Original COVID-19 bill vetoed and special session called
Kansas 2020 Legislative Session Overview
The 2020 Kansas legislative session kicked off at a fairly brisk pace until several moderate Republicans joined House Democrats to block a proposed anti-abortion amendment to the state constitution early in the session. Abortion opponents responded by moving aggressively to block a Medicaid expansion plan backed by Democrats and GOP moderates. That impasse continued right up to the advent of the COVID-19 pandemic and the combination of events resulted in not much getting done outside important legislation relating to COVID-19 emergency powers and the funding of essential state functions.
Legislators adjourned the regular session two weeks early as the pandemic spread before returning for the annual veto session and the legislature adjourned Sine Die following the adoption of COVID/emergency powers legislation in the form of House Bill 2054. Governor Laura Kelly vetoed that bill five days later, however, and called a special session in which similar compromise COVID/emergency legislation (House Bill 2016) was approved by the Legislature in a brief two-day session and the bill was promptly signed into law by the governor.
While most of the focus was on the abortion amendment/Medicaid expansion standoff and COVID-19/emergency powers issues this session, a number of bills affecting the commercial and industrial building construction industry did see action and brief summaries of those bills follow.
COVID-RELATED EFFORTS SUCCESSFUL
When it became clear that state and county officials intended to issue stay at home orders, the Association immediately began contacting those officials and encouraging them to include construction as an essential business activity so that construction workers could stay on the job and construction activity could continue during the lockdown. We contacted other construction industry groups as well in order to present a united front. We were initially successful at the area county level and when the governor issued her statewide executive order our industry was included as an essential activity, as well. In addition, we realized that trial lawyers will be hot on the trail of liability claims related to the virus and that liability protection for businesses was needed. The Kansas Chamber of Commerce made this a priority, as well, and we joined their effort. Fortunately, liability protection for businesses was included in both HB 2054 and HB 2016 mentioned immediately above. HB 2016 provides that, notwithstanding any other provision of law, a person (or agent of such person) conducting business in Kansas shall be immune from liability in a civil action for a COVID-19 claim if such person was acting pursuant to and in substantial compliance with public health directives applicable to the activity giving rise to the cause of action when the cause of action accrued. This section expires on January 26, 2021, and applies retroactively to any cause of action accruing on or after March 12, 2020.
EMPLOYMENT SECURITY BENEFITS EXTENDED
The Kansas Legislature also addressed the much-anticipated layoffs due to the Covid-19 outbreak by passing House Substitute for Senate Bill 27 before ending the regular session. This legislation provides that, effective January 1, 2020, unemployment benefits shall be extended from the current 16 weeks to 26 weeks. Under previous law, the number of weeks for which a worker may claim benefits was capped at 16 weeks, 20 weeks, or 26 weeks if the Kansas unemployment rate (on a three-month seasonally adjusted average) was less than 4.5 percent, at least 4.5 percent but less than 6.0 percent, or at least 6.0 percent, respectively. Under prior law, workers were required to wait for a week prior to making a claim and receiving UI benefits. This bill grants workers an additional week’s benefit upon the completion of the third week of unemployment after the waiting week. This amount does not increase the total amount of benefits that a worker may claim. The bill was effective upon publication in the Kansas Register and will sunset on April 1,2021. This idea was originally proposed earlier this session to deal with aviation layoffs in Wichita, but lawmakers applied the increase to everyone in light of the COVID-19 crisis.
TEMPORARY CHANGES TO UNEMPLOYMENT COMPENSATION DUE TO COVID-19
House Bill 2016 above also makes a number of temporary changes to the state unemployment compensation system in response to the COVID-19 pandemic. The bill provides that a claimant is not ineligible for benefits on the basis of not actively seeking work during a disaster emergency proclaimed by the governor and in response to the spread of COVID-19 and the state has temporarily waived the work search requirement in compliance with the Families First Act. Additionally, the bill waives the waiting week requirement for new claims filed from April 5, 2020, through December 26, 2020, in accordance with the Families First Act and the CARES Act. The bill limits unemployment contribution rates for employers to the standard rate schedule and prohibits an additional solvency adjustment. The bill provides that benefits paid as a result of employees being discharged by an employer directly impacted by COVID-19 will not be charged to the account of the contributing employer. Under the bill, payments of unemployment compensation that are wholly reimbursed to a reimbursing employer by the federal government shall be charged for the purpose of such reimbursement under the CARES Act. The bill also eliminates provisions prohibiting negative account employers from participating in shared work plans, but provides that shared work plans may be approved only if the Secretary of Labor determines the contributing employer does not adversely impact the State’s eligibility under the CARES Act, which provides for federal reimbursement of certain shared work plan payments.
BUDGET BILL ALLOWS AMERICAN ROYAL PROJECT TO CONTINUE
Senate Bill 66, the budget bill passed just prior to first adjournment and signed into law on March 25, provides a one-year extension to the state’s current STAR Bonds program. This will allow current projects in the pipeline to be completed, specifically the American Royal project near the Kansas Speedway. Legislators are expected to come back next session and make some additional changes to the program.
LOCAL CONTROL OVER WAGES AND BENEFITS
Did Not Pass
House Bill 2584 died in the House Commerce, Labor and Economic Development Committee after failing to meet the February 27 deadline for consideration of non-exempt bills in their house of origin. Current Kansas law provides that, unless otherwise required by state or federal law, no city, county or local government unit shall enact or administer any ordinance, resolution or law that requires an employer to: (1) provide employees any leave from work; (2) pay compensation for any leave from work; (3) pay compensation or wages at any rate higher than the minimum wage; (4) offer an employee benefit; or (5) alter or adjust any employee scheduling. HB 2584 would have stricken the prohibition against the adoption of ordinances, resolutions or laws requiring payment of compensation or wages at a rate higher than the minimum wage. Current law does not apply to state economic development incentive programs or to city, county, local government or local economic development agency business attraction, retention or recruitment programs.
EISENHOWER LEGACY TRANSPORTATION PLAN IS SIGNED INTO LAW
House Substitute for Senate Bill 173 was approved by the House (112-3) and Senate (37-2) on March 19 and signed into law by Governor Kelly on April 2. This important legislation authorizes and directs the Secretary of Transportation to initiate a 10-year, $10 billion comprehensive transportation program to be called the Eisenhower Legacy Transportation Program. Among other things, the bill specifies the types of projects authorized, addresses local funding and new and continuing grant programs, authorizes alternative procurement methods under certain circumstances, increases city connecting links payments, adds reporting requirements, requires at least $8 million to be spent in each county through fiscal year (FY) 2030, and states that 16.154 percent of the current 6.5 percent state sales tax rate shall be levied for the State Highway Fund (SHF). The bill provides that the Program shall provide for the construction, improvement, reconstruction, and maintenance of the state highway system and provide for selection of projects that will allow for the flexibility to meet emerging and economic needs. The bill further provides that program expenditures may include, but not be limited to, preservation, preservation plus, expansion and economic opportunity, and modernization projects.
PROPOSAL TO PREEMPT LOCAL BUILDING CODES FAILS
Did Not Pass
Strong opposition to House Bill 2703 that was raised at a February 19 hearing before the House Committee on Commerce, Labor and Economic Development also resulted in this bill’s death as the turnaround February 27 deadline passed. Drafted much more broadly than proponents intended, the bill essentially prohibited political subdivisions from adopting building codes that are either more or less stringent than “national model codes” as defined in the bill. That essentially means that all political subdivisions would have to adopt such codes and not deviate. In noting our opposition to the measure, we advised that contractors and codes officials work closely together in communities all across the state to locally adopt the building codes that best meet the particular needs of each community. Kansas political subdivisions should retain the ability to do that and we support their home rule authority to do so. This legislation was actually intended to prohibit political subdivisions from adopting codes that would prohibit the use or connection of existing energy sources such as natural gas (which the City of Lawrence is attempting to do over a period of years). Proponents will likely pursue legislation next session that is more narrowly drafted and limited to the intended purpose.
SALES TAX EXEMPTIONS
Did Not Pass
House Bill 2727 died in the House Taxation Committee as the 2020 session came to a close. This bill would have required that an existing sales tax exemption of equal or greater value be repealed or suspended for each new sales tax exemption adopted on and after January 1, 2021. The Builders’ and Kansas City Chapter, AGC monitors this and other sales tax exemption related bills that are introduced each legislative session so as to preserve the existing important sales tax exemption for labor services (labor, profit and overhead) involved in new construction in Kansas. Legislation imposing a 2.5% sales tax on such labor services to help fund school finance was adopted in 1992 with disastrous results, especially in the economically important Kansas City metropolitan area. The Builders’ Association, the Kansas City Chapter, AGC and a coalition of other organizations joined together to get legislation approved that would repeal the sales tax on new construction labor services in each of the subsequent two years only to have the legislation vetoed by then Governor Joan Finney. Finally, newly elected Governor Bill Graves signed repeal legislation in 1995. We have closely watched all sales tax exemption related legislation since.
RIGHT TO RESIGN FROM CERTAIN LABOR UNIONS AND END DUES OBLIGATIONS
Did Not Pass
Having been approved by the House Commerce, Labor and Economic Development Committee and placed on the House Calendar, House Bill 2586 was “blessed” and kept alive by referral to the deadline-exempt Appropriations Committee prior to the February 27 turnaround deadline. The bill was then re-referred to House Commerce, but the bill ultimately died in that committee as the session came to a close. As drafted, the bill related only to certain public employees and professional employees and their corresponding labor unions and was intended by proponents to align Kansas law with U.S. Supreme Court rulings that public employers must receive clear and compelling evidence of affirmative consent from an employee who wishes union membership dues be deducted from a paycheck. The bill would have codified public employees’ and professional employees’ right to join or refrain from joining their respective unions as well as the right to immediately resign from and end any financial obligation to such unions. A companion bill, Senate Bill 361, was stricken from the Senate calendar on March 4.
Did Not Pass
After being passed (123-2) by the House on February 26, the Substitute for HB 2506 died on General Orders in the Senate as the COVID-shortened session came to a close. HB 2506 was intended to remove barriers to employment in Kansas for those professionals who are new to the state and who work in occupations which require occupational licenses. The bill provided reciprocity for applicants who have been licensed and practicing in other states if such other states’ requirements are substantially equivalent to those in Kansas. In instances where Kansas licensing requirements exceed those of other states, applicants would be granted temporary permits while completing the necessary educational requirements for a Kansas license. Special provisions were included in the bill which addressed this issue for members of the military and their spouses.
WORK-BASED LEARNING PROGRAMS AND LIABILITY FOR NEGLIGENT ACTS
Did Not Pass
House Bill 2507 also died on Senate General Orders after being approved by the full House (97-27) on February 26. The amended bill would have exempted businesses from certain liability claims arising from a secondary student engaged in a secondary curriculum including work study, on-the-job training, job shadowing, internships, clinicals, practicums, apprenticeships, co-ops, and industry-led service-learning projects. A business would not have been subject to a claim arising from the student’s negligent act or omission or to a claim for bodily injury to the student or sickness or death by accident of the student providing the student’s school district had purchased applicable insurance coverage. The school district would have been solely responsible for a student’s loss due to bodily injury, sickness, or death caused by accident due to a negligent act or omission caused by the student or business. The bill would not have provided immunity for the student or business for gross negligence or willful misconduct. The bill would also have broadened the concept of school-sponsored activity to include transportation to and from a work-based learning program.
JOB CORP WORK-BASED LEARNING PROGRAM PREFERENCE BILL FAILS
Did Not Pass
House Bill 2455 would have specified that, except when a contract is awarded to a certified business or disabled veteran business under current law, a contract would be awarded to a Job Corps-aligned business that is also a responsible bidder whose total bid cost is not more than ten percent higher than the lowest competitive bid. The contract would include a promise by the Job Corps-aligned business or a memorandum of understanding with the Job Corp that at least five percent of its employees are Job Corps Work-based Learning Program graduates and that the percentage would not decrease throughout the contract term as well as a condition that the Job Corps-aligned business would not subcontract for goods or services in an aggregate amount of more than twenty-five percent of the total bid cost. A hearing before the House Commerce, Labor and Economic Development Committee scheduled for January 23 was postponed and the bill subsequently died for failure to meet the February 27 deadline for consideration of bills in their house of origin.
BILL PROVIDING PENALTIES FOR MISCLASSIFYING EMPLOYEES DIES
Did Not Pass
Senate Bill 419 died in the Senate Commerce Committee after failing to meet the February 27 turnaround deadline. This bill would have increased civil penalties for anyone who knowingly and intentionally misclassifies one or more employees as independent contractors for the purpose of avoiding either state income tax withholding and reporting requirements or state unemployment insurance contributions reporting requirements. It also would have provided for an order to be issued to any person who has not complied with the civil penalties rendered for making such misclassifications to cease doing business as an employer in the state of Kansas. Enforcement provisions through the district court were set out for an employer who failed to comply with such order.
FILING DUPICATE LIENS OR PRESENTING FALSE LIENS TO RECORDERS OF RECORD
Did Not Pass
Senate Bill 372 died in the Senate Judiciary Committee having failed to meet the turnaround deadline. This bill would have required a court that sets aside a lien or other claim to enter an order prohibiting an individual from filing subsequent duplicate liens or other claims. Such order would have been required to include an instruction that the filer must seek approval from the court before filing subsequent liens or other claims and a warning that violation of the order could lead to civil and criminal penalties. The bill would have created a new prohibition against presenting a lien or financing statement that the presenter knows or should know is false to the recorder of record. It also would have prohibited the presentation of any document to the recorder of record that is intended to be filed publicly and that the presenter knows or should know is false and is presented to harass an entity, individual, or public official, or obstruct governmental operations or judicial procedures. The bill would have made the penalty for violation a severity level 8, nonperson felony.
ECONOMIC DEVELOPMENT BILLS FAIL TO PASS
Did Not Pass
House Bill 2529 would have added “major business facility” and “major medical facility” to the list of definitions associated with the STAR Bond Financing Act. “Rural redevelopment project" was defined to mean a project that is in an area outside of a metropolitan statistical area that is of regional importance, with capital investment not to exceed $4,000,000, and that will enhance the quality of life in the community and region. The bill would have increased the minimum capital investment required from $50 million to $75 million and projected gross annual sales from $50 million to $75 million. It would have altered the procedure for a city or county proposing to undertake a STAR bond project by requiring that a feasibility study be conducted by one or more economic consultants selected and approved by the Secretary of Commerce and the costs would be paid by the developer or the city or county. The bill would also have extended the expiration date for provisions regarding STAR bonds to July 1, 2025. House Bill 2689 would have extended the sunset on the Angel Investor tax credit from tax year 2021 to tax year 2026. The annual cap on tax credits would have increased in one-half million dollar increments annually, from $6 million in tax year 2021 to $8 million in tax year 2025 and thereafter. The bill would have increased the amount of tax credits claimed on a qualified business investment from $50,000 to $100,000. The total amount of tax credits an investor could claim in any one tax year would increase from $250,000 to $350,000. The bill would have allowed bioscience businesses in Kansas to qualify for the tax credit. Entrepreneurs and representatives of the Department of Commerce, the Enterprise Center in Johnson County, and various technology and bioscience trade associations spoke in favor of the bill and generally stated that the Angel Investor Tax Credit is a means to mitigate investment risk, encourage new capital to flow into the state, and grow the Kansas economy.
VETOED BILLS OF NOTE
It is interesting to note that, on the eve of opening the special session, Governor Kelly vetoed several bills that had been passed with strong support just prior to Sine Die adjournment of the veto session. Included were House Bill 2702, a bill that would have provided tax transparency, removed the property tax lid, waived interest and fees for late property tax payment through August 10, 2020 and authorized county treasures to set up payment plans for delinquent and nondelinquent property taxes and House Bill 2510 which, among other things, would have established the Kansas Promise Scholarship Program for students who want to go into a technical trade and required the student live in Kansas for two years after graduation in order to receive loan forgiveness. A special session is separate from the normal legislative session in that the legislature did not have the constitutional authority to override these vetoes and there was much discussion about whether to take these bills back up, stay in session to go through the process of passing them again and see if the governor would veto them again. Republican leadership saw this as an attempt to goad the legislature into a lengthy session for the purpose of taking another run at expanding Medicaid so there was no motion to reconsider these bills and the vetoes were sustained.
As always, if you have questions about any of the pieces of legislation above, or would like us to look into a bill or issue not listed, please contact Allen Dillingham, Government Relations Director for The Builders’ Association, at 816-595-4121 or [email protected]. We also encourage you to contact your elected representatives on these pieces of legislation and other issues important to you and your business.