Updates and Alerts

AFTER FIRST ADJOURNMENT, AHEAD OF VETO SESSION
STATE LEGISLATIVE UPDATE

Lawmakers have been on break since reaching first adjournment on April 6, now preparing to return to Topeka this Wednesday, April 26, for what is anticipated to be a short (but intense) veto session. Veto sessions are a period when lawmakers complete any remaining unfinished business and consider whether to attempt to override vetoes already issued by the Governor. There is no prescribed time limit – lawmakers are done when they’re done (and veto sessions have sometimes lasted for weeks) – but leadership’s goal for 2023 is to wrap-up over several days.

Regular committee action is essentially done for the year, and the veto session will primarily be devoted to special House-Senate conference committees negotiating final compromise agreements. Those conference committee agreements are then considered by each chamber in an up-or-down vote (no amendments permitted.) Several major issues still need to be finalized, including K-12 education, tax policy, and the state budget

Lawmakers are also expected to attempt to override several gubernatorial vetoes, possibly including a sweeping tax measure, as well as a number of line-items Gov. Kelly struck from the proposed state budget.

Action of note from first adjournment heading into veto session include:

TAXATION
The House passed (85-38), the Senate passed (24-13), and the Governor VETOED the conference committee report on SB 169, making income, sales, and property tax policy changes. Before vetoing the bill, the Governor had repeatedly expressed concern with moving to a single individual income tax rate, citing the impact on future state budgets as well as it primarily benefiting wealthier Kansans.
       The measure includes:

  • Providing a single 5.15% income tax rate for individuals for taxable income over $6,150 ($12,300 for married filing jointly) beginning in TY2024.
  • Decreasing the normal income tax rate for corporations from 4% to 3% beginning in TY2024 (accelerates scheduled APEX-related reductions), decreasing the privilege tax paid by financial institutions, and discontinuing possible future APEX-related tax reductions.
  • Addressing the income tax deduction threshold for Social Security income, softening the current cliff at $75,000 up to $100,000 in TY2023 and gradually increasing the threshold.
  • Increasing the Kansas standard deduction by a cost-of-living adjustment starting in TY2024 and thereafter.
  • Eliminating state sales tax on groceries on Jan. 1, 2024, and adjusting the transfer to the State Highway Fund to hold it harmless for the reduction in sales tax.
  • Increasing the exemption for residential property from the statewide school levy from $40,000 to $60,000 (retains current COLA provisions) starting TY 2023.
    The fiscal impact to the State General Fund is estimated at $258.7M in FY2024, $529.6M in FY2025, & $434.9M in FY2026. Read a summary of the CCR. See how House members voted. See how senators voted. An attempt by lawmakers to override her veto is expected.

The House passed (76-43) the conference committee report on SB 8, making a number of business-related property, sales, and income tax policy changes including:

  • Reducing penalties for the late filing of and the failure to file personal property renditions, including the discovery of escaped personal property, and limiting the instances in which a taxpayer must file statements regarding personal property. Future annual filings would only be required when there has been a change to report related to property previously listed. Under current law, a county appraiser adds 5% to the assessed value of the property as a penalty for the late payment of property taxes paid within the month they are due, with an additional 5% penalty for each additional month up to 25%. Penalties for late payment would be reduced to 2% of the property’s assessed value, with an additional 2% for each additional month up to 10%. The penalty for escaped property taxes and for property taxpayers who fail to deliver a full and complete statement of assessment would be reduced from 50% to 12.5%.
  • Creating, beginning in TY 2024, a real and personal property tax exemption for qualifying businesses deemed to be competing against a facility owned or operated by a governmental entity (SB 252). Businesses qualifying for the exemption would be limited to child care centers, health clubs, or restaurants. The business would need to be located within the same city or within five miles of the competing governmental facility.
  • Creating a sales tax exemption for the purchase of equipment, repairs, and maintenance used in the provision of internet access, telecommunications, or video services (HB 2106). This exemption for telecommunications providers would expire on July 1, 2028.
  • Reducing penalties for employers failing to timely remit employee withholding income taxes. Currently any delay in filing is assessed a penalty of 15% of the underpayment. The penalty would be decreased to 2% if remitted within one to five days, 5% if remitted within six to 15 days, 10% if remitted after 15 days, and 15% if remitted after 15 days and the Department has issued a notice to the person regarding the underpayment but the amount of the underpayment was not remitted within ten days of issuance of the notice.
  • Allowing for state income tax deduction and carry-forward of certain individual Net Operating Losses (NOL), specifically taxpayers who carried-back federal NOL in tax years 2018 through 2020 pursuant to the federal CARES Act (SB 40). Kansas taxpayers would have until April 15, 2025, to file amended state returns for tax years 2018 through 2020.
  • Providing state income tax deductions for certain federal tax credit disallowances, specifically a deduction equal to 100% of the federal disallowance for the Work Opportunity Tax Credit, and effective for tax year 2020 and all years thereafter, a deduction equal to 25% of the federal disallowance for the Employee Retention Tax Credit (SB 33 further amended).
  • Clarifying last year’s changes to the State and Local Tax (SALT) income tax deduction, making clear how taxes on electing entities under the SALT Parity Act would be levied on resident and nonresident owners (HB 2465). The provisions would be retroactive to tax year 2022.
    Read a summary of the CCR. See how House members voted. The Senate is expected to take up the measure during the veto session.

The Senate passed (28-11) SCR 1611, proposing a state constitutional amendment limiting annual increases in appraised valuation of all real property for property taxation purposes to no more than 4%. The limit would not apply after the property is transferred, changed, or conveyed to another person, or where new construction or improvements have been made, the classification of the property changes, the property becomes disqualified from an exemption, the property is first listed as escaped or omitted, or the legal description of the parcel changes.
       Supporters say the move would be a step in holding down property taxes; opponents say that isn’t necessarily true because mill levies are what dictate property taxes and that the measure is ripe for unintended consequences in its effect on determining comparables and fair market value. Read a summary. See how senators voted.  The bill now moves to the House. If the measure clears the legislature, it would go to a statewide vote on the November 2024 general election ballot.

EDUCATION
The House passed (65-58) and the Senate FAILED to pass (17-20) the conference committee report on SB 83, expanding school choice by providing direct renewable tax-funded “grants” equal to base aid (currently $5,000) for qualifying students in non-public school settings, as well as one-time $1,000 “awards” to qualifying students in public schools (SB 83). Qualified students would include students in grades K-12 whose 1) family has a household income of 250% or less of the Federal Poverty Level (for 2023 that’s $75,000 or less for a family of four), or who 2) the previous year attended a school building that has since been closed by the district and has to travel 15 miles or more to attend the new assigned school. Unused grant monies would be permitted to roll over to future years. Provisions explicitly state that nothing in the Act would be construed to permit any governmental agency to exercise control or supervision over any non-public school or home school.
       The CCR also provides the annual K-12 special education funding appropriation – separate from all other K-12 education funding, contained in the CCR for SB 113 – and creates a task force for special education topics.
       Read a summary of the CCR. See how House members voted. See how senators voted. While this CCR failed, comments by legislative leaders indicate it is possible the issue of school choice could be revisited during the veto session. Even if the legislature were to pass a reworked but similar bill, Governor Kelly is likely to veto it and legislators will be short of the 2/3 votes needed to override that veto.

House and Senate negotiators have agreed to a conference committee report on SB 113, providing for K-12 education funding and renewing the 20-mill property tax levy for education for two years. The CCR also includes education policy provisions, including:

  • Increasing student eligibility for the Low-Income Student Scholarship Program (scholarships of up to $8,000/student) from 185% to 250% of federal poverty & increasing the income tax credit for contributions from 70% to 75%,
  • Requiring school districts to create a parent portal on the district website including certain enrollment information and a list of the school district’s adopted curriculum, organized by grade level, including textbooks, required reading books, and units of study by theme, chapter, or subject matter (would not require posting teacher lesson plans); and
  • Authorizing non-public students to participate in a public school district’s activities regulated by the Kansas High School Activities Association.
           Read a summary of the CCR. The full House and Senate are expected to take up the CCR during veto session.

ECONOMIC/WORKFORCE DEVELOPMENT
The Governor VETOED HB 2344, revising child care regulations including changes to license capacity and staff-to-child ratios, revising certain professional development and training requirements, and authorizing the secretary to develop and operate pilot programs to increase day care facility availability or capacity. In her veto message, the Governor said that while the issue of child care needs to be addressed, this proposal could endanger child safety and is not the way forward.
       The legislation is intended to address a shortage in affordable child care availability — limiting the ability of some workers to return to the workforce – by reducing barriers for providers in what proponents say is a responsible and balanced way. Opponents to the bill say it goes too far, potentially endangering child safety, and instead urge that a task force appointed for analysis of proposed causes behind the child care shortage (such as low wages) first finish its work.
       The measure passed the Senate (21-17) and the House concurred (77-46) in the Senate’s version. Read a summary of the amended bill. See how House members voted. See how senators voted. The bill is unlikely to have the necessary 2/3 support to override the Governor’s veto.

The Senate passed (32-6) and the House passed (110-11) the conference committee report on HB 2292, enacting Kansas apprenticeship tax credits and grants to encourage apprenticeship programs in Kansas by providing income tax credits for participating businesses that employ apprentices. The bill would initially establish a tax credit for employers for up to $2,500 per apprentice for up to 20 apprentices. The tax credit program has a $7.5 million cap. The bill also creates special apprenticeship grant programs aimed at nonprofit healthcare workers and educators.
       The CCR also creates a matching grant program within the Department of Commerce to provide grants to eligible institutions of higher education, through an engineering graduate incentive fund, based on the number of engineering program graduates of the institution. Engineering remains a high-need workforce sector in the state.
       Read a summary of the CCR. See how House members voted. See how senators voted. The measure now moves to the Governor’s Office for consideration.

The House passed (122-1), the Senate passed (35-2), and the Governor signed into law the conference committee report on SB 123, promoting workforce development through expanded educational opportunities including:

  • Creating grants for eligible adult postsecondary-education learners (25+) in specified high-need or high-wage fields (an adult-learner alternative to PROMISE scholarships) and providing a “Workforce Retention Incentive Tax Credit” to learners that work in Kansas for at least 2 years after graduation (the program sunsets on July 1, 2028);
  • Expanding Kansas Promise Scholarship Act eligible fields of study to include elementary/secondary education teachers and transportation; and
  • Requiring school districts and colleges that offer career technical education (CTE) for students grades 9 – 12 to, upon request of the student, pay any fees associated with the assessment or examination required for the student to obtain an “industry-sought credential” associated with the student’s CTE program.
    Read a summary of the CCR. See how House members voted. See how senators voted.
  • The House passed (116-5), the Senate passed (37-3), and the Governor signed into law the conference committee report on SB 66, streamlining interstate occupational credentialing processes to get workers into jobs more quickly by requiring state occupational licensing bodies to provide electronic credentialing and to utilize a centralized license verification portal.
    Read a summary of the CCR. See how House members voted. See how senators voted.

The House passed (63-59), the Senate passed (31-9), and the Governor signed into law the conference committee report on SB 17, expanding existing tools available to municipalities to help encourage development and redevelopment of housing statewide, including:

  • Expanding the Kansas Rural Housing Incentive District Act into the Kansas Reinvestment Housing Incentive District Act by extending it to cities of 60,000 or more;
  • Expanding the list of costs that may be paid for by proceeds of special obligations bonds under the Act if certain conditions are met; and
  • Expanding the transferability of tax credits issued under the Kansas Housing Incentive Tax Credit Act.

       Essentially the KRHIDA allows cities if certain conditions are met to issue bonds and divert future tax revenue to help pay for the development of up to 100 houses a year, aiding in “making the math work” where the cost of developing housing currently is more than what the homes would be worth in the market, now not only in rural areas but also urban areas of the state.
       Read a summary of the CCR. See how House members voted. See how senators voted.

The Senate passed (32-6) the conference committee report on HB 2234, creating a program aimed at attracting the film and digital media production industry to the state. The effort would include a sales tax exemption and non-refundable income tax credits for qualifying film production activities, and establish educational and economic development programs to incentivize and promote the growth of film and digital media production in Kansas. Read a summary of the CCR. See how senators voted. The House is expected to take up the measure during the veto session.

LEGAL
The House concurred (83-37) and the Governor signed into law HB 2016, the Senate’s version of a bill creating a civil action for determining whether litigation that alleges a website access violation under the Americans With Disabilities Act or similar law constitutes abusive litigation and authorizing penalties for such abusive litigation. This legislation is in response to lawsuits filed by out-of-state plaintiffs against Kansas small businesses claiming their websites aren’t ADA accessible, but whose primary purpose appears to be obtaining a financial settlement requiring businesses to pay the plaintiffs. Disability advocates argued the bill could deter valid accessibility claims by Kansans with disabilities.
       Read a summary of the bill as amended by the Senate. See how senators voted. See how House members voted.

The Senate concurred (38-0) and the Governor signed into law SB 75, the House’s version changing the statutory pre-judgment interest rate from a fixed rate of 10% to a variable rate based on the statutory rate provided for interest on judgments. Pre-judgment interest is intended to compensate plaintiffs for the lost time value of money for the time period spent litigating their claims. Proponents say a variable rate would more fairly and accurately reflect real-world prevailing economic conditions than the 10% fixed rate, which in today’s conditions has been creating a bonus for plaintiffs and penalizing defendants. The change would apply to civil cases filed after July 1, 2023. The House passed the bill (122-1). Read a summary of the amended bill. See how House members voted. See how senators voted.

REGULATIONS
The Senate FAILED to pass (19-18) the conference committee report on HB 2390, which includes expanding the broadly-defined religious exemption applicable to COVID vaccinations to any vaccination for individuals attending child care centers and schools and prohibiting inquiry into the sincerity of the belief. As originally considered by lawmakers, the proposal to expand the exemption to any vaccine included all employers as well.
       The CCR also significantly restricts the duties and authority of state and local health officers regarding infectious and contagious diseases.
       Read a summary of the CCR. See how senators voted. It’s possible this issue may be revisited during the veto session.

The Senate passed (27-12) and the House passed (76-47) the conference committee report on HB 2100, aimed at protecting pensions and businesses from environmental, social & governance (ESG) standards, including prohibiting state and local political subdivisions from giving preferential treatment to or discriminating against companies based on ESG criteria in procuring or letting contracts, requiring KPERS fiduciaries to act solely in the financial interest of participants and beneficiaries of the system, and restricting state agencies from adopting ESG criteria or requiring any person or business to operate in accordance with such criteria. It does not include mandates on the private sector financial industry.
       Proponents say ESG limitations ensure financial decisions are based solely on best rate of return; industry sectors like fossil fuels, nuclear, agriculture, timber, mining, firearms and ammunition manufacturing, and greenhouse gas emitters (or those who don’t disclose emissions information) are protected; and social issues related to abortion, diversity (racial, gender, ethnicity, sexual orientation), and transgender policies aren’t influencing financial decision-making.
       Read a summary of the CCR. See how House members voted. See how senators voted. The measure now moves to the Governor’s Office for consideration.

NATURAL RESOURCES
The Senate passed (38-1), the House passed (122-1), and the Governor signed into law the conference committee report on HB 2302, providing for significantly increased State General Fund (SGF) appropriations to support water conservation (adding another $35M on top of the current $8M in funding) through the State Water Plan Fund and water-related infrastructure project grants. As the Ogallala Aquifer that serves large portions of western Kansas and its agricultural industry continues to be depleted, water resource conservation has been a growing concern for Kansas and its future economy, and lawmakers have been considering paths to updating aged water infrastructure and incentivizing voluntary conservation. Read a summary of the CCR. See how House members voted. See how senators voted.

EMPLOYER/EMPLOYEE RELATIONS
The Senate passed (28-12), the House passed (84-38), and the Governor signed into law the conference committee report on HB 2020, which includes provisions relating to transportation network company services (such as Uber, Lyft and others) establishing conditions for when a driver is an independent contractor versus an employee. Read a summary of the CCR. See how House members. See how senators voted.

“See How They Voted” Lenexa-Area Legislator Guide!

Kansas Senate

Kansas House of Representatives

Interested in a bill and want to learn more?

  • Explore the legislature’s website kslegislature.org to find House and Senate calendars, links to proposed bills, and committee information including live meeting audio links and posted testimony.
  • Watch House and Senate sessions and many committee meetings via the Kansas Legislature’s YouTube channel.
  • Access archived committee meeting audio recordings here.
  • Follow legislative action simultaneously detailed on Twitter using the hashtag #ksleg.
  • Call the State Library’s toll-free legislative hotline at (800) 432-3924. Calls and questions are confidential.
  • Ask questions such as how to read the calendar, what’s existing law and what would change in a proposed bill, etc, by contacting Ashley Sherard, the Chamber’s Director of Legislative Affairs, at asherard@lenexa.org or (913) 888-1414.

 

AREA LEGISLATORS MEET WITH CHAMBER

The Kansas Capitol came to the Chamber on Friday, January 13, when nearly all Lenexa-area state legislators were guests of the Chamber’s Legislative Affairs Committee, Board, and Economic Development Council to talk about issues in Topeka and connect with our members!

The Chamber looks forward to working this year with Kansas Senate Minority Leader Dinah Sykes and Kansas Reps. Jo Ella Hoye, Susan Ruiz, Adam Turk, Laura Williams, and Brandon Woodard.

 

CHAMBER BOARD APPROVES 2023 STATE LEGISLATIVE AGENDA

The Lenexa Chamber Board of Directors has approved a legislative platform to guide our advocacy in the upcoming 2023 state legislative session.  The platform addresses a spectrum of issues important to the business community including pandemic relief and recovery, tax policy, key business costs and regulations, K-12 and higher education, health care, transportation, economic development, and others.

For a summary of the platform, please click here.

Questions or feedback?  Call Ashley Sherard, Vice President and Director of Legislative Affairs, at 913-888-1414 or email asherard@lenexa.org.