That’s a wrap!  The 2021 session of the Kansas Legislature adjourned after a week of overriding vetoes and passing last-minute legislation left over from the main part of the session. Sine Die, scheduled for May 26, is typically a ceremonial day marking the official end to session. However, there remains a chance that additional vetoes could bring the Legislature back to attempt more overrides.

Overall, it proved to be a good session for the business community as the Legislature revamped the much-maligned unemployment system, extended and improved several economic development tools, and enacted other legislation that will ultimately save businesses time and money.

Taxes - SB 50, dealing with taxes, is an omnibus tax bill of sorts that we’ve written about extensively.  The bill addresses the collection of taxes on marketplace facilitators and a host of other tax changes impacting the business community. The bill was vetoed by Governor Kelly citing concerns that the fiscal impact of the bill could destabilize the state’s economic recovery. On votes of 84-10 and 30-10 the House and Senate turned back the Governor’s veto and allowed SB 50 to become law.

COVID Relief Funding – House Substitute for Substitute for SB 273 creates a fund to help compensate businesses for losses sustained due to the pandemic.  The bill sets aside 25% of federal COVID relief funds sent to the state and 35% of the funds certain cities and counties received directly from the federal government.

The legislation creates a system by which employers with 50 or fewer full-time equivalent employees can apply to a three-member panel for compensation from the newly created fund. The panel, the reimbursement process and many of the program details will be established and announced in the coming months.  The legislation calls for the panel to begin accepting compensation requests by October 1 of this year.

HB 2313 was another bill originally created to reimburse businesses for the impact of the COVID pandemic. In this case, the bill authorized property tax reimbursements for taxes paid during the government-imposed shutdown orders precipitated by the COVID pandemic.  Ultimately the property tax reimbursement provisions related to the COVID pandemic were stripped out with the Legislature opting to instead approve the reimbursement process created in SB 273 as noted above.

However, lawmakers did keep in the bill a reimbursement process for property taxes paid during future shutdowns ordered after January 1, 2022.

The bill also re-authorized the 20-mill statewide property tax levy for schools; expanded a motor vehicle property tax exemption for certain military personnel, and directed Legislative Post Audit (LPA) to study the impact of non-profit and governmental competition with private sector industries.  The LPA report is due by January 15, 2022.

The LPA report is in response to concerns that for-profit entities such as health clubs are competing on an uneven playing field with non-profit entities such as YMCAs and municipally-owned community centers that often contain recreational facilities without the same tax burdens that for-profit businesses have.

Education – Many of the funding decisions for K-12 were considered separately from the larger state budget and ended up as HB 2134. The bill was the subject of considerable debate and modification throughout the session, but lawmakers ultimately found a proposal that earned broad support in the House and Senate.

Throughout the session there were fears approved funding levels could fall short of the Gannon school funding decision and land the state back in court. In the end, lawmakers, education advocates and the Governor’s office found common ground that will likely avoid further litigation over funding levels.

As is the case with most legislation, there is some give-and-take that occurs, and this bill was no different. The bill expands the current tax credit program providing tax credits for contributions that fund scholarships in low-performing schools. Currently the scholarship program is open only to students qualifying for free meals and for those attending one of the 100 lowest performing schools in the state.

HB 2134 expands the program to students qualifying for reduced-price meals and opens the program up to a student in any school rather than the current requirement their school be one of the lowest performing schools.

Budget – As is typically the case, the final budget for the next fiscal year is often one of the last pieces of legislation to be approved. SB 159, which authorizes the FY 2021 budget of $21 billion, was approved in the closing hours of session.  A detailed overview of the approved budget can be found here:

Major Legislation Recap

As we’ve reported in previous editions of this update, other legislation we’ve been monitoring had already been passed and signed into law this session. As a reminder, here are a few highlights of particular interest:

Unemployment – HB 2196

Economic Development – SB 65 (HPIP); SB 66 (Angel Investors) and SB 124  (STAR Bonds)

Workforce – HB 2066 (Expedited Licensure), HB 2064 (Promise Scholarship Act)

Taxation – SB 13 (Truth in Taxation)

Education - HB 2101 (University Engineering Initiative Act)

Business Filings – HB 2391