It’s the end of week two and it was anything but normal. After taking Monday off to honor the life and legacy of Dr. Martin Luther King, Jr., the legislature had planned for a full week of action. However, threats of ongoing unrest in Washington, D.C. and state capitols across the country led to large-scale changes in the legislative schedule for the week.

Many committees opted to not meet this week or change their venue to online only as a result. With ongoing concerns about COVID, legislative leaders worked to move key legislation forward as best they could under the circumstances. Let’s hope things return to normal – or at least what passes for normal right now – when lawmakers return next week.

Unemployment

The House Commerce Committee, under the leadership of Rep. Sean Tarwater, ramped up efforts to address the state’s unemployment compensation system. The unprecedented number of applications, newly-created compensation programs by the federal government and an antiquated IT infrastructure created problems for applicants and businesses alike.

The House Commerce Committee launched hearings to receive status reports from the Kansas Department of Labor (KDOL) and discuss ideas to revamp and modernize the state’s unemployment compensation system. To see the KDOL presentation, click here. The Committee, through its questioning of KDOL staff, highlighted growing concern with the scope and impact of fraud occurring with unemployment payments.

A few highlights from the report:

• The U.S. Department of Labor Inspector General estimates unemployment fraud amounts to somewhere between $8 billion and $26 billion across the country. Agency officials outlined actions they have undertaken to combat fraud occurring within the KS unemployment system although they recognize much more needs to be done on this front.
• Since March 15, 2020 KDOL has paid out 3.8 million weekly claims and $2.6 billion through regular and federal unemployment programs.
• KDOL reports significant progress in reducing claim backlogs to near zero with regular unemployment claims. Nearly 25,000 backlogged claims existed at the start of the year.

This issue will receive much more attention in the coming weeks and remains a key focus of the Commerce Committee this session. Look for legislation to be introduced soon that will address fraud as well as structural changes to ensure replenishment of the trust fund without being punitive to the Kansas business community.

Taxation

The hearing on SB 22 was continued in the Senate Assessment and Taxation Committee on Thursday. This bill contains numerous provisions largely driven by the federal Tax Cuts and Jobs Act of 2017 and the fact that Kansas automatically conforms to federal tax code changes. The bill is similar to a bill considered by the legislature during the 2020 session.

The bill addresses the tax treatment of Global Intangible Low-Taxed Income, FDIC premiums, carryforward of business interest, capital contributions, small business expenses and Payroll Protection Program loans. Additionally, the bill allows Kansans to itemize deductions on their Kansas return regardless of their decision to itemize or use the standard deduction on their federal return.

A new element this year clarifies that Kansans whose identity was used fraudulently to obtain unemployment benefits do not have to include the reported income as part of their gross income.

Commerce / Economic Development

The Senate Commerce Committee, chaired by Senator Rob Olson, heard a presentation from Lt. Governor/Secretary of Commerce David Toland on the successes and challenges with the Kansas Department of Commerce. Despite the impact of COVID, the Department of Commerce realized a tremendous level of success in 2020. To review the presentation, click here.

A few highlights and challenges from the report:

• 9,481 new jobs created in 2020
• 4,390 jobs retained in 2020
• $2.5 billion in capital investment – a 92% over the prior year.
• Population losses and loss of talent to other states is concerning
• Kansas is 38^th in startup job creation
• Housing shortages/affordability
• Kansas must realign to keep up with growth in high-risk innovative startups that are driving job creation

Emergency Management Operations/COVID Response

SB 14 was debated and approved by the Kansas House on Thursday, sending the bill to the Governor for her signature. This bill addresses changes made during the 2020 Special Session when HB 2016 was passed to allow for temporary operational changes within the state in response to the COVID pandemic. That bill contained multiple provisions including limitations on the Governor’s authority during declared emergencies, liability protection for businesses and provisions to assist health care providers in dealing with increased demand for services due to COVID.

Many of the provisions in last year’s bill were set to expire on January 26. The intent of SB 14 is to extend the sunset date from January 26 to March 31 and allowing the legislature more time to carefully evaluate the policies enacted in HB 2016.

Workforce

HB 2066, introduced by Johnson County Representatives Chris Croft, Sean Tarwater and Adam Thomas, had its initial hearing this week. The bill is similar to one introduced last year that seeks to expedite professional licensure for new Kansas residents. The bill is an expansion of the current program that offers the streamlined licensure process for military spouses and service members.

While concerns have been raised with some of the details – particularly in a handful of professions addressed by the bill – there is strong interest in finding middle ground that will allow the bill to move across the finish line this session. Advocates for the bill are interested in encouraging the relocation of professional and skilled workers from other states by removing unnecessary barriers.

Next Week/Legislation of Note

I anticipate a large number of bills of interest will be introduced next week on topics including property tax and single-factor apportionment.  I’ll report on those next week, should they materialize.

As for this week, several new bills of interest were introduced and likely will be cued up for a hearing soon. Among them are:

SB 50 – Requires the collection and remittance of sales, compensating use and transient guest taxes for marketplace facilitators and online retailers.

HB 2097 – Decouples the Kansas Industrial Training (KIT) and Kansas Industrial Retraining (KIR) programs from the High-Performance Incentive Fund (HPIP).

HB 2101 – Extends transfers from the expanded lottery act to support the extension of the University Engineering Initiative.

HB 2105 – Establishes withholding requirements for certain employees who work in multiple states.