2019 Kansas legislature returns to work following turnaround
The Kansas legislature returned to work on March 6 after a short break following “turnaround” day which was Feb. 27 this year. Turnaround day is considered the half-way point of the session and is the final day for consideration of “non-exempt” bills in their “house of origin.” Bills that have not been “blessed” by connection with deadline-exempt committees in one way or another and have not been approved by their house of origin are now considered dead. Taxes, school funding and transportation funding remain key issues as the April 5 deadline for consideration of all bills except vetoed bills, omnibus appropriations and omnibus reconciliation spending limit bills rapidly approaches. Following are brief summaries of a number of bills of interest to the commercial and industrial building construction industry.
BILLS PROVIDING FOR LOCAL CONTROL OF WAGES PAID FOR CONSTRUCTION FAIL
Several bills that would have provided local control of wages failed to meet the deadline for adoption by their house of origin and died in the House Committee on Commerce, Labor and Economic Development. House Bill 2017 would have repealed current law that prohibits city, county or local governments from enacting any ordinance or resolution that would, among other things, require compensation or wages at any rate higher than the minimum wage on construction projects unless required by state or federal law. House Bill 2061 would also have repealed the current prohibition on municipal regulation of minimum wages. House Bill 2060 would have repealed the current prohibition on municipal regulation of paid leave for employees and would have allowed municipal or county governments to enact an ordinance that would require a private employer to pay compensation for leave from work.
RIGHT TO WORK AMENDMENT REPEAL
House Concurrent Resolution 5008 would repeal section 12 of article 15 of the Constitution of the State of Kansas. This would repeal the “right to work” amendment to the Kansas Constitution if adopted by two-thirds of the members of each house and if a subsequent ballot measure was approved by voters. HCR 5008 remains in the House Commerce, Labor and Economic Development Committee and the prospects for movement on the resolution are virtually nonexistent given the composition of the Kansas legislature.
MONITORING BILLABLE HOURS FOR WORK PERFORMED ON COMPUTERS
Senate Bill 56 and House Bill 2115 remain alive as both were introduced by their respective deadline-exempt Federal and State Affairs committees. Both are strongly opposed by the Builders’ Association and Kansas City Chapter, AGC. These bills would affect all state agency contracts greater than $100,000 and would require that contractors use a software program that verifies that hours billed for work performed by contractor employees on a computer are legitimate. Contractors would be required to purchase the software program and could not charge state agencies or the Division of Post Audit for access to or use of the software program which would result in unreimbursed costs incurred by contractors. Fortunately, the Department of Administration has noted that adoption of this legislation would likely cause some companies to elect not to submit bids for contracts if the companies believe the requirements are too intrusive or too difficult to implement, particularly small businesses who may not have the means to meet the requirements. The Department further noted that any conditions that have the potential to limit the number of bidders would reduce competition for such projects and increase cost. In addition, the Office of the Attorney General has indicated the bill may result in outside counsel being unwilling to contract with the state for legal services. These measures are being proposed by the software program developer in many states all across the country. They are intrusive and self-serving and would have a very chilling effect on competition on work performed for state agencies.
TAX EXEMPTION FOR CONSTRUCTION AND OTHER RURAL INCENTIVES
The Association has provided testimony in support of House Bill 2131 which would reinstate the Enterprise Zone sales tax exemption that expired on Dec. 31, 2011. The program provides a sales tax exemption for materials, equipment, and services purchased in connection with a business expansion project. In order for businesses to receive the sales tax exemption, manufacturing businesses would be required to create at least two jobs, nonmanufacturing businesses would be required to create at least five jobs, and retail businesses would be required to create at least two jobs located in a city with a population of 2,500 or less or in a county with a population of 10,000 or less. The sales tax exemption would take effect beginning on July 1, 2019. Although aimed at rural areas of the state it has been indicated that the provisions of the bill could apply to other areas as well. Introduced and heard by the House Committee on Rural Revitalization, HB 2131 has been kept alive by referral to the deadline-exempt Taxation Committee prior to the turnaround deadline.
Other proposed incentives for rural areas include House Bill 2147 which, as amended, would extend the maximum maturity on bonds issued to finance projects under the Kansas Rural Housing Incentive District Act (Act) from 15 years to 25 years and thereby financially assist developers in building affordable new housing in rural communities. HB 2147 passed the House (123-0) on Feb. 27 and was referred to the Senate Commerce Committee which held a hearing on the bill on March 14. Senate Bill 125 would extend the sunset date for the Rural Opportunity Zones Program. Under current law, this program offers individuals who relocate to a county that has been designated as a Rural Opportunity Zone the opportunity to participate in a Student Loan Forgiveness Program and receive a 100 percent state income tax credit through tax year 2021. SB 125 would extend the sunset for the student loan forgiveness program and the sunset on the tax credit to FY 2026. SB 125 was approved (29-11) by the full Senate on March 20.
ECONOMIC DEVELOPMENT AND TRANSPARENCY
House Bill 2006 was passed (122-0) by the House on Feb. 27 and has received protracted hearings in the Senate Commerce Committee. This bill would amend the Legislative Post Audit Act to authorize the Legislative Post Audit Committee to conduct a systematic and comprehensive review, analysis, and evaluation of each economic development program every three years. The Department of Commerce would establish a database for the purpose of disclosing information on economic development incentive programs, which would be defined to include certain income tax credits and locally-granted property tax exemptions in addition to various programs administered directly by the Department. The Department would be required to provide data on most programs providing more than $50,000 in annual incentives and make such information available to the public in a digital format. The bill would require such information to be available for multiple years and be searchable and available on the Internet. The database would contain names and addresses of recipients receiving STAR bond benefits, as well as names of principals and officers for each STAR bond project developer; annual amount of incentives claimed and distributed to each recipient; and qualification criteria for each economic development program, including the number of jobs created or amount of capital investments made.
ASSOCIATION HEALTH PLANS
On Oct. 12, 2017, President Donald Trump issued Executive Order (EO) 13813 (“Promoting Healthcare Choice and Competition Across the United States”), which, among other things, encourages expanded access to Association Health Plans (AHPs). The Final Rule, issued by the U.S. Department of Labor and published on June 21, 2018, allows employers to form AHPs (termed “small business health plans”) on the basis of geography or industry. Numerous related bills were introduced in both houses of the Kansas Legislature this session as a result. HB 2054, the bundled Association Health Plan (AHP) bill, was amended by the House Committee on Insurance to contain its original provisions plus modified provisions of HB 2055, HB 2056, and HB 2058. The provisions of a number of other AHP proposals were not included.
The new availability of Association Health Plans (AHP’s) is an important development in Kansas for small business. Kansas law, however, currently has a “look-through” definition of “small business” and this definition negatively impacts Kansas small businesses by restricting their access to larger groups. The current Kansas definition of “small business” must be changed then in order to allow associations and member companies to participate in AHPs. House Bill 2054, which was passed (101-23) by the House on March 26, would accomplish that. The Builders’ Association and KC Chapter, AGC have joined other Kansas trade associations in urging leadership to make AHPs a top legislative priority as the session rapidly comes to an end.
FIRE SPRINKLER INDUSTRY PROPOSAL DIES
House Bill 2026 ran into some pretty stiff opposition from local fire chiefs, building and codes officials and others in a Feb. 12 hearing before the Commerce, Labor and Economic Development Committee and the bill subsequently died when it failed to meet the Feb. 27 turnaround deadline. Most of the opposition concerned infringement of a statewide program on local sprinkler regulations and on city and county home rule authority. Among other things, HB 2026 would require the Office of the State Fire Marshal (OSFM) to create and oversee a licensure for anyone who works in the fire sprinkler industry. The OSFM would be required to design and administer an examination for potential licensees to test their experience and training as well as run background checks, including fingerprinting. The bill would require fire sprinkler companies to possess a license and every company would be required to have a fire sprinkler manager on staff. A fire sprinkler technician, manager or inspector would be required to be on the job site of any work being performed. The OSFM would be required to charge application fees for licenses and license renewals. Individuals who violated the Act would be fined up to $250 for each violation, except for company managers who could be fined up to $500 per violation. Companies found to be in violation of the Act would be subject to a fine of up to $5,000 per day of violation not to exceed $25,000 in total.
BOARD OF EDUCATION-SPECIFIED PRODUCTS OR INSTALLATION METHODS
Senate Bill 148 and its companion bill in the House, House Bill 2207, have both died having not met the deadline for consideration in their house of origin. These measures provided that whenever the board of education of a school district puts forth a request for proposal (RFP) for construction, reconstruction, repair or remodeling of buildings or for materials, goods or wares that are required for construction, reconstruction, repair or remodeling of buildings, the board may specify a particular product or particular installation method. The board could not specify a proprietary product or proprietary installation method. In addition, the board could not require a bidder to obtain certification or approval from an architectural consultant, engineering consultant, school district employee or the board of education of the school district to establish that the product or installation method to be used by such bidder is a substantially similar alternative to the product or installation method specified in the RFP. Finally, if the RFP specifies a particular product or a particular installation method, the board could not consider any responding bids unless at least three bidders have submitted bids to provide the specified product or installation method or substantially similar products or installation methods.
SCRAP METAL BILLS
House Bill 2226 remains a live bill in the deadline-exempt Federal and State Affairs Committee and would make various changes to the Scrap Metal Theft Reduction Act. The changes would include removing jurisdiction and responsibilities regarding scrap metal dealers from the Attorney General and placing those responsibilities with either cities or counties. It would be required that local law enforcement be given notice of new scrap metal dealers registered with cities and counties. The bill would change the fees associated with becoming a registered scrap metal dealer. The bill would also remove certain registration standards and include changes to procedures regarding any suspension or revocation of scrap metal dealer registrations. Additionally, the bill would remove language requiring scrap metal dealers to obtain and maintain copies of identification cards, other documents and pictures of items or lots of items being sold and removes fines associated with noncompliance of those provisions. Another related bill, Senate Bill 219, was introduced on turnaround day by the deadline-exempt Ways and Means Committee and referred to Judiciary which recommended the bill be passed on March 26. That bill would assess an excise tax on scrap metal, create a scrap metal data repository fund and address registration fees. The prospect for further movement on either of these bills remains uncertain.
REHABILITATION OF ABANDONED PROPERTY
House Bill 2314 remains a live bill having been referred to the deadline exempt Appropriations Committee and re-referred back to the Commerce, Labor and Economic Development Committee prior to the turnaround deadline. The bill was approved (97-27) by the full House on March 26. Among other things, this bill would revise provisions of law pertaining to the authority of cities and nonprofit organizations to petition the district court to possess abandoned property temporarily for rehabilitation purposes. “Abandoned property” would include an alternative definition to the one currently in law for residential real estate, which would mean property that has been unoccupied continuously for 365 days and has a blighting influence on surrounding properties. “Blighting influence” would be redefined by removing a provision allowing properties to be determined to be having a blighting influence as a consequence of the properties having an adverse impact on other properties in the area. The bill also would allow a court to extend the time a defendant has to come into compliance with all applicable codes and prohibit the striking of any affirmative defense solely on the basis of delinquent property taxes.
UNDERGROUND UTILITY DAMAGE PREVENTION DUTY TO MARK EXCEPTION
House Bill 2178 was approved by the House (122-2) on Feb. 27 and received a hearing in the Senate Judiciary Committee on March 12. The committee recommended the bill be passed as amended on March 19. As amended, HB 2178 would change current law concerning the duty of an operator to mark the tolerance zone (the area not less than 24 inches of the outside dimensions in all horizontal directions) around an underground facility within the Kansas Law Underground Utility Damage Prevention Act (Act). Specifically, the bill would exclude from the definition of “operator” any person who is providing electric service for that portion of an underground facility downstream of the point where ownership of the facility changes from an electric public utility to another person as determined by the electric public utility’s rules and regulations, tariffs, service or membership agreements or other similar documents.
OTHER BILLS OF INTEREST
Fair Share Act – HB 2175 has died in the House Commerce, Labor and Economic Development Committee having not met the turnaround deadline. The proposal provided that a fair share charitable fee would apply, as a condition of the employee's employment, to any employee who elects not to be a member of a labor organization that is the exclusive bargaining representative of the employee's bargaining unit under applicable federal law. The fair share charitable fee would be an amount determined by the labor organization and would be equal to not less than 85% and not more than 100% of the regular dues and initiation fees assessed by the labor organization to its members. The fair share charitable fee would be deducted by the employer from a nonmember employee's wages and transmitted by the employer as follows: 90% to the labor organization and 10% to a charitable organization selected by the labor organization. An employee who elects to be a member of the labor organization would not be required to pay the fair share charitable fee.
Numerous Harmful Workers Comp Bills Fail – A number of workers compensation bills of interest failed to meet the turnaround deadline and have died. SB 172 would have increased the limit of healthcare expenses allowed as a workers compensation benefit for injured employees prior to formal authorization of a claim from $500 to $2,000. HB 2012 would have amended the Workers Compensation Act by replacing the word “prevailing” with the word “substantial” which would lower the threshold for compensation. The bill provided that a substantial factor would be defined as a material element in bringing about an injury, repetitive trauma or occupational disease. A prevailing factor would be the primary factor for the injury and need for medical care. HB 2013 and SB 92 would have amended the Act by removing the reference to the sixth edition of the American Medical Association guides to evaluation of permanent impairment. The Act would revert to the fourth edition of this publication. According to the Department of Labor, enactment of this legislation could affect the costs for employers and their Workers Compensation insurance carriers as impairment ratings under the fourth edition in some cases are higher than the impairment ratings under the sixth edition. HB 2014 would have modified the horseplay exception to allow an employee to receive compensation if the horseplay or fighting is work-related. This exception would allow employees to receive benefits which were previously disallowed. HB 2016 and SB 146 would have disallowed reduction of workers compensation benefits from the social security benefits received by the employee. These bills would allow employer contributions to a retirement plan to be used to reduce workers compensation benefits while employee contributions to a retirement plan would not be used to reduce workers compensation benefits. Currently, employers may deduct retirement benefits for employer-sponsored retirement plans from workers compensation benefits paid to an employee. Finally, HB 2260 would have increased the amount an employee may recover from an employer for unauthorized medical expenses from $500 to $1,500. The bill would have allowed the employee to receive an amount to defray their expenses and a per diem rate for legislators. The bill would also require an employer to pay the actuals costs of transportation rather than the amount prescribed for state officers and employees in statute. Currently, all medical expenses related to a worker’s compensation claim must be authorized by an employer before they can be charged back to an employer.
Kansas Act Against Discrimination – HB 2130 remains alive in the Federal and State Affairs Committee. HB 2130 would amend the Kansas Act Against Discrimination to prohibit discrimination in employment, housing, and public accommodation based on a person’s sexual orientation, gender identity, or expression. No hearing has been scheduled on the bill. A companion bill, SB 84, which was co-sponsored by all 11 Senate Democrats, the 1 Independent and 4 Senate Republicans, has died having not met the deadline for consideration in the first house.
Employment Related Bills – Several employment related bills have now died for failure to meet the deadline for consideration of bills in their house of origin. HB 2186 provided that any employer that provides sick leave benefits to an employee, must allow the employee to use the sick leave for absences because of an illness, injury or medical appointment of his or her child, stepchild, spouse, domestic partner, sibling, parent, mother-in-law, father-in-law, grandchild, grandparent or stepparent. The bill would require the sick leave be on the same terms upon which the employee is able to use sick leave benefits for the employee’s own illness, injury or medical appointment. HB 2253 would have allowed a plaintiff to be awarded any costs incurred, including attorney fees, as part of the judgement relating to unpaid wage claims. HB 2263 would have prohibited any public or private employer from denying earned maternity leave benefits after an employee has given notice of intent to take maternity leave. The bill would include employees who are terminated or subject to disciplinary action while on leave after giving notice. Finally, HB 2324 would have created a public policy in Kansas that any non-disclosure agreement or any agreement governing post-employment benefits entered into by an employee and an employer could not include any provisions imposing damages, penalties or loss of benefits against the employee for communicating any alleged sexual abuse or sexual harassment committed against the employee by another employee or officer of the employer.
Minimum Wage Increase Bills – Bills that would have incrementally increased the minimum wage in Kansas over the next several years to either $13.00 and $15.00 per hour have also died having not met the turnaround deadline. Those bills include HB 2022 and SB 141 which would also provide for increases in each year thereafter pursuant to a formula set out in the bill.
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.