| Unemployment Insurance, taxes and COVID relief were the hot issues of the week. House bills 2195 and 2196, both addressing the unemployment insurance problems, received a lot of attention in the State house and in the press. HB 2195 was heard last week, but carries a long shadow because the fiscal note is directly tied to level of fraud allowed to be paid out through the UI system. The bill would place the financial burden of the fraud directly on the State general fund instead of requiring businesses to replenish the stolen money. HB 2196 restructures the future contribution rates to create a slighter increase over a longer period of time than the current formula requires. Companion bills will be heard in the Senate next week.
In addition, the Senate passed SB 22 named the “Rebuilding Employers and Livelihoods while Investing in Everyone’s Future (RELIEF) Act,” with 24 supporting votes. The bill has many moving parts and received three additional amendments during floor debate, significantly increasing the fiscal note. The bill primarily has past business initiatives, such as de-coupling, standard deductions, itemization and GILTI provisions needed to address the 2017 Trump tax changes. The bill did include three reforms needed due to COVID; 1) PPP loan exemptions, 2) meal deductibility for three years, and 3) UI fraud tax protections. Because of the increased fiscal note, the bill will likely not be the final solution, but many of the elements will receive priority attention.
Finally, HB 2142 was heard by House Tax. The bill would require governments who restricted businesses through emergency COVID orders to proportionately adjust their property tax downward. If a county, for instance, reduced a business’s ability to create income and reduces the use of their property by 50% for three months they would also be required to reduce their property tax proportionately. The Kansas Restaurant & Hospitality Association testified for the bill and received the majority of the questions and significant media attention. Not surprisingly, the bill also received considerable opposition from local governments. KRHA testified governments are required to compensate businesses, according to the 5th Amendment and the Kansas Emergency Management Act, when they take their property for a government purpose. Scott Schneider recited an argument from the US Supreme Court Chevron case: “The Fifth Amendment is meant to bar Government from forcing some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole.”
Governments expressed their concern they would have to lay off employees if the bill passed. Many in the room were not sympathetic, because the restaurant industry alone lost 64,000 employees last March. The committee asked questions for over 30 minutes and contemplated if the bill should be retroactive or prospective. No modern legislature has had to address the issue of a taking during a pandemic. Public comments were largely prohibited when the orders were first made by local governments, so this bill provided the first opportunity to challenge the issue outside a lawsuit.
Speaking of lawsuits, Kansas attorney, Ryan Kriegshauser and Kansas Attorney General recently paused a district court case to see if the legislature is willing to create a settlement remedy in the case of Omega Bootcamps Inc. and Ryan Floyd v State of Kansas. Derek Schmidt made this statement: “This lawsuit raises important public policy questions extending well beyond this individual case that would be better answered by the Legislature rather than courts. I agree with the basic principle, reflected in current law, that at least some of those whose property is significantly damaged by government actions undertaken for the public good during a state of emergency should be compensated for their loss. However, current law was not designed to address these sorts of business shutdown orders, and it is not certain (nor does the state concede) that the law as written applies on the facts of this or similar cases.” Link to Attorney General full statement. This issue will continue as State Representative Ken Corbet has also introduced this measure in the Kansas Senate and a full COVID relief bill will be more fully considered.
Media on Property Taxes
CJonline: https://www.cjonline.com/story/news/coronavirus/2021/02/09/kansas-businesses-affected-covid-restrictions-might-get-property-tax-reimbursements-counties/4450874001/
LJworld: https://www2.ljworld.com/news/state-region/2021/feb/10/restaurants-ask-for-property-tax-relief-from-counties-that-restricted-business/
Kansas Reflector: https://kansasreflector.com/2021/02/10/restaurants-ask-for-property-tax-relief-from-kansas-counties-that-restricted-business/
Interesting bill introductions:
SB 202, COVID relief
HB 2316, Allows for Credit Card Surcharges
HB 2314, Prepaid Sales Tax Phase Out |
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AGC of Kansas – www.agcks.org