would also lower credit rate schedules for payments made by employers into the Employment Security Fund. Last week, Conference Committee Report on HB 2703 was passed by the House and Senate and will be presented to the Governor for consideration.

Bill Opposing Sanctuary Cities

House Bill 2717 would prohibit any Kansas municipality from preventing the enforcement of federal immigration laws, requiring municipal law enforcement agencies to provide written notice to each law enforcement officer of the officer’s duty to cooperate with state and federal agencies in the enforcement of immigration laws and requiring any municipal identification card to state on its face that it is not valid for state identification. Last week, the bill was passed by both chambers and will be presented to the Governor for consideration.

State Level Preemption of Plastic Regulation

Senate Bill 493would prohibit cities and counties from regulating plastic and other containers designed for the consumption, transportation or protection of merchandise, food, or beverages. Last week, the bill was passed by both chambers and forwarded to the Governor for consideration.

Work-Based Learning Program Liability

House Sub for SB 91 was introduced with the purpose of providing businesses with immunity from general liability for participating in work-based learning programs with students. Under the bill, schools would insure against this liability in the same way that they insure students during field trips and sporting events. This reasonable legislation is beneficial for businesses as they seek to increase the Kansas workforce. A conference committee between the House and the Senate agreed to language in Conference Committee Report on  SB 91. The bill was passed by both chambers and will be presented to the Governor for consideration.

Technical Education Credential and Transition Incentive

House Bill 2631 would enact the Career Technical Education (CTE) Credential and Transition Incentive (CTI) for Employment Success Act. The bill would provide a new category of state aid to school districts for students obtaining a CTE credential. In addition, a school district that offers CTE and has students that obtain a CTE credential would receive state aid payments subject to the availability of appropriations. Before sending it to the full House, the Education Committee amended the bill this week to: Specify reimbursement rates for approved standard CTE credentials and approved high-value CTE credentials; provide reimbursement for assessments for standard CTE credentials exclusively for students with an IEP, 504 plan, or as identified by the discretion of the school district. The House passed the bill favorably on a vote of 122-0. The bill was discussed extensively in the Education conference committee, and may be given further consideration during the veto session.

Medical Marijuana

Certain factions within the Legislature are eager to see recreational and medicinal use of marijuana be legalized in the state and various bills were introduced this year for that purpose. Marijuana is now a Schedule 1 Controlled Substance under federal law, which makes illegal the interstate transportation of most forms of medical marijuana. The Senate Federal and State Affairs Committee deliberated on SB 560, a bill regulating medical marijuana, and on House Sub for SB 158, a bill that would have created the Kansas Medical Marijuana Regulation Act. The committee heard testimony on the economic development prospects of getting a Kansas medical marijuana industry established to make the state competitive if federal restrictions were eliminated. Opponents to the measures argue that this is only the first step toward state legalization of recreational marijuana, as has happened in Colorado and 18 other states. The legislation did not move forward this year.

KEMA Disaster Emergency Powers

Senate Bill 541 would, inter alia, limit the authority of the governor, and other governmental entities in issuing and enforcing orders for face mask mandates, gathering limitations, and business restrictions related to a contagious or infectious disease. The bill would also prohibit post-secondary educational institutions, the State Board of Education, local boards, schools, and school officials from requiring a COVID-19 vaccination and from issuing or requiring a COVID-19 passport. Schools would be required to recognize exemptions for mask requirements and alternative measures regarding religious exemptions for vaccinations. The bill would also give local boards of education and governing bodies of community and technical colleges the authority to issue orders or policies for contagious or infectious diseases instead of the current authority given during the state of disaster emergency related to the COVID-19 health emergency. SB 541 would also remove the sunset for the Contact Tracing Privacy Act. The bill would prohibit schools and childcare facilities from denying access to their facilities unless there were reasonable grounds that a person was infected with a disease suspected of being infectious or contagious. The Senate passed the bill favorably on a vote of 24-14. The bill was then referred to the House Committee on Judiciary but received no further action. The contents of the bill may be considered in conference during the veto session.

Government Response to COVID Pandemic

CCR on Senate Bill 286 would amend and extend the expiration dates and effectiveness of provisions regarding the governmental response to the COVID-19 pandemic; amend certain healthcare provider immunity provisions related to the COVID-19 public health emergency; create the crime of interference with the conduct of a hospital; and increase the penalty for the crime of battery when committed against a healthcare provider. Last week, the bill was passed by both chambers and will be presented to the Governor for consideration.

March 18, 2022

2022 Legislative Session, Week 10

The Kansas legislature’s final day for non-exempt committees to meet passed without much fanfare on Friday, March 18. As a rain and snow mixture fell on Topeka Friday, a few lawmakers navigated the statehouse hallways, while the majority of legislators returned home to gear up for a week of late-night floor debate on big-ticket issues as time winds down on the 2022 session. 

This week the Senate passed two high-priority pieces of legislation to the House: the 2023 state agency budget and redistricting maps. The House meanwhile is holding off on completing its version of the aforementioned bills, likely leading up to extended hours of conference committees to negotiate differences before adjourning on April 1.

Biological Lab Accidents

Senate Bill 441 would enact the biological laboratory accident transparency act and would require institutions and organizations to report accidents and near miss accidents at high-risk biological laboratories. The bill drew only one proponent, who testified from Israel and stated he, “Had no ties to Kansas.” Senate Public Health and Welfare Committee Chairman Richard Hilderbrand (R-Galena) acknowledged he requested the bill’s introduction in relation to a laboratory at Kansas State University and the speculation of similar incidents occurring in Wuhan, China. Having passed the Senate, the bill now has now been referred to the House Committee on Health and Human Services for consideration where chairwoman Brenda Landwehr (R-Wichita) has shown little interest in hearing the bill. 

Over-the-Counter Sales Tax Exemption

House Bill 2721 would provide for a sales tax exemption on sales of over-the-counter drugs. A hearing was held on the bill on March 8 in the House Committee on Taxation, where there was one proponent and no opponents. The estimated fiscal note on the bill would be an annual cost to the state of $20.5 million. This week, the House Tax Committee passed the bill favorably.

Research and Development Income Tax Credit

House Bill 2394 would establish a 6.5 percent research and development tax credit for LLCs and small businesses. Currently, Kansas law provides this tax credit for corporations only, and has a one-time transferability. The tax credit is based on the amount above the average of actual qualified research and development expenses in the tax year and the previous two tax years. HB 2394 would allow all taxpayers the ability to claim this tax credit and increases the initial tax credit calculation from 6.5 percent to 10.0 percent. The House Tax Committee added a date-change amendment prior to passing the bill out favorably this week.

State Contractor Foreign Disclosure Requirement

Senator Kellie Warren (R-Leawood) introduced SB 537 late in the session requiring state agencies, political subdivisions, state contractors and vendors to disclose certain contracts, gifts, or grants received from foreign sources and state educational institutions to screen certain foreign applicants seeking employment in certain research positions, prohibiting agreements with or accepting grants from certain foreign countries of concern and establishing research integrity offices and international travel and approval programs at state educational institutions. Warren indicated the bill likely will not move forward this year, but she introduced it to, “Get the conversation on this topic started.”

COVID Vaccine

Sen Sub for House Bill 2280, pressed by Sen. Mark Steffen (R-Hutchinson), was referred to the Senate Committee on Public Health and Welfare, where it was amended to insert the contents of Senate Bill 381, allowing for the prescribing and dispensing of medications for off-label use to prevent and treat COVID-19 infections; and Senate Bill 398requiring a childcare facility or school to grant religious exemptions from vaccination requirements without inquiring into the sincerity of the religious beliefs. After tabling the bill for a few weeks, the committee, despite attempts by committee members to strike the vaccination language from the bill, passed the legislation favorably to the Senate Committee of the Whole on Thursday. The Kansas Reflector provided an in-depth article on the meeting.

Senate Bill 370 would prohibit COVID-19 vaccination requirements for national guard members. A hearing on the bill was held in the exempt Senate Committee on Federal and State Affairs.

Senate Bill 489 would remove certain regulatory authority concerning infectious or contagious diseases from the secretary of health and environment. The Senate Committee Public Health and Welfare Committee held a hearing on the bill on March 8, where despite only two proponents and 10 opponents, it was amended to allow local health officers to only recommend a quarantine or patient isolation in the event of a public health emergency. This week, the bill passed out of committee favorably and is on the docket to be debated by the full Senate.

House Bill 2501 would prohibit COVID-19 vaccination requirements for National Guard members. The bill was referred to the House Committee on Federal and State Affairs.

Midwest Stem Cell Therapy Center

This week, on a vote of 23-17, the Senate amended Senate Bill 373 and passed it out favorably. The bill would make appropriations of $500,000 for the University of Kansas Medical Center for COVID-19 clinical trials at the Midwest Stem Cell Therapy Center. The Senate amended the bill to allow the funds to be used any time before June 30 2024. The bill has been referred to the House Committee on Appropriations.

Senate Passes Budget

The Senate passed its version of the state agency budget (Sub SB 444) to the House around 7 o’clock Tuesday evening. Senator Tom Holland and Senator Caryn Tyson tacked on the only successful amendments to include: the federal E-Verify provision for state hiring and contracts of more than $50,000; and, a 15 percent pay raise for legislative employees – not legislators – who were left out of last year’s budget bill. Also included in the Senate budget bill is an allotment of $60,000 from state general funds for the KDA grain warehouse inspection program for fiscal years 2023 and 2024.

Corporate Income Tax Apportionment

Kansas currently uses a three-factor system for apportioning income between states for corporate income tax purposes. House Bill 2186 would allow corporate taxpayers the option to elect which methodology to use when apportioning their corporate income between Kansas and other states in which it operates. The 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. This week, the House Tax Committee amended the bill to add NAICS codes for additional businesses and industries as requested by the Kansas Chamber of Commerce, to include 541690 and 112210. Having gone through the exempt Committee on Taxation, the bill remains alive and has been placed on the House calendar for consideration. The House is holding off acting on tax bills.

Industry Regulations

House Concurrent Resolution 5014 would propose a constitutional amendment to increase legislative oversight of agency regulations. If approved by two-thirds of the legislature, the amendment would go before Kansas voters in the 2022 election. The House passed the resolution on a vote of 85-39. The Senate Judiciary Committee passed the resolution out favorably and it now awaits consideration by the full Senate.  

Substitute for Senate Bill 34 would require states agencies to review each of its regulations, at least once every five years, to determine if they are still valid and necessary. The bill also allows for a 15-day quick repeal process for outdated regulations. Kansas Grain and Feed Association, Kansas Agribusiness Retailers Association, and Renew Kansas Biofuels Association testified in support of the measure prior to the House Committee on Federal and State Affairs passing the bill out of committee favorably on March 17.

House Bill 2087would amend a law requiring review of economic impact of proposed regulations by the state budget director. The Senate amended the bill to reduce the review threshold from $3 million to, $1 million, to increase the number of regulations reviewed by the state budget director. The bill is now on the House calendar to either concur or non-concur with the Senate amendment. 

Resolution Denouncing Natural Gas “Price Gouging” 

Introduced by House Speaker Pro Tem Blaine Finch (R-Ottawa), HCR 5023 denounces price gouging and market manipulation in the natural gas marketplace, and supports investigations into the extraordinary price increases of wholesale natural gas during the extreme cold weather event “Uri” during February 2021 that resulted in increased costs on ratepayers. On Friday, March 11, the Senate Utilities Committee passed the resolution out favorably.

Salt (State and Local Tax) Parity Act

Senate Bill 495 would establish the “salt parity act” to allow a S corporation or partnership to annually elect to be subject to income tax at the entity level for the taxable period beginning in tax year 2022. The S corporation or partnership would make the election on the return filed by the S corporation or partnership. The filing of the return would be binding on all electing passthrough entity owners. The election would only be allowed in a taxable year where there is a limitation on state and local tax deductions allowed to individuals under the federal Internal Revenue Code. An electing pass-through entity would be subject to a tax in an amount equal to 5.7 percent of the sum of each electing pass-through entity owner’s distributive share of the electing pass-through entity’s income attributable to the state. Any excess income tax credit, net operating loss, or other modification would be allowed to be carried forward on the electing pass-through entity’s return but would only be utilized in a year in which the electing pass-through entity has made the election, except that any limitation for an income tax credit, the net operating loss, or any other modification would apply to the electing pass-through entity. 

The bill would allow the electing pass-through entity owners to not be liable for the income tax in their separate or individual capacities, and the electing pass-through entity’s income attributable to the state would not be taken into account by the electing pass-through entity owners. A nonresident individual or fiduciary whose only source of income from this state is income from an electing pass-through entity under the Salt Parity Act would not be required to file an income tax return. A hearing on the bill was held in the Senate Tax Committee on March 10.

Food Sales Tax Exemption

The legislature has held hearings on multiple bills, each taking a unique angle at exempting purchases of “food” from state sales tax. This week, the House Tax Committee passed House Bill 2711, a bill that would cut the state sales tax while gradually lowering the sales tax on food with a goal of eliminating it within three years. The bill would cut the state sales tax by two-tenths of a penny to 6.3% beginning July 1 of this year, while starting a slow reduction in the sales tax on food over time.

Workers Compensation

Introduced and referred to the Senate Commerce Committee, Senate Bill 361 would eliminate the $155,000 cap on permanent total disability in Kansas’ Workers Compensation Act. The bill would allow an injured worker who is determined to be permanently totally disabled to receive weekly benefits at the rate of the employee’s average weekly wage in effect on the date of the injury for which compensation is being made, starting from the date of maximum medical improvement and continuing for life, or the duration of the disability. A hearing on the bill was held on Tuesday, March 8.

Unemployment Insurance

House Bill 2703 would modify the My Reemployment Plan Program and, with certain exceptions, make use of the program mandatory for those receiving unemployment insurance benefits. The Secretary of Commerce would be allowed to require claimants to participate in reemployment services. In addition, the bill would amend solvency and credit rate schedules for the Employment Security Fund. Having passed the House, the Senate Commerce Committee amended the bill to clarify which individuals are exempt from participation in the My Reemployment Plan including: claimants on temporary layoff with a return-to-work date, claimants that are currently employed or that no longer reside in Kansas, claimants that are current reemployment services and eligibility assessment participants, claimants that are members of a placement union or claimants that are engaged in a training program.

Bill Opposing Sanctuary Cities

House Bill 2717 would prohibit any Kansas municipality from preventing the enforcement of federal immigration laws, requiring municipal law enforcement agencies to provide written notice to each law enforcement officer of the officer’s duty to cooperate with state and federal agencies in the enforcement of immigration laws and requiring any municipal identification card to state on its face that it is not valid for state identification. The hearing in the House Federal and State Affairs Committee on Tuesday drew a large crowd to the Statehouse as nearly 70 pieces of testimony were submitted and discussed on the record. Committee chairman Rep. John Barker (R-Abilene) closed the hearing stating his intention to move forward working on the legislation with the time remaining in the session this year.

Plastic Regulation, State Level Preemption

Senate Bill 493would prohibit cities and counties from regulating plastic and other containers designed for the consumption, transportation or protection of merchandise, food, or beverages. The House Commerce Committee amended the bill slightly to add plastic straws to the definition of “auxiliary container” before sending it to the full House for consideration. 

Work-Based Learning Program Liability

In 2021, House Sub for SB 91 was introduced with the purpose of providing businesses with immunity from general liability for participating in work-based learning programs with students. Under the bill, schools would insure against this liability in the same way that they insure students during field trips and sporting events. This reasonable legislation is beneficial for businesses as they seek to increase the Kansas workforce. A conference committee between the House and the Senate has been appointed to determine final language on the bill.

Workforce Development Scholarship

Last year, Governor Kelly signed into law a workforce development bill creating the Kansas Promise Scholarship Act which provides educational scholarships to students attending a Kansas community college, technical college, or two-year associate degree program or career and technical education programs. The scholarship would be eligible for students pursing certain fields of study, including manufacturing, construction, and others. This year, Senate Bill 340 was introduced to modify the act to authorize additional programs and fields of study. On March 10, the Senate Ways and Means Committee amended the bill and passed it out favorably as amended.

Special Legislative Tax Committee Recommendations

In November of 2021, a Special Committee on Taxation met to review current tax exemptions and abatements in Kansas. The committee made multiple recommendations on, inter alia, the use of state general fund ending balances, constitutional amendment proposals limiting taxes or expenditures, and the taxation of energy production in the state. On March 10, the Senate Committee on Taxation held a hearing on Senate Concurrent Resolution 1619 which urges the legislature to adopt the recommendations of the Special Committee. While no testimony was offered during the hearing, the committee recommended that the full Senate adopt SCR 1619.

KEMA Disaster Emergency Powers

The Senate Judiciary Committee held a hearing on Senate Bill 541, a bill that would, inter alia, limit the authority of the governor, and other governmental entities in issuing and enforcing orders for face mask mandates, gathering limitations, and business restrictions related to a contagious or infectious disease. The bill would also prohibit post-secondary educational institutions, the State Board of Education, local boards, schools, and school officials from requiring a COVID-19 vaccination and from issuing or requiring a COVID-19 passport. Schools would be required to recognize exemptions for mask requirements and alternative measures regarding religious exemptions for vaccinations. The bill would also give local boards of education and governing bodies of community and technical colleges the authority to issue orders or policies for contagious or infectious diseases instead of the current authority given during the state of disaster emergency related to the COVID-19 health emergency. SB 541 would also remove the sunset for the Contact Tracing Privacy Act. The bill would prohibit schools and childcare facilities from denying access to their facilities unless there were reasonable grounds that a person was infected with a disease suspected of being infectious or contagious. On Friday, March 11, the committee amended the bill and passed it out favorably. We anticipate a floor amendment to clarify that the bill does not apply to animal infectious disease and quarantine orders.

March 11, 2022

2022 Legislative Session, Week 9

Despite winter weather moving into Topeka the evening before BioKansas’ 2022 Bioscience Day, industry representatives joined together on March 7 inside of the Kansas Statehouse to meet with and educate lawmakers on legislation important to the industry. 

The event featured a full day of meetings with legislative leadership and pertinent committee chairmen including: House Speaker Pro Tem Blaine Finch (R-Ottawa); Senator Kristen O’Shea (R-Topeka); Senator Pat Pettey (D-Kansas City); Senate Vice President Rick Wilborn (R-McPherson); Representative Dr. John Eplee (R-Atchison); Representative Megan Lynn (R-Olathe); Senate Minority Leader Dinah Sykes (D-Lenexa); Representative Brandon Woodard (D-Lenexa); House Minority Leader Tom Sawyer (D-Wichita); Senator Cindy Holscher (D-Overland Park); and Representative Brenda Landwehr (R-Wichita). 

During the meetings, BioKansas’ members explained the association’s position on impactful legislation being worked on in the 2022 session including support for Senate Bill 340 and House Bill 2394. Senate Bill 340 Amends the Kansas promise scholarship act by clarifying the responsibilities of the state board of regents and postsecondary educational institutions and authorizing designation of additional programs and fields of study. Passage of SB 340 incentivizes training and education in agriculture, food and natural resources, distribution, and logistics; driving development of a well-trained workforce that can fortify a modern economy. 

House Bill 2394 increases the amount of the research and development tax credit, expanding eligibility beyond corporate taxpayers and permitting transfer of the credit. BioKansas supports innovative treatments that keep Kansans healthy, our livestock and crops bountiful and excellent, and our economy strong. 

A bill BioKansas opposed in meetings with legislators was Senate Bill 441 which would enact the biological laboratory accident transparency act. Most legislators BioKansas met with were receptive to the association’s position on the bill that would create distrust between the public and key state and federal assets. During a meeting with Landwehr, the House Health Committee Chairwoman where the bill currently resides, she stated at this time she does not have intentions of bringing the bill up for a hearing.

This week, on a vote of 32-5, the Senate confirmed Janet Stanek as the Governor’s nominee for Secretary of the Kansas Department of Health and Environment. In addition, both chambers continue to debate and pass mostly noncontroversial bills, leaving debate on the major issues still to come in the remaining couple weeks of the session – including various tax cut bills, redistricting of legislative districts, and passage of the 2023 state agency budget.

Midwest Stem Cell Therapy Center

This week, on a vote of 23-17, the Senate amended Senate Bill 373 and passed it out favorably. The bill would make appropriations of $500,000 for the University of Kansas Medical Center for COVID-19 clinical trials at the Midwest Stem Cell Therapy Center. The Senate amended the bill to allow the funds to be used any time before June 30, 2024. The bill has been referred to the House Committee on Appropriations.

Workforce Development Scholarship

Last year, Governor Kelly signed into law a workforce development bill creating the Kansas Promise Scholarship Act which provides educational scholarships to students attending a Kansas community college, technical college, or two-year associate degree program or career and technical education programs. The scholarship would be eligible for students pursing certain fields of study, including manufacturing, construction, and others. This year, Senate Bill 340 was introduced to modify the act to authorize additional programs and fields of study. On March 10, the Senate Ways and Means Committee amended the bill and passed it out favorably as amended.

Biological Lab Accidents

Senate Bill 441 would enact the biological laboratory accident transparency act and would require institutions and organizations to report accidents and near miss accidents at high-risk biological laboratories. The bill drew only one proponent, who testified from Israel and stated he, “Had no ties to Kansas.” Senate Public Health and Welfare Committee Chairman Richard Hilderbrand (R-Galena) acknowledged he requested the bill’s introduction in relation to a laboratory at Kansas State University. Having passed the Senate, the bill now has now been referred to the House Committee on Health and Human Services for consideration.

Over-the-Counter Sales Tax Exemption

House Bill 2721 would provide for a sales tax exemption on sales of over-the-counter drugs. A hearing was held on the bill on March 8 in the House Committee on Taxation, where there was one proponent and no opponents. The estimated fiscal note on the bill would be an annual cost to the state of $20.5 million.

Research and Development Income Tax Credit

House Bill 2394 would establish a 6.5 percent research and development tax credit for LLCs and small businesses. Currently, Kansas law provides this tax credit for corporations only, and has a one-time transferability. The tax credit is based on the amount above the average of actual qualified research and development expenses in the tax year and the previous two tax years. HB 2394 would allow all taxpayers the ability to claim this tax credit and increases the initial tax credit calculation from 6.5 percent to 10.0 percent. The House Tax Committee is scheduled to take final committee action on the bill on Monday, March 14.

KEMA Disaster Emergency Powers

The Senate Judiciary Committee held a hearing on Senate Bill 541, a bill that would, inter alia, limit the authority of the governor, and other governmental entities in issuing and enforcing orders for face mask mandates, gathering limitations, and business restrictions related to a contagious or infectious disease. The bill would also prohibit post-secondary educational institutions, the State Board of Education, local boards, schools, and school officials from requiring a COVID-19 vaccination and from issuing or requiring a COVID-19 passport. Schools would be required to recognize exemptions for mask requirements and alternative measures regarding religious exemptions for vaccinations. The bill would also give local boards of education and governing bodies of community and technical colleges the authority to issue orders or policies for contagious or infectious diseases instead of the current authority given during the state of disaster emergency related to the COVID-19 health emergency. SB 541 would also remove the sunset for the Contact Tracing Privacy Act. The bill would prohibit schools and childcare facilities from denying access to their facilities unless there were reasonable grounds that a person was infected with a disease suspected of being infectious or contagious. On Friday, March 11, the committee amended the bill and passed it out favorably. We anticipate a floor amendment to clarify that the bill does not apply to animal infectious disease and quarantine orders.

COVID Vaccine

Sen Sub for House Bill 2280, pressed by Sen. Mark Steffen (R-Hutchinson), was referred to the Senate Committee on Public Health and Welfare, where it was amended to insert the contents of Senate Bill 381, allowing for the prescribing and dispensing of medications for off-label use to prevent and treat COVID-19 infections; and Senate Bill 398 requiring a childcare facility or school to grant religious exemptions from vaccination requirements without inquiring into the sincerity of the religious beliefs. The committee began the amendment process on the bill midway through the week, however, action was tabled until a later date. The bill remains in the committee.

Senate Bill 370 would prohibit COVID-19 vaccination requirements for national guard members. A hearing on the bill was held in the exempt Senate Committee on Federal and State Affairs.

Senate Bill 489 would remove certain regulatory authority concerning infectious or contagious diseases from the secretary of health and environment. The Senate Committee Public Health and Welfare Committee held a hearing on the bill on March 8. There were two proponents and 10 opponents.

House Bill 2501 would prohibit COVID-19 vaccination requirements for National Guard members. The bill was referred to the House Committee on Federal and State Affairs.

Corporate Income Tax Apportionment

Kansas currently uses a three-factor system for apportioning income between states for corporate income tax purposes. House Bill 2186 would allow corporate taxpayers the option to elect which methodology to use when apportioning their corporate income between Kansas and other states in which it operates. The 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. This week, the House Tax Committee amended the bill to add NAICS codes for additional businesses and industries as requested by the Kansas Chamber of Commerce, to include 541690 and 112210. Having gone through the exempt Committee on Taxation, the bill remains alive and has been placed on the House calendar for consideration. The House is holding off acting on tax bills.

Industry Regulations

House Concurrent Resolution 5014 would propose a constitutional amendment to increase legislative oversight of agency regulations. If approved by two-thirds of the legislature, the amendment would go before Kansas voters in the 2022 election. During a hearing in the Senate Judiciary Committee, Kansas Agribusiness Retailers Association, Kansas Grain and Feed Association, and Renew Kansas Biofuels Association joined other stakeholders in support of the measure. The committee passed the resolution out favorably on March 9.

Substitute for Senate Bill 34 would require states agencies to review each of its regulations, at least once every five years, to determine if they are still valid and necessary. The bill also allows for a 15-day quick repeal process for outdated regulations. The House Committee on Federal and State Affairs held a hearing on the bill on March 9. We anticipate the bill being passed out of committee next week.

House Bill 2087would amend a law requiring review of economic impact of proposed regulations by the state budget director. The Senate amended the bill to reduce the review threshold from $3 million to, $1 million, to increase the number of regulations reviewed by the state budget director. The bill is now on the House calendar to either concur or non-concur with the Senate amendment. 

Resolution Denouncing Natural Gas “Price Gouging”

Introduced by House Speaker Pro Tem Blaine Finch (R-Ottawa), HCR 5023 denounces price gouging and market manipulation in the natural gas marketplace, and supports investigations into the extraordinary price increases of wholesale natural gas during the extreme cold weather event “Uri” during February 2021 that resulted in increased costs on ratepayers. On Friday, March 11, the Senate Utilities Committee passed the resolution out favorably.

Salt (State and Local Tax) Parity Act

Senate Bill 495 would establish the “salt parity act” to allow a S corporation or partnership to annually elect to be subject to income tax at the entity level for the taxable period beginning in tax year 2022. The S corporation or partnership would make the election on the return filed by the S corporation or partnership. The filing of the return would be binding on all electing passthrough entity owners. The election would only be allowed in a taxable year where there is a limitation on state and local tax deductions allowed to individuals under the federal Internal Revenue Code. An electing pass-through entity would be subject to a tax in an amount equal to 5.7 percent of the sum of each electing pass-through entity owner’s distributive share of the electing pass-through entity’s income attributable to the state. Any excess income tax credit, net operating loss, or other modification would be allowed to be carried forward on the electing pass-through entity’s return but would only be utilized in a year in which the electing pass-through entity has made the election, except that any limitation for an income tax credit, the net operating loss, or any other modification would apply to the electing pass-through entity. The bill would allow the electing pass-through entity owners to not be liable for the income tax in their separate or individual capacities, and the electing pass-through entity’s income attributable to the state would not be taken into account by the electing pass-through entity owners. A nonresident individual or fiduciary whose only source of income from this state is income from an electing pass-through entity under the Salt Parity Act would not be required to file an income tax return. A hearing on the bill was held in the Senate Tax Committee on March 10.

Workers Compensation

Introduced and referred to the Senate Commerce Committee, Senate Bill 361 would eliminate the $155,000 cap on permanent total disability in Kansas’ Workers Compensation Act. The bill would allow an injured worker who is determined to be permanently totally disabled to receive weekly benefits at the rate of the employee’s average weekly wage in effect on the date of the injury for which compensation is being made, starting from the date of maximum medical improvement and continuing for life, or the duration of the disability. A hearing on the bill was held on Tuesday, March 8.

Unemployment Insurance

House Bill 2703 would modify the My Reemployment Plan Program and, with certain exceptions, make use of the program mandatory for those receiving unemployment insurance benefits. The Secretary of Commerce would be allowed to require claimants to participate in reemployment services. In addition, the bill would amend solvency and credit rate schedules for the Employment Security Fund. Having passed the House, a hearing on the bill is scheduled for Monday, March 14 in the Senate Commerce Committee.

Bill Opposing Sanctuary Cities

House Bill 2717 would prohibit any Kansas municipality from preventing the enforcement of federal immigration laws, requiring municipal law enforcement agencies to provide written notice to each law enforcement officer of the officer’s duty to cooperate with state and federal agencies in the enforcement of immigration laws and requiring any municipal identification card to state on its face that it is not valid for state identification. The bill is scheduled for a hearing in the House Committee on Federal and State Affairs on Tuesday, March 15.

Plastic Regulation, State Level Preemption

Senate Bill 493would prohibit cities and counties from regulating plastic and other containers designed for the consumption, transportation or protection of merchandise, food, or beverages. The bill was heard by the House Commerce Committee on March 9.

Work-Based Learning Program Liability

In 2021, House Sub for SB 91 was introduced with the purpose of providing businesses with immunity from general liability for participating in work-based learning programs with students. Under the bill, schools would insure against this liability in the same way that they insure students during field trips and sporting events. This reasonable legislation is beneficial for businesses as they seek to increase the Kansas workforce. A conference committee between the House and the Senate has been appointed to determine final language on the bill.

Special Legislative Tax Committee Recommendations

In November of 2021, a Special Committee on Taxation met to review current tax exemptions and abatements in Kansas. The committee made multiple recommendations on, inter alia, the use of state general fund ending balances, constitutional amendment proposals limiting taxes or expenditures, and the taxation of energy production in the state. On March 10, the Senate Committee on Taxation held a hearing on Senate Concurrent Resolution 1619 which urges the legislature to adopt the recommendations of the Special Committee. While no testimony was offered during the hearing, the committee recommended that the full Senate adopt SCR 1619.

March 4, 2022

2022 Legislative Session, Week 8

The legislature returned to work this week to begin further consideration of bills. On Thursday afternoon, while debating a bill that would provide income tax credits to graduates of aviation-related programs and their employers, the Senate amended the bill multiple times to add other income and property tax bills and programs with a total cost of over $100 million to the state. The bill now includes such items as an income tax credit for schoolteachers, a freeze on property taxes for seniors and veterans, property tax breaks on school taxes, and a rural housing development tax credit. One amendment that was narrowly defeated would have added Governor Laura Kelly’s proposal to provide every Kansas taxpayer with a one-time $250 cash rebate. That proposal would have cost the state $460 million. The bill would be the first major piece of tax legislation to pass a chamber this session. 

The House continues to hold off action on tax bills as the legislature wrestles with how best to spend down the estimated $3 billion ending balance for the current fiscal year. That ending balance was just increased as February state tax revenues beat estimates by 4 percent, adding another $18 million to this year’s ending balance. The major issues remaining for the session include various tax cut bills, redistricting of legislative districts, and passage of the 2022 omnibus and 2023 state agency budgets.

Midwest Stem Cell Therapy Center

This week, on a vote of 23-17, the Senate amended Senate Bill 373 and passed it out favorably. The bill would make appropriations of $500,000 for the University of Kansas Medical Center for COVID-19 clinical trials at the Midwest Stem Cell Therapy Center. The Senate amended the bill to allow the funds to be used any time before June 30 2024. The bill has been referred to the House Committee on Appropriations.

Biological Lab Accidents

Senate Bill 441 would enact the biological laboratory accident transparency act and would require institutions and organizations to report accidents and near miss accidents at high-risk biological laboratories. The bill drew only one proponent, who testified from Israel and stated he, “Had no ties to Kansas.” Senate Public Health and Welfare Committee Chairman Richard Hilderbrand (R-Galena) acknowledged he requested the bill’s introduction. Having passed the Senate, the bill has now been referred to the House Committee on Health and Human Services for consideration.

Over-the-Counter Sales Tax Exemption

House Bill 2721 would provide for a sales tax exemption on sales of over-the-counter drugs. A hearing on the bill is scheduled for Tuesday, March 8 in the House Committee on Taxation. 

COVID Vaccine Bills

Sen Sub for House Bill 2280, pressed by Sen. Mark Steffen (R-Hutchinson), was referred to the Senate Committee on Public Health and Welfare, where it was amended to insert the contents of Senate Bill 381, allowing for the prescribing and dispensing of medications for off-label use to prevent and treat COVID-19 infections; and Senate Bill 398 requiring a childcare facility or school to grant religious exemptions from vaccination requirements without inquiring into the sincerity of the religious beliefs. The bill remains in the committee.

Senate Bill 370would prohibit COVID-19 vaccination requirements for national guard members. A hearing on the bill was held in the exempt Senate Committee on Federal and State Affairs.

Senate Bill 489 would remove certain regulatory authority concerning infectious or contagious diseases from the secretary of health and environment. A hearing on the bill is scheduled in the Senate Committee Public Health and Welfare Committee on Tuesday, March 8.

House Bill 2501would prohibit COVID-19 vaccination requirements for National Guard members. The bill was referred to the House Committee on Federal and State Affairs.

Senate Bill 541, a multi-pronged bill concerning orders and actions by public officials relating to vaccine passports, face mask mandates, gathering limitations, business restrictions, and religious gathering limitations. The Senate Judiciary Committee held an informational hearing on this bill on March 3, and has scheduled for a full hearing on Monday, March 7.

Research and Development Income Tax Credit

House Bill 2394 would establish a 6.5 percent research and development tax credit for LLCs and small businesses. Currently, Kansas law provides this tax credit for corporations only, and has a one-time transferability. The tax credit is based on the amount above the average of actual qualified research and development expenses in the tax year and the previous two tax years. HB 2394 would allow all taxpayers the ability to claim this tax credit and increases the initial tax credit calculation from 6.5 percent to 10.0 percent. The House Tax Committee held a hearing on the bill on Wednesday, February 16. Because of the exempt status of the tax committee the bill remains alive for the session. Kansas Dept. of Commerce submitted proponent testimony available HERE.

Workforce Development Scholarship

Last year, Governor Kelly signed into law a workforce development bill creating the Kansas Promise Scholarship Act which provides educational scholarships to students attending a Kansas community college, technical college, two-year associate degree program, or career and technical education programs. The scholarship would be eligible for students pursuing certain fields of study, including manufacturing, construction, and others. This year, Senate Bill 340 was introduced to amend the act to authorize additional programs and fields of study. A presentation on the bill will be held in the Senate Committee on Ways and Means on Thursday, March 10.

Corporate Income Tax Apportionment

Kansas currently uses a three-factor system for apportioning income between states for corporate income tax purposes. House Bill 2186 would allow corporate taxpayers the option to elect which methodology to use when apportioning their corporate income between Kansas and other states in which it operates. The 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. This week, the House Tax Committee amended the bill to add NAICS codes for additional businesses and industries as requested by the Kansas Chamber of Commerce. The House is holding off acting on tax bills.

Industry Regulations

House Concurrent Resolution 5014would propose a constitutional amendment to increase legislative oversight of agency regulations. If approved by two-thirds of the legislature, the amendment would go before Kansas voters in the 2022 election. Having passed the House, the Senate Judiciary Committee held a hearing on the resolution this week. Proponent testimony was provided by Kansas Agribusiness Retailers Association, Kansas Grain and Feed Association, and Renew Kansas Biofuels Association.

Substitute for Senate Bill 34would require states agencies to review each of its regulations, at least once every five years, to determine if they are still valid and necessary. The bill also allows for a 15-day quick repeal process for outdated regulations. Having passed the Senate, it is scheduled for a hearing in the House Committee on Federal and State Affairs on Wednesday, March 9.

House Bill 2087 would amend a law requiring review of economic impact of proposed regulations by the state budget director. The Senate amended the bill to reduce the review threshold from $3 million to $1 million, to increase the number of regulations reviewed by the state budget director. The bill is now on the House calendar to either concur or non-concur with the Senate amendment. 

Credit and Debit Card Fees

Kansas law prohibits the seller or lessor in any sales or lease transaction or any credit or debit card issuer from imposing a surcharge on a card holder who elects to use a credit or debit card in lieu of payment by cash, check, or similar means. A surcharge is defined as any additional amount imposed at the time of the sales or lease transaction by the merchant, seller or lessor that increases the charge to the buyer or lessee for the privilege of using a credit or debit card. House Bill 2316was introduced to eliminate this prohibition and allow the imposition of a surcharge. Having passed the House, the Senate Tax Committee held a hearing on the bill where Kansas Agribusiness Retailers Association provided proponent testimony.

Resolution Denouncing Natural Gas “Price Gouging”

Introduced by House Speaker Pro Tem Blaine Finch (R-Ottawa), HCR 5023 denounces price gouging and market manipulation in the natural gas marketplace and supports investigations into the extraordinary price increases of wholesale natural gas during the extreme cold weather event “Uri” during February 2021 that resulted in increased costs on ratepayers. Having passed the House, a hearing on the resolution is scheduled in Senate Utilities Committee on Tuesday, March 8.

Plastic Regulation,State Level Preemption

Senate Bill 493 would prohibit cities and counties from regulating plastic and other containers designed for the consumption, transportation or protection of merchandise, food, or beverages. Having passed the Senate, the bill is scheduled for hearing in the House Commerce Committee on Wednesday, March 9.

Salt Parity Act

Senate Bill 495 was introduced at the request of the Kansas Society of Certified Public Accountants. The bill would establish the “salt parity act” to allow pass-through entities to elect to pay state income tax at the entity level. The bill is scheduled for hearing in the Senate Tax Committee on Thursday, March 10.

Workers Compensation

Introduced and referred to the Senate Commerce Committee, Senate Bill 361 would eliminate the $155,000 cap on permanent total disability in Kansas’ Workers Compensation Act. The bill would allow an injured worker who is determined to be permanently totally disabled to receive weekly benefits at the rate of the employee’s average weekly wage in effect on the date of the injury for which compensation is being made, starting from the date of maximum medical improvement and continuing for life, or the duration of the disability. A hearing on the bill is scheduled for Tuesday, March 8.

Unemployment Insurance

House Bill 2703 wouldmodify the My Reemployment Plan Program and, with certain exceptions, make use of the program mandatory for those receiving unemployment insurance benefits. The Secretary of Commerce would be allowed to require claimants to participate in reemployment services. In addition, the bill would amend solvency and credit rate schedules for the Employment Security Fund. Having passed the House, a hearing on the bill is scheduled for Thursday, March 10 in the Senate Commerce Committee.

Work-Based Learning Program Liability

In 2021, House Sub for SB 91was introduced with the purpose of providing businesses with immunity from general liability for participating in work-based learning programs with students. Under the bill, schools would insure against this liability in the same way that they insure students during field trips and sporting events. This reasonable legislation is beneficial for businesses as they seek to increase the Kansas workforce. A conference committee between the House and the Senate has been appointed to determine the final language on the bill.

February 25, 2022

2022 Legislative Session, Week 7

This was Turnaround week in the Kansas legislature, where the House and Senate debated dozens of bills before adjourning on Wednesday afternoon. Any bill that was either not passed by its chamber of origin by Wednesday, or is otherwise exempt, will no longer be an active bill this session. This week, the House passed and sent 29 bills to the Senate, and the Senate sent 37 bills to the House. The legislature will return to work next Tuesday to begin further consideration of bills. The major issues remaining for the session include various tax cut bills – including sales tax on food, passage of reapportionment maps for the House and Senate, and how to best spend the state’s approximately $3 billion ending cash balance. In other news, with a re-election campaign this year, it was reported this week that Governor Laura Kelly’s approval rating has slipped to just 45.4%.

Biological Lab Accidents

This week, on a close vote of 21-19, the Senate passed Senate Bill 441. The bill would enact the biological laboratory accident transparency act and would require institutions and organizations to report accidents and near miss accidents at high-risk biological laboratories. The bill drew only one proponent, who testified from Israel and stated he, “Had no ties to Kansas.” Senate Public Health and Welfare Committee Chairman Richard Hilderbrand (R-Galena) acknowledged he requested the bill’s introduction. The bill now goes to the House for consideration.

COVID Vaccine Bills

Sen Sub for House Bill 2280, pressed by Sen. Mark Steffen (R-Hutchinson), was referred to the Senate Committee on Public Health and Welfare, where it was amended to insert the contents of Senate Bill 381, allowing for the prescribing and dispensing of medications for off-label use to prevent and treat COVID-19 infections; and Senate Bill 398requiring a childcare facility or school to grant religious exemptions from vaccination requirements without inquiring into the sincerity of the religious beliefs. The bill remains in the committee.

Senate Bill 370 would prohibit COVID-19 vaccination requirements for national guard members. A hearing on the bill was held in the exempt Senate Committee on Federal and State Affairs, and the bill will survive turnaround.

Senate Bill 466 would prohibit any place of public accommodation from refusing service, products, admission, or transportation based upon an individual’s vaccination status or possession of an immunity passport. The bill would define “immunity passport” as a document, digital record, or software application indicating that a person is immune to disease, either through vaccination or infection and recovery. The bill would specify county commission boards would be authorized to review, amend, or revoke any order by a local health officer, including orders issued pursuant to a Governor’s executive order, or on behalf of a county concerning any communicable disease. The bill will not survive legislative turnaround and is now a dead bill.

Senate Bill 489 would remove certain regulatory authority concerning infectious or contagious diseases from the secretary of health and environment. The bill was referred to the exempt Senate Federal and State Affairs Committee, and then referred to the Committee Public Health and Welfare Committee. The bill will survive turnaround.

House Bill 2498 would prohibit the Secretary of KDHE from requiring COVID-19 vaccination for children to attend school. The bill will not survive legislative turnaround and is now a dead bill.

House Bill 2501 would prohibit COVID-19 vaccination requirements for National Guard members. The bill was referred to the exempt House Federal and State Affairs Committee and will survive turnaround.

House Bill 2535 would enact the individual liberty preservation act to nullify certain federal COVID-19 vaccine requirements, prohibit enforcement of such requirements and provide criminal penalties for violations. The bill will not survive legislative turnaround and is now a dead bill.

House Bill 2669 would require childcare facilities and schools to grant religious exemptions from vaccination requirements without inquiring into the sincerity of the religious beliefs. The bill will not survive legislative turnaround and is now a dead bill.

House Bill 2670 would prohibit certain acts by business entities, governmental entities or public officials based upon a person’s vaccination status or possession of an immunity passport, amending the Kansas act against discrimination to define unlawful employment practices related to vaccination status or possession of an immunity passport and limiting powers of the secretary of health and environment and local health officers. The bill will not survive legislative turnaround and is now a dead bill.

Midwest Stem Cell Therapy Center

This week, on a vote of 23-17, the Senate amended Senate Bill 373 and passed it out favorably. The bill would make appropriations of $500,000 for the University of Kansas Medical Center for COVID-19 clinical trials at the Midwest Stem Cell Therapy Center. The Senate amended the bill to allow the funds to be used any time before June 30, 2024.

Over-the-Counter Sales Tax Exemption

This week, House Bill 2721 was introduced in the House Committee on Taxation. The bill provides for a sales tax exemption on sales of over-the-counter drugs.

Corporate Income Tax Apportionment

Kansas currently uses a three-factor system for apportioning income between states for corporate income tax purposes. House Bill 2186 would allow corporate taxpayers the option to elect which methodology to use when apportioning their corporate income between Kansas and other states in which it operates. The 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. This week, the House Tax Committee amended the bill to add NAICS codes for additional businesses and industries as requested by the Kansas Chamber of Commerce, to include 541690 and 112210, as requested by Seaboard. Having gone through the exempt Committee on Taxation, the bill remains alive and has been placed on the House calendar for consideration. 

Industry Regulations

House Concurrent Resolution 5014 would propose a constitutional amendment to increase legislative oversight of agency regulations. If approved by two-thirds of the legislature, the amendment would go before Kansas voters in the 2022 election. This week, with 84 votes needed, the House narrowly passed HCR 5014 on a vote of 85-39. The resolution is now scheduled for hearing on Wednesday, March 2 in the Senate Judiciary Committee, which recently held a hearing on Senate Concurrent Resolution 1618 – the senate version of the resolution.

Also, this week, the Senate passed (on a vote of 32-7) Substitute for Senate Bill 34 which would require states’ agencies to review each of its regulations, at least once every five years, to determine if they are still valid and necessary. The bill also allows for a 15-day quick repeal process for outdated regulations. 

In addition, House Bill 2087would amend a law requiring review of economic impact of proposed regulations by the state budget director. The Senate amended the bill to reduce the review threshold from $3 million to $1 million, to increase the number of regulations reviewed by the state budget director. The bill is now on the House calendar to either concur or non-concur with the Senate amendment. 

Credit and Debit Card Fees

Kansas law prohibits the seller or lessor in any sales or lease transaction or any credit or debit card issuer from imposing a surcharge on a card holder who elects to use a credit or debit card in lieu of payment by cash, check or similar means. A surcharge is defined as any additional amount imposed at the time of the sales or lease transaction by the merchant, seller or lessor that increases the charge to the buyer or lessee for the privilege of using a credit or debit card. House Bill 2316 was introduced to eliminate this prohibition and allow the imposition of a surcharge. The Senate Tax Committee held a hearing on the bill where Kansas Agribusiness Retailers Association provided proponent testimony.

Electric Rates

Kansas has the highest energy rates in our region. Multiple bills were introduced this week targeted at either lowering those rates or stemming any increase in the rates. The Senate Utilities Committee held a hearing on Senate Bill 349, prohibiting the Kansas Corporation Commission (KCC) from approving any increase in retail electric rates for an electric public utility that would result in an annual increase of greater than 1.0 percent when compared to the preceding calendar year’s total retail rates or an average of 1.0 percent per year if the electric public utility does not file for a rate increase in two or more subsequent years. Because the bill was not referred to an exempt committee, it will not survive legislative turnaround this week. The Senate Committee on Assessment and Taxation held a hearing on Senate Bill 359, a bill that would remove the state sales tax on utilities and grant the same authority to cities and counties. In addition, the committee added the contents of this bill into Senate Bill 339, a tax bill concerning a reduction in the state sales tax on food, and then passed SB 339 out favorably.

Plastic Regulation, State Level Preemption

Senate Bill 493would prohibit cities and counties from regulating plastic and other containers designed for the consumption, transportation, or protection of merchandise, food, or beverages. This week, on a vote of 27-13, the bill passed the Senate and now moves to the House for consideration.

Workers Compensation Bill

House Bill 2704 would specify that an employer, or their insurance carrier, would not be required to notify an injured worker of any change or termination of medical or disability benefits for a worker’s compensation injury. The bill would also establish that an employee’s patient privilege would be waived for certain medical records when they file a workers compensation claim. All related treatment records would be required to be provided to the employer or insurance carrier without any medical release. Employers and insurance carriers would be able to communicate with healthcare providers without notice to the employee and communications would not need to be memorialized, though they could be at the employer or insurance carrier’s discretion. The bill would specify that costs associated with post award motions do not include costs incurred by a claimant for an expert opinion or expert testimony. For purposes of calculating an employee’s average weekly wage, the bill would require that any week an employee worked for any part of such week be considered a week of actual employment. In cases of dispute as to the injury, when a medical examination is ordered by the Director of Workers Compensation, the bill would require the Director, prior to the examination, to communicate in writing to the examining provider the medical questions to be answered by the provider that may be applicable to the case. This week, the bill was withdrawn from the House Commerce Committee and referred to the Committee on Appropriations. The bill should be returned to the Commerce Committee.

Unemployment Insurance Updates

House Bill 2703 would modify the My Reemployment Plan Program and, with certain exceptions, make use of the program mandatory for those receiving unemployment insurance benefits. The Secretary of Commerce would be allowed to require claimants to participate in reemployment services. In addition, the bill would amend solvency and credit rate schedules for the Employment Security Fund. This week, the House passed the bill by a vote of 121-0. It now advances to the Senate for consideration.

Workforce Development Scholarship

Last year, Governor Kelly signed into law a workforce development bill creating the Kansas Promise Scholarship Act which provides educational scholarships to students attending a Kansas community college, technical college, two-year associate degree program, or career and technical education programs. The scholarship would be eligible for students pursuing certain fields of study, including manufacturing, construction, and others. This year, Senate Bill 340 was introduced to amend the act to authorize additional programs and fields of study. The bill was advanced from the Senate Committee on Education, and this week the bill was referred to the Senate Committee on Ways and Means.

February 18, 2022

2022 Legislative Session, Week 6

The Legislature passed a Congressional redistricting map last week (Sub Senate Bill 355), overriding Governor Laura Kelly’s veto. Multiple legal challenges to the bill were filed. Major floor action in the House included the attempted passage of a resolution on a proposed constitutional amendment giving the Legislature oversight of rules and regulations adopted by executive branch agencies. The vote failed to gain the super majority votes required to pass, but it will likely come up for reconsideration on Monday. In the Senate, the Senate Tax Committee passed a large bill full of tax cuts, including reductions in property taxes and a new sales tax holiday for school supplies. The bill would also eliminate a property tax set aside for buildings at state universities, state hospitals, veterans’ homes, and schools for the deaf and blind, with the intent being to appropriate the necessary funds directly from the state general fund. 

Biological Lab Accidents

On Friday, February 18, the Senate Committee on Public Health and Welfare passed Senate Bill 441 out favorably. The bill would enact the biological laboratory accident transparency act and would require institutions and organizations to report accidents and near miss accidents at high-risk biological laboratories. The bill drew only one proponent, who testified from Israel and stated he, “Had no ties to Kansas.” Senate Public Health and Welfare Committee Chairman Richard Hilderbrand (R-Galena) acknowledged he requested the bill’s introduction in relation to a laboratory at Kansas State University and the speculation of similar incidents occurring in Wuhan, China. The bill now goes to the Senate floor for possible debate and action.

Research and Development Income Tax Credit

House Bill 2394 would establish a 6.5 percent research and development tax credit for LLCs and small businesses. At this time, Kansas law provides this tax credit for corporations only, and has a one-time transferability. The tax credit is based on the amount above the average of actual qualified research and development expenses in the tax year and the previous two tax years. HB 2394 would allow all taxpayers the ability to claim this tax credit and increases the initial tax credit calculation from 6.5 percent to 10.0 percent. The House Tax Committee held a hearing on the bill on Wednesday, February 16. Kansas Department of Commerce submitted proponent testimony available HERE

Midwest Stem Cell Therapy Center

On Friday, February 18, the Senate Committee on Public Health and Welfare passed Senate Bill 373 out favorably. The bill would make appropriations of $500,000 for the fiscal years ending June 30, 2022, or June 30, 2023, for the University of Kansas Medical Center for COVID-19 clinical trials at the Midwest Stem Cell Therapy Center. Republican senators Mark Steffen and Mike Thompson were strong proponents of the legislation.

COVID Vaccine Bills

Sen Sub for House Bill 2280, pressed by Sen. Mark Steffen (R-Hutchinson), was referred back to the Senate Committee on Public Health and Welfare to provide a technical amendment. It is uncertain when the committee will work the bill. Sen Substitute for House Bill 2280 was amended by the Senate Committee to include Senate Bill 381, allowing for the prescribing and dispensing of medications for off-label use to prevent and treat COVID-19 infections; and to include Senate Bill 398requiring a childcare facility or school to grant religious exemptions from vaccination requirements without inquiring into the sincerity of the religious beliefs.

Senate Bill 370 would prohibit COVID-19 vaccination requirements for national guard members. A hearing was held on the bill in the Senate Committee on Federal and State Affairs on Monday, January 31.

Senate Bill 466 would prohibit any place of public accommodation from refusing service, products, admission, or transportation based upon an individual’s vaccination status or possession of an immunity passport. The bill would define “immunity passport” as a document, digital record, or software application indicating that a person is immune to disease, either through vaccination or infection and recovery. Violation of these prohibitions would be a class A nonperson misdemeanor. The bill would specify county commission boards would be authorized to review, amend, or revoke any order by a local health officer, including orders issued pursuant to a Governor’s executive order, or on behalf of a county concerning any communicable disease. The bill was referred to the Senate Judiciary Committee but the hearing on the bill was canceled.

Senate Bill 489 would remove certain regulatory authority concerning infectious or contagious diseases from the Secretary of Health and Environment. The bill was referred to the Senate Committee on Federal and State Affairs. No hearing has been scheduled.

House Bill 2498 would prohibit the Secretary of KDHE from requiring COVID-19 vaccination for children to attend school. The bill was referred to the House Committee on Health and Human Services. A hearing was scheduled for Monday, February 21.

House Bill 2501 would prohibit COVID-19 vaccination requirements for National Guard members. The bill was referred to the House Committee on Federal and State Affairs. No hearing has been scheduled.

House Bill 2535 would enact the individual liberty preservation act to nullify certain federal COVID-19 vaccine requirements, prohibit enforcement of such requirements and provide criminal penalties for violations. The bill was referred to the House Committee on Judiciary. No hearing has been scheduled.

House Bill 2669 would require childcare facilities and schools to grant religious exemptions from vaccination requirements without inquiring into the sincerity of the religious beliefs. Introduced on 2/9/2022 and referred to Committee on Health and Human Services. No hearing has been scheduled.

House Bill 2670 would prohibit certain acts by business entities, governmental entities, or public officials based upon a person’s vaccination status or possession of an immunity passport, amending the Kansas act against discrimination to define unlawful employment practices related to vaccination status or possession of an immunity passport and limiting powers of the secretary of health and environment and local health officers. No hearing has been scheduled.

Corporate Income Tax Apportionment

Kansas currently uses a three-factor system for apportioning income between states for corporate income tax purposes. House Bill 2186 is a bill that would allow corporate taxpayers the option to elect which methodology to use when apportioning their corporate income between Kansas and other states in which it operates to determine tax liability. 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 bill may have a cost to the state of approximately $20 million. The House Tax Committee held a hearing on the bill and the Kansas Chamber of Commerce offered language to amend the bill to include additional NAICS codes requested by industry, including 541690 and 112210. The committee intends to take final action on the bill on Monday, February 21.

Industry Regulations

Legislation on regulatory reform is being advanced this year. House Bill 2087would amend a law requiring review of economic impact of proposed regulations by the state budget director. The Senate amended the bill to reduce the review threshold from $3 million to $1 million to increase the number of regulations reviewed by the state budget director. The Senate passed the bill on a vote of 39-0, and it now goes back to the House to either concur or non-concur with the Senate amendment. 

Also, as amended this week, Senate Bill 34 would require a five-year review of all agency regulations and allow for a 15-day quick repeal process for outdated regulations. The Senate will likely take this bill up for consideration next week.

House Concurrent Resolution 5014and Senate Concurrent Resolution 1618 would propose a constitutional amendment to increase legislative oversight of agency regulations. If approved by two-thirds of the legislature, the amendment would go before Kansas voters in the 2022 election. SCR 1618 received a hearing in the Senate Judiciary Committee this week, and the committee will likely work the bill on Monday, February 18. In addition, after failing to garner the 2/3 majority vote in the House this last week, we anticipate a motion for reconsideration on Monday for HCR 5014.

Mega Senate Sales Tax Bill

This week, the Senate Tax Committee took final action on Senate Bill 339, a bill that would exempt food and food ingredients, including food sold at restaurants, from state sales tax. The exemption would begin on January 1, 2024. The Committee amended the bill to allow local taxing jurisdictions to remove the sales tax on food, and also amended the bill to include the following: Senate Bill 359, exempting utilities from state sales tax ($55 million fiscal note in 2024); and, include Senate Bill 327, exempting delivery charges from state sales tax ($4 million annual fiscal note). The committee passed the bill out favorably, as amended. The fiscal note on the bill, as amended, is substantial. 

Credit and Debit Card Fees

Kansas law prohibits the seller or lessor in any sales or lease transaction or any credit or debit card issuer from imposing a surcharge on a card holder who elects to use a credit or debit card in lieu of payment by cash, check, or similar means. A surcharge is defined as any additional amount imposed at the time of the sales or lease transaction by the merchant, seller, or lessor that increases the charge to the buyer or lessee for the privilege of using a credit or debit card. House Bill 2316 was introduced to eliminate this prohibition and allow the imposition of a surcharge. This week, the Senate Tax Committee held a hearing on the bill.

Electric Rates

Kansas has the highest energy rates in our region. Multiple bills were introduced this week targeted at either lowering those rates or stemming any increase in the rates. This week, the Senate Utilities Committee held a hearing on Senate Bill 349, prohibiting the Kansas Corporation Commission (KCC) from approving any increase in retail electric rates for an electric public utility that would result in an annual increase of greater than 1.0 percent when compared to the preceding calendar year’s total retail rates or an average of 1.0 percent per year if the electric public utility does not file for a rate increase in two or more subsequent years. 

In addition, the Senate Committee on Assessment and Taxation advanced Senate Bill 359, a bill that would remove the state sales tax on utilities and grant the same authority to cities and counties. The committee added the contents of this bill into Senate Bill 339, concerning a reduction in the state sales tax on food and then passed SB 339 out favorably as amended.

February 11, 2022

2022 Legislative Session, Week 5

This week saw the override of Governor Laura Kelly’s veto of a Republican-friendly map (Sub Senate Bill 355) that will draw new lines for the state’s four Congressional districts. It is assumed that legal challenges to the bill will follow. Following much consternation over the congressional map veto override vote, Senate President Ty Masterson removed two Republican senators from their committee leadership positions. Masterson also removed Senator Mark Steffen of Hutchinson from his vice chairmanship of the senate commerce committee and from his seat on the senate tax committee. In addition, the House and Senate each passed Governor Kelly’s economic development bill aimed at bringing a large national corporate headquarters to the state with a specified capital investment of at least $1,000,000,000. Governor Kelly quickly signed the bill into law to advance the state’s economic development proposal to the company. Finally, a billwas introduced this week to designate the Sand Hill Plumas the official state fruit of Kansas.

Prescription Monitoring Program

Senate Bill 168 would update provisions of the prescription monitoring program act relating to program data, storage, and access, increasing the membership of the advisory committee, and providing for setup and annual maintenance fees for program data integration. On Friday, February 11, the Senate Health Committee amended the bill and then passed it out of committee favorably.

Midwest Stem Cell Therapy Center

Senate Bill 373 would make appropriations for the fiscal year ending June 30, 2022 for the University of Kansas Medical Center for COVID-19 clinical trials at the Midwest Stem Cell Therapy Center. A hearing on the bill has been scheduled for Wednesday, February 16 in the Senate Committee on Public Health and Welfare.

Biological Lab Accidents

Senate Bill 441 would enact the biological laboratory accident transparency act and would require institutions and organizations to report accidents and near miss accidents at high-risk biological laboratories. A hearing on the bill is scheduled for Wednesday, February 16 in the Senate Committee on Public Health and Welfare.

COVID Vaccine Bills

Sen Sub for House Bill 2280, pressed by Senator Mark Steffen (R-Hutchinson), was referred back to the Senate Committee on Public Health and Welfare to provide a technical amendment. It is uncertain when the committee will work the bill. Sen Substitute for House Bill 2280 was amended by the Senate Committee to include Senate Bill 381, allowing for the prescribing and dispensing of medications for off-label use to prevent and treat COVID-19 infections; and to include Senate Bill 398requiring a childcare facility or school to grant religious exemptions from vaccination requirements without inquiring into the sincerity of the religious beliefs.

Senate Bill 370 would prohibit COVID-19 vaccination requirements for national guard members. A hearing was held on the bill in the Senate Committee on Federal and State Affairs on Monday, January 31.

Senate Bill 489 would remove certain regulatory authority concerning infectious or contagious diseases from the secretary of health and environment. The bill was referred to the Senate Committee on Federal and State Affairs. No hearing has been scheduled.

House Bill 2498 would prohibit the Secretary of KDHE from requiring COVID-19 vaccination for children to attend school. The bill was referred to the House Committee on Health and Human Services. No hearing has been scheduled.

House Bill 2501 would prohibit COVID-19 vaccination requirements for National Guard members. The bill was referred to the House Committee on Federal and State Affairs. No hearing has been scheduled.

House Bill 2535 would enact the individual liberty preservation act to nullify certain federal COVID-19 vaccine requirements, prohibit enforcement of such requirements and provide criminal penalties for violations. The bill was referred to the House Committee on Judiciary. No hearing has been scheduled.

House Bill 2669 would require childcare facilities and schools to grant religious exemptions from vaccination requirements without inquiring into the sincerity of the religious beliefs. Introduced on 2/9/2022 and referred to Committee on Health and Human Services. No hearing has been scheduled.

House Bill 2670 would prohibit certain acts by business entities, governmental entities, or public officials based upon a person’s vaccination status or possession of an immunity passport, amending the Kansas act against discrimination to define unlawful employment practices related to vaccination status or possession of an immunity passport and limiting powers of the secretary of health and environment and local health officers. No hearing has been scheduled.

Research and Development Income Tax Credit

House Bill 2394 would establish a 6.5 percent research and development tax credit for LLCs and small businesses. Kansas law provides this tax credit for corporations only and has a one-time transferability. The tax credit is based on the amount above the average of actual qualified research and development expenses in the tax year and the previous two tax years. HB 2394 would allow all taxpayers the ability to claim this tax credit and increases the initial tax credit calculation from 6.5 percent to 10.0 percent. A hearing on the bill is scheduled for Wednesday, February 16 in the House Tax Committee.

Corporate Income Tax Apportionment

Kansas currently uses a three-factor system for apportioning income between states for corporate income tax purposes. This week, the House Tax Committee held a hearing on House Bill 2186, a bill that would allow corporate taxpayers the option to elect which methodology to use when apportioning their corporate income between Kansas and other states in which it operates to determine tax liability. 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 bill may have a cost to the state of approximately $20 million. During the hearing, language was offered to amend the bill to include additional NAICS codes requested by industry, including 541690 and 112210. Kansas Grain and Feed Association submitted testimony in support of the measure.

Industry Regulations

Legislation on regulatory reform is being advanced this year. House Bill 2087would amend a law requiring review of economic impact of proposed regulations by the state budget director. The Senate amended the bill to reduce the review threshold from $3 million to $1 million to increase the number of regulations reviewed by the state budget director. The Senate passed the bill on a vote of 39-0. The bill now goes back to the House to either concur or non-concur with the Senate amendment. Also, as amended this week, Senate Bill 34 would require a five-year review of all agency regulations and allow for a 15-day quick repeal process for outdated regulations. In addition, House Concurrent Resolution 5014and Senate Concurrent Resolution 1618 would propose a constitutional amendment to increase legislative oversight of agency regulations. If approved by two-thirds of the legislature, the amendment would go before Kansas voters in the 2022 election.

Senate Committee Advances Mega Sales Tax Bill

On Thursday, the Senate Tax Committee took final action on Senate Bill 339, a bill that would exempt food and food ingredients, including food sold at restaurants, from state sales tax. This bill has an estimated fiscal note of approximately $320 million in fiscal year 2023, $782.0 million in fiscal year 2024, and $797 million in fiscal year 2025. The exemption would begin on January 1, 2024. The Committee amended the bill to allow local taxing jurisdictions to remove the sales tax on food and amended the bill to include the following: Senate Bill 359, exempting utilities from state sales tax ($55 million fiscal note in 2024); and, include Senate Bill 327, exempting delivery charges from state sales tax ($4 million annual fiscal note). The committee passed the bill out favorably, as amended.

Resolution Denouncing Natural Gas “Price Gouging”

This week, the House Committee of the Whole passed HCR 5023 favorably. The Resolution, introduced by House Speaker Pro Tem Blaine Finch (R-Ottawa), denounces price gouging and market manipulation in the natural gas marketplace, and supports investigations into the extraordinary price increases of wholesale natural gas during the extreme cold weather event “Uri” during February 2021 that resulted in increased costs on ratepayers. 

Credit and Debit Card Fees

Kansas law prohibits the seller or lessor in any sales or lease transaction or any credit or debit card issuer from imposing a surcharge on a card holder who elects to use a credit or debit card in lieu of payment by cash, check, or similar means. A surcharge is defined as any additional amount imposed at the time of the sales or lease transaction by the merchant, seller, or lessor that increases the charge to the buyer or lessee for the privilege of using a credit or debit card. House Bill 2316 was introduced to eliminate this prohibition and allow the imposition of a surcharge. A hearing on the bill was held this week in the Senate Committee on Assessment and Taxation, where Kansas Agribusiness Retailers Association provided proponent testimony.

Electric Rates

Kansas has the highest energy rates in our region. Multiple bills were introduced this week targeted at either lowering those rates or stemming any increase in the rates. One bill, Senate Bill 349, is scheduled for a hearing next week in the Senate Utilities Committee. The bill would prohibit the Kansas Corporation Commission (KCC) from approving any increase in retail electric rates for an electric public utility that would result in an annual increase of greater than 1.0 percent when compared to the preceding calendar year’s total retail rates or an average of 1.0 percent per year if the electric public utility does not file for a rate increase in two or more subsequent years. The bill would provide guidelines for the KCC to use for determining the annual limitation. In addition, a hearing was held this week on Senate Bill 359 in the Senate Committee on Assessment and Taxation. The bill would remove the state sales tax on utilities and grant the same authority to cities and counties. 

Entity Level Taxation for Pass-Through Businesses

This week, Senate Bill 495 was introduced and referred to the Senate Committee on Assessment and Taxation. The bill would establish the “salt parity act” to allow pass-through entities to elect to pay state income tax at the entity level. The bill may receive a hearing next week.

Economic Development Proposal

This week, the Legislature passed, and Governor Laura Kelly quickly signed into law, Senate Bill 347 – the Attracting Power Economic Expansion(APEX) bill. The bill authorizes tax incentives to companies that make a minimum $1 billion investment in Kansas over a five-year period. Kansas is one of two finalists for a $4 billion, 3 million square foot advanced manufacturing facility that would permanently employ 4,000, $50,000-a-year workers and create 16,000 temporary jobs during construction. The bill was amended to include accountability and safeguard measures meant to drive economic development across the state and various industries. Just an hour after the $1 billion-plus mega economic development bill, Lieutenant Governor David Toland explained to the State Finance Council the deal the state was extending to a yet unnamed company to offer inducements to move to the state.

$1,000,000,000 KPERS Transfer Considered

On Wednesday, February 9, the House Committee on Insurance and Pensions held a hearing on House Bill 2561, a bill that would transfer $1 billion from our state general fund to the Kansas public employees retirement system (KPERS) fund during fiscal year 2022. The bill would save the state $100 million annually in interest payments on its outstanding KPERS debt. The first $250 million would be used to pay off the “layering payments” for debt payments the state missed in recent years.

February 4, 2022

2022 Legislative Session, Week 4

This week, the legislature took a day of hiatus when winter storms were predicted to bring heavy snow to the capitol city. On Thursday, as predicted, Governor Laura Kelly vetoed a Republican-friendly map that would have drawn new lines for the state’s four Congressional districts. The House got bogged down in deliberation over the Kelly Administration’s economic development bill aimed at bringing a large national corporate headquarters to the state with a specified capital investment of at least $1,000,000,000.

COVID Vaccine Bills

Senate Bill 381 would allow for the prescribing and dispensing of medications for off-label use to prevent and treat COVID-19 infections. The Senate Committee on Public Health and Welfare is scheduled to take committee action on the measure on Tuesday, February 8.

Prescription Monitoring Program Act

The Senate Committee on Public Health and Welfare has scheduled a hearing on Senate Bill 168 for Thursday, February 10. The bill proposes to make several amendments to the Kansas Prescription Monitoring Program Act.

Research and Development Tax Credit

Last session, certain stakeholders requested the introduction of HB 2394, a bill which would establish a 6.5 percent research and development tax credit for LLCs and small businesses. Currently, Kansas law provides this tax credit for corporations only, and has a one-time transferability. The tax credit is based on the amount above the average of actual qualified research and development expenses in the tax year and the previous two tax years. HB 2394 would allow all taxpayers the ability to claim this tax credit and increases the initial tax credit calculation from 6.5 percent to 10.0 percent beginning in tax year 2021. The bill was referred to the House Tax Committee.

Economic Development Proposal

Following decisive passage (32-7) last week in the Senate, a House committee this week worked through dozens of proposed amendmentsto Senate Bill 347 – the development incentives package for a manufacturing prospect that the state is racing to land. The legislation, which has strong support from Governor Kelly’s administration, is now possibly in limbo. House members sounded alarms over several provisions, including one added by the Senate to phase out the state’s corporate income tax for the business. The bill would enact the “Attracting Powerful Economic Expansion” act to provide for tax and other incentives to boost the state’s economic development. The bill would be the single biggest economic development bill in state history, with up to $1 billion in tax and other inducements to bring an unidentified business to the state. It is said the business would bring a $4 billion investment, build a 3 million square foot facility for a headquarters or factory in eastern Kansas, and hire at least 4,000 workers. The House Committee will continue deliberations next week.

Redistricting

One of the required benchmarks of the 2022 session is the passage of new district maps for the legislature, statewide offices, and Congressional districts. On Thursday of this week, Governor Kelly vetoed Sub Senate Bill 355 which would have redrawn Kansas’ four congressional districts. The bill had previously passed from the legislature (Senate 26-9 and in the House 79-37). The bill lacked Democrat support as the map would split Wyandotte County and Johnson County in the 3rd Congressional District, which was seen as making re-election efforts more difficult for Congresswoman Sharice Davids (D-Kansas City). The bill now returns to the legislature for consideration of an override of the Governor’s veto. 

Corporate Income Tax Apportionment

Kansas currently uses a three-factor system for apportioning income between states for corporate income tax purposes. House Bill 2186 would allow corporate taxpayers the option to elect which methodology to use when apportioning their corporate income between Kansas and other states in which it operates to determine tax liability. 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 bill may have a cost to the state of approximately $20 million. The House Tax Committee will hold a hearing on the bill on Tuesday, Feb 8 at 3:30 pm. It is understood that the Kansas Chamber is prepared to offer suggested language as an amendment to the bill to include additional NAICS codes requested by industry. Kansas Grain and Feed Association will submit testimony in support of the measure.

Food Sales Tax Exemption

Governor Laura Kelly, and 2022 Gubernatorial Candidate (and current Attorney General) Derek Schmidt have stated a goal of eliminating, to some degree, the current state sales tax on food. Referred to as Governor Kelly’s “Axe the Tax” plan, a full repeal of the food sales tax would cost the state over $500 million annually in lost revenues, while allowing the average Kansas family to save about $500. Multiple bills on the issue have been introduced. This week, the Senate Tax Committee held a hearing on Senate Bill 342 which would provide a 0% state rate for sales and use taxes for sales of food and food ingredients but also allow cities and counties to assess the sales tax. The bill would also provide for a tax exemption for sales of farm products sold at farmers’ markets and discontinue the current nonrefundable food sales tax credit. The committee also held a hearing on Senate Bill 339, a bill which would also exempt sales tax on food sold in restaurants. This bill has an estimated fiscal note of approximately $320 million in fiscal year 2023, $782.0 million in fiscal year 2024, and $797 million in fiscal year 2025.

Resolution Denouncing Natural Gas “Price Gouging”

This week, the House Utilities Committees advanced HCR 5023 out of committee favorably. The Resolution, introduced by House Speaker Pro Tem Blaine Finch (R-Ottawa), denounces price gouging and market manipulation in the natural gas marketplace, and supports investigations into the extraordinary price increases of wholesale natural gas during the extreme cold weather event “Uri” during February 2021 that resulted in increased costs on ratepayers. 

Credit and Debit Card Fees

Kansas law prohibits the seller or lessor in any sales or lease transaction or any credit or debit card issuer from imposing a surcharge on a card holder who elects to use a credit or debit card in lieu of payment by cash, check, or similar means. A surcharge is defined as any additional amount imposed at the time of the sales or lease transaction by the merchant, seller, or lessor that increases the charge to the buyer or lessee for the privilege of using a credit or debit card. House Bill 2316 was introduced to eliminate this prohibition and allow the imposition of a surcharge. A hearing on the bill has been scheduled for Tuesday, February 8 in the Senate Committee on Assessment and Taxation.

Electric Rates Bill

Kansas has the highest energy rates in our region. Senate Bill 359 was introduced to help reduce those costs on rate payers by removing the state sales tax on utilities and granting the same authority to cities and counties. The measure is thought to have an elevated fiscal cost for the state. A hearing on the bill is scheduled for Tuesday, February 8 in the Senate Committee on Assessment and Taxation.

Workforce Development Scholarship

Last year, Governor Kelly signed into law a workforce development bill creating the Kansas Promise Scholarship Act. The Act provides educational scholarships to students attending a Kansas community college, technical college, two-year associate degree program, or career and technical education programs. The scholarship would be eligible for students pursuing certain fields of study, including manufacturing, construction, and others. Senate Bill 340 was introduced to amend the act to authorize additional programs and fields of study. This week, the Senate Education Committee amended the bill and advanced it out of committee favorably as amended.

January 28, 2022

2022 Legislative Session, Week 3

This week, the Legislature passed a map drawing new lines for the state’s four Congressional districts, held hearings on various bills proposing to exempt food from states sales tax, and advanced an economic development bill that would provide incentives for specified industries to establish their national corporate headquarters in the state with specified capital investment of at least $1,000,000,000. In addition, the Committees on Agriculture received annual reports from the state commodity commissions and the House Agriculture Committee held a hearing on a bill making it unlawful to capture or possess an ornate box turtle – the official state reptile of Kansas. Here are some of the other highlights from this week. 

COVID Vaccine Bills

Senate Bill 370 would prohibit COVID-19 vaccination requirements for national guard members. A hearing on this bill has been scheduled in the Senate Committee on Federal and State Affairs for Monday, January 31 at 10:30 am in room 144-s. 

Senate Bill 381 would allow for the prescribing and dispensing of medications for off-label use to prevent and treat COVID-19 infections. The Senate Committee on Public Health and Welfare held a hearing on the measure and is scheduled to take committee action on Thursday, February 3, at 8:30 am in room 548-S. During the bill’s hearing earlier this week there were 385 pieces of proponent testimony, while the Kansas Medical Society and Kansas State Board of Healing Arts submitted neutral testimony. The University of Kansas Health System and Ascension Via Christi Health were the only opponents.

Introduced on Friday and referred to the Senate Committee on Public Health and Welfare, Senate Bill 398would require a child care facility or school to grant religious exemptions from vaccination requirements without inquiring into the sincerity of the religious beliefs. A hearing has not been announced. 

House Bill 2535 was introduced on Tuesday, January 25 and referred to the House Judiciary Committee. The bill would enact the individual liberty preservation act to nullify certain federal COVID-19 vaccine requirements, prohibit enforcement of such requirements, and provide criminal penalties for violations.

New Economic Development Idea Proposed

On Thursday, January 27, on a vote of 32-7, the Senate passed Senate Bill 347, a bill which would enact the “Attracting Powerful Economic Expansion” act to provide for tax and other incentives to boost the state’s economic development. The bill would be the single biggest economic development bill in state history, with up to $1 billion in tax and other inducements to bring an unidentified business to the state. It is said the business would bring a $4 billion investment, build a 3 million square foot facility for a headquarters or factory in eastern Kansas, and hire at least 4,000 workers. The inducements would include a refundable tax credit for a portion of the investment, reimbursement of certain payroll and training costs, retention of certain payroll withholding taxes, a sales tax exemption for project construction, and a property tax incentive for projects located in a foreign trade zone. Proponents of the measure, including the Kansas Department of Commerce, argued that competitive economic incentives were vital to Kansas being competitive with surrounding states. The bill is now scheduled for hearing in the House Committee on Commerce, Labor and Economic Development on Monday, January 31.

Redistricting

Aside from passing a budget, one of the main objectives of the 2022 session will be adopting new maps and boundaries for the legislature, statewide elected seats, state school board, and our state Congressional districts. This week, both the Senate (26-9) and the House (79-37) passed Sub Senate Bill 355, a bill containing a reapportionment map for Kansas’ four congressional districts. Each district would contain 734,470 Kansans a four-way division of the state’s census population which is thought to be the key to a federal court holding the map as constitutional. The bill was presented to Governor Kelly for consideration on Thursday, January 27. It is assumed that the Governor will veto the bill.

Unemployment Fund Briefing

This week, the Kansas Department of Labor provided a reportto the legislature on a recent increase in fraudulent unemployment claims received by the agency. The agency has seen renewed attempts to file fraudulent unemployment claims in the new benefits year. Thankfully, the agency reported it is catching these claims – using identity verification protocols and a one-week waiting period – and has not paid out substantially more in unemployment claims. Last year, state auditors found the state had paid out about $700 million in fraudulent claims from its employment security fund during the pandemic. 

Food Sales Tax Exemption

Governor Laura Kelly, and 2022 Gubernatorial Candidate (and current Attorney General) Derek Schmidt have stated a goal of eliminating, to some degree, the current state sales tax on food. Referred to as Governor Kelly’s “Axe the Tax” plan, a full repeal of the food sales tax would cost the state over $500 million annually in lost revenues, while allowing the average Kansas family to save about $500. Multiple bills on the issue have been introduced. The Senate Tax Committee will hold hearings on Senate Bill 339 and Senate Bill 342 on Tuesday, February 1. In addition, the House Tax Committee held hearings on House Bill 2484and House Bill 2487.

Hearing on Resolution Denouncing Natural Gas “Price Gouging”

This week, the House Utilities Committees held a hearing on HCR 5023, denouncing price gouging and market manipulation in the natural gas marketplace. The resolution supports investigations into the extraordinary price increases of wholesale natural gas during the extreme cold weather event “Uri” during February 2021 that resulted in increased costs on ratepayers. The Committee Chairman has indicated his intent to take Committee action on the resolution next week.

Industry Regulations

Legislation on regulatory reform will be advanced this year. House Bill 2087would amend a law requiring review of economic impact of proposed regulations by the state budget director. The Senate amended the bill to reduce the review threshold from a $3 million to $1 million threshold, to increase the number of regulations reviewed by the state budget director. The Senate passed the bill on a vote of 39-0. The bill now goes back to the House to either concur or non-concur with the Senate amendment. Also, as introduced, Senate Bill 34 would sunset all administrative regulations every five years unless extended by the legislature. However, the bill is likely to be amended to require a five-year review, only, and allow for a 15-day quick repeal process for outdated regulations. In addition, House Concurrent Resolution 5014and Senate Concurrent Resolution 1609 would propose a constitutional amendment to increase legislative oversight of agency regulations. If approved by two-thirds of the legislature, the amendment would go before Kansas voters in the 2022 election.

Electric Rates Bill 

Kansas has the highest energy rates in our region. Senate Bill 359 was introduced to help reduce those costs on rate payers by removing the state sales tax on utilities and granting the same authority to cities and counties. The measure is thought to have an elevated fiscal cost for the state. A hearing on the bill is scheduled for Wednesday, February 2 in the Senate Committee on Assessment and Taxation.

Renewable Energy Bills Heard

This week, the Senate Committee on Utilities held hearings on two bills (SB 323, SB 324) that would add new requirements for lease instruments concerning wind and solar projects. In addition, the Senate Committee on Local Government held multiple-day hearings on SB 325 which would enact the “Kansas Renewable Energy Transparency Act,” adding state-level zoning requirements for wind and solar easements and projects. Specifically, SB 325 would state that, on and after July 1, 2022, no facility could be constructed on any parcel of land that is not zoned for industrial use by the county in which the facility is to be constructed, and no developer could begin site preparation for or construction of a facility without first acquiring the appropriate building permit or conditional use permit from the county where the facility is to be constructed. The bill outlines a process for citizens to petition the county government to protest a decision to rezone land for industrial activities. It is thought the bills were intended to initiate discussion on concerns with wind and solar projects in Kansas.

January 21, 2022

2022 Legislative Session, Week 2

This week, the Legislature worked through bills and hearings, even while many legislators were absent due to positive COVID-19 tests. The Senate passed a few important bills, as the House also began initial committee work. Here are some of the highlights from the week.

COVID-19Vaccine Bills

This week, two bills were introduced in the legislature concerning COVID-19 vaccinations. House Bill 2498 would prohibit the Secretary of KDHE from requiring COVID-19 vaccination for children to attend school. The bill was referred to the House Committee on Health and Human Services. Similarly, House Bill 2501 would prohibit COVID-19 vaccination requirements for National Guard members. This second bill was referred to the House Committee on Federal and State Affairs. 

Food Sales Tax Exemption

Governor Laura Kelly and 2022 Gubernatorial Candidate Derek Schmidt (current Attorney General) have stated a goal of eliminating, to some degree, the current state sales tax on food. This would cost the state approximately $440 million in annual revenues lost. Multiple bills on the issue have been introduced and the House Tax Committee has scheduled hearings on two of those bills (House Bill 2484 and House Bill 2487) on Tuesday, January 25.

Redistricting

Aside from passing a budget, one of the main objectives of the 2022 session will be adopting new maps and boundaries for the legislature, statewide elected seats, state school board, and our state Congressional districts. On Friday, the Senate passed Sub Senate Bill 355 containing reapportionment maps for Kansas’ congressional districts. The bill creates four congressional districts, each with 734,470 Kansans – a four-way division of the state’s census population, which is thought to be the key to a federal court holding the map as constitutional.

New Economic Development Idea Proposed

On Thursday, January 20, the Senate Commerce Committee held a hearing on Senate Bill 347, a bill which would enact the “Attracting Powerful Economic Expansion” act to provide for tax and other incentives to boost the state’s economic development. The bill includes projects in specified industries, or for national corporate headquarters, that involve a significant capital investment. The program would include: a refundable tax credit for a portion of the investment, reimbursement of certain payroll and training costs, retention of certain payroll withholding taxes, a sales tax exemption for project construction, and a property tax incentive for projects located in a foreign trade zone. Proponents to the measure, including the Kansas Department of Commerce, argued that competitive economic incentives were vital to Kansas being competitive with surrounding states and that 12 other states have similar programs. The bill was focused on providing investment tax credits for an unnamed business that would invest up to $4 billion for a headquarters or factory in eastern Kansas. If passed, it would be the largest specific development bill in Kansas history, with an estimated fiscal note of up to $1 billion.

House Resolution Denounces Natural Gas “Price Gouging”

This week, the House Utilities Committees introduced HCR 5023 which denounces price gouging and market manipulation in the natural gas marketplace. The resolution also supports investigations into the extraordinary price increases of wholesale natural gas during the extreme cold weather event “Uri” during February 2021 that resulted in increased costs on residential and industrial ratepayers. A hearing on the resolution is scheduled for Thursday, January 27. In addition, on Tuesday, January 18, the Senate Committee on Utilities received a presentation from Jim Zakoura, Executive Director, Natural Gas Transportation Customer Coalition, about the financial effects of winter storm Uri on various residents, schools, hospitals and businesses in Kansas. Mr. Zakoura discussed the free-market price exposure in the unregulated market.

Bill Introduced to Allow Sales Tax Exemption on Utilities

A bill has been introduced in the Senate that would seek to remove the sales tax paid on utilities. Introduced as a cost savings measure for businesses and residential rate payers, Senate Bill 359 would allow cities and counties to tax certain utilities beginning July 1, 2023, but would also grant cities and counties the ability to exempt those utilities from sales tax. The bill may be scheduled for a hearing soon.

Workforce Development Scholarship

Last year, Governor Kelly signed into law a workforce development bill creating the Kansas Promise Scholarship Act. The Act provides educational scholarships to students attending a Kansas community college, technical college, two-year associate degree program, or career and technical education programs. The scholarship would be for students pursing certain fields of study, including manufacturing, construction, and others. This year, Senate Bill 340 has been introduced to amend the act to authorize additional programs and fields of study. The Senate Education Committee may take the bill up for final action on Monday, January 24 or Tuesday, January 25.

January 14, 2022

2022 Legislative Session Commences

The Kansas legislature gaveled in on Monday, January 10, 2022. It was a busy week in Topeka which saw hearings on various tax issues related to wildfires in the state and Governor Laura Kelly’s State of the State address. Key issues this session will include reapportionment and redistricting following the 2020 census, a Senate vote on the “Value Them Both” constitutional amendment question on abortion, legalization of medical marijuana, and deliberation of how to spend most appropriately the projected $2.9 billion ending balance – either through tax cuts (such as removal of the sales tax on food), or the paying down of outstanding debt (such as KPERS, the state employee retirement system).

Governor Kelly Gives State of the State Address

In Governor Kelly’s annual State of the State address, the Governor doted on our state’s low unemployment rate, which has been below 4% for more than a year. The Governor also focused on her policy goals this year, which include: (1) pursuing responsible tax policy, to include full elimination of the sales tax on food, and a one-time income tax return to taxpayers of $250 per person or $500 per married couple; (2) investing in rural Kansas, to include investments in broadband, and the rural housing shortage; (3) investing fully in the state highway plan and other transportation infrastructure, including short line rail; (4) fully funding Kansas K-12 education; (5) fully funding the state water plan as required by Kansas law, for the first time in 15 years; (6) putting a freeze on increases in the cost of college tuition; and (7) adding $600 million dollars to the state’s “Rainy-Day fund”.

Redistricting Following 2020 Census

Aside from passing a budget, one of the main objectives of the 2022 Legislature will be adopting new maps and boundaries for the legislature, statewide elected seats, state school board, and our state Congressional districts. Demographic shifts have shown large population movements from rural areas to more urban areas of the state. This will likely result in larger rural legislative districts, and new districts in more urban areas. Kansas was fortunate it did not lose a congressional district because of the 2020 census. During the last redistricting, in 2012, the legislature was unable to agree on the boundaries which resulted in the 2012 maps being drawn up by the court.

Corporate Income Tax Apportionment

Kansas currently uses a three-factor system for apportioning income between states for corporate income tax purposes. House Bill 2186 would allow corporate taxpayers the option to elect which methodology to use when apportioning their corporate income between Kansas and other states in which it operates to determine tax liability. 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 bill may cost the state approximately $20 million.

Legislature Receives Report on Effects of “Uri”

This week, the Utilities Committees received a presentation from the Kansas Corporation Commission (KCC) on the severe effects suffered by Kansas residents and businesses during winter storm “Uri” in February 2021. The severe cold temperature from the storm greatly increased the demand for electricity and natural gas over multiple days, which greatly increased the costs of electricity and natural gas in the state and region. Those price spikes prompted the passage of legislation in 2021 by the Kansas legislature which created state programs to assist Kansas entities in covering the costs of their natural gas bills. KCC explained that, prior to the storm, natural gas production had declined. Together with the increased demand for natural gas caused by Uri, Kansans experienced unprecedented price spikes across the region that were up to 250 times greater than the highest prices ever experienced previously. In addition, the wholesale price for electricity increased greatly during the winter storm. Further, natural gas providers placed “curtailments,” or reductions, in the amount of natural gas delivered to certain commercial facilities during Uri. This resulted in various other costs for those businesses. 

Industry Regulations

Legislation on regulatory reform will be advanced this year. House Concurrent Resolution 5014 would propose a constitutional amendment to increase legislative oversight of agency regulations. If approved by two-thirds of the legislature, the amendment would go before Kansas voters in the 2022 election. In addition, House Bill 2087 would amend a law requiring review of economic impact of proposed regulations by the state budget director. The Senate amended the bill to reduce the review threshold from a $3 million to $1 million threshold to increase the number of regulations to be reviewed by the state budget director.

Electric Rates

Kansas has the highest energy rates in our region. There may be hearings on the issue of high electric utility rates in response to Evergy’s stated plan to spend billions in additional capital expenditures in coming years, which would increase Kansan’s electric energy rates even more. Legislation will likely be introduced to reduce costs on rate payers while ensuring reliable service and still protecting the cooperative business structure that many rural members rely on for service. 

Work-Based Learning Program Liability

In 2021, House Sub for SB 91 was introduced with the purpose of providing businesses with immunity from general liability for participating in work-based learning programs with students. Under the bill, schools would insure against this liability in the same way that they insure students during field trips and sporting events. We anticipate the final passage of the legislation in some form this year.