A REVIEW OF THE 2016 KANSAS LEGISLATIVE SESSION
When the 2016 Kansas Veto Session ended at 3:28 a.m. on May 2nd it ended the shortest legislative session in Kansas since 1974. The 73-day session ended 17 days ahead of schedule and stands in sharp contrast to the grueling 114-day session last year. Legislators returned to Topeka for the formal and very brief “sine die” adjournment on June 1. A special summer session has now been called by the governor in response to the Kansas Supreme Court ruling that the local option budget portion of the legislature’s school finance formula is unconstitutional. A total of 307 House bills and 207 Senate bills were introduced this legislative session and a few of the 573 total bills carried over from the 2015 legislative session, like Senate Bill 249 immediately below, became vehicles for important legislation. Following are summaries of legislation of interest to the building construction industry. All legislation is effective on July 1 unless otherwise noted.
PUBLIC-PRIVATE PARTNERSHIP (P3) AGREEMENT BILLS SURFACE THEN DISAPPEAR
Budget Bill Passed
The final and most anticipated piece of legislation this session was the passage of the omnibus budget. That came in the form of House Substitute for Senate Bill 249. Before this measure became the budget bill, however, it was the vehicle that, among other things, would have created a commission to review so-called P3 agreements during the interim between sessions and make recommendations to the 2017 legislature. The P3 language had previously been amended into House Bill 2703and inserted into the House substitute before it was again gutted and made the budget bill.
In its final form, House Substitute for SB 249 narrowly passed the House (63-59) and Senate (22-18) just prior to the close of the veto session at about 3:30 a.m. on May 2. The bill included several budget provisions approved by the Senate Ways and Means and House Appropriations Conference Committee. Governor Brownback has to use his allotment authority to make significant additional cuts to balance the budget. Now, in addition to the governor’s cuts, given the Supreme Court’s recent equity ruling on the school finance formula and shortfalls in projected revenues at the close of the fiscal year, further cuts must now be made. In another significant development, efforts to roll back the 2012 sales tax exemption on nonbusiness wage income were unsuccessful in spite of the budget situation. Governor Sam Brownback approved H Sub for SB 249 on May 18 with the exception of his line item veto of language that would have barred any consideration or approval of STAR bond projects in WyandotteCounty until Fiscal Year 2018, including a project that would relocate the American Royal from Kansas City to WyandotteCounty. No motion to reconsider this line item veto was made during sine die and the veto was sustained.
House Bill 2407, which would have allowed public-private partnership agreements on state infrastructure projects, died in the House Federal and State Affairs Committee after a hearing on the bill was cancelled. Finally, Senate Bill 475, which would have amended the Kansas Fairness in Public Construction Act to require contractors to provide public owners with payment and performance bonds on projects of $25,000 or more, died in the Senate Ways and Means Committee. We expect similar legislation to be introduced in the 2017 legislative session.
70% KANSAS WORKFORCE PREFERENCE BILL FAILS
Legislation Did Not Pass
As previously reported,House Bill 2574failed to meet the February 23 turnaround deadline and died in the House Commerce, Labor and Economic Development Committee. The Builders’ Association and Kansas City Chapter, AGC have actively opposed these “70% Kansas workforce“ bills for several years now as they would have required all contractors entering into a contract with a state agency for a project with an annual cost of $100,000 or more, or performing work on a STAR bond project, to have their workforces, and their subcontractors’ workforces, made up of at least 70% Kansans. Such a preference would restrict competition and even bar Kansas contractors located near state lines who may not have at least a 70% Kansas workforce from competing for such work in their own state. This legislation would not only bar most qualified out-of-state contractors from competing for such work in Kansas, it would also hurt Kansas contractors and subcontractors who would like to compete for similar work in other states because invariably other states’ “reciprocal” preference laws would be passed which would impose the same or similar restrictions in favor of their residents. We have historically opposed preference laws because open competition across state lines and across the boundary lines of political subdivisions within a state is essential to the building construction industry. In noting our opposition we have also advised legislators that a similar Missouri law was recently found to be unconstitutional.
PROPERTY TAX LID CHANGES APPROVED
Legislation Passed
The Senate Substitute for House Bill 2088, formerly introduced as Senate Bill 316, was passed by the House (112-5) and Senate (37-3) on April 29 and signed by the governor on May 9. This legislation modifies portions of a property tax reform package that passed last year and moves up the effective date from January 2018 to January 2017 for requiring voter approval before cities and counties can raise property taxes higher than the rate of inflation. The bill contains a number of exemptionsfrom the computation involved in determining whether mandatory elections arenecessary, including construction of new structures, improvements, remodeling or renovation of existing structures, or improvements on real property, exclusive of ordinary maintenance or repair. New clarifying language stipulates that the inflation measure utilized will be a five-yearrolling average, and under no circumstances could a figure be utilized of less than zero. Tax-lid elections couldoccur as special elections, as part of regularly scheduled elections held in August or Novemberof election years, or as elections held pursuant to the provisions of the Mail Ballot Election Act(MBEA). An existing MBEA restriction is relaxed to authorize cities and counties to hold tax-lidrelated elections under the MBEA on the same day. Cities and countiesare responsible for paying all costs associated with conducting tax-lid elections.
IMMIGRATION-RELATED BILLS BASICALLY IGNORED THIS YEAR
Legislation Did Not Pass
A number of immigration related bills were introduced again this year but little attention was given to any. House Bill 2525 would have made it unlawful for an employer to knowingly hire, recruit or refer for a fee for employment an unauthorized alien and significant penalties were set out for repeated violations. An employer’s good faith use of e-verify would provide a rebuttable presumption that the employer did not knowingly hire an illegal alien. Significantly, the bill provided that there shall be no contractor liability for subcontractor violations of the act. This bill died in its committee of origin without being heard. The Builders’ Association and Kansas City Chapter, AGC took a neutral position on this proposal. Several bills prohibiting sanctuary policies and ordinances, Senate Bill450,HouseBill 2466,and HouseBill 2587, were also introduced but only HB 2587 was recommended “do pass” by its committee of origin and that bill was not taken up by the full House.
Employee Scheduling Policies bill approved
Legislation Passed
SenateBill366passed the Senate (32-6) and House (76-45) and was signed into law on May 17. The bill includes a preemptive measure that prohibits cities, counties and local units of government from adopting “fair scheduling mandates” that affect the work schedules of private sector employees, unless required by state or federal law. Under currentlaw, cities, counties, and local units of government are prohibited from enacting or enforcingpolicies regarding private sector employees’ leave, compensation, or other benefits. Political subdivisions are also prohibited from enacting, maintaining, or enforcing anordinance or resolution that would control the purchase price agreed upon between the partiesto a transaction of privately owned residential or commercial property. The bill does not impair the right of a property owner from entering into a voluntaryagreement with a political subdivision that would affect the amounts of rent charged or purchaseprice in return for grants or incentives provided by the political subdivision to the owner. Politicalsubdivisions may not condition the issuance of permits to an owner of private property on anyrequirements that would have the effect of controlling the amount of rent charged or purchaseprice.
ABANDONED PROPERTY BILL VETO SUSTAINED
Legislation Did Not Pass
Although passed by the House (79-44) and Senate (32-8) Governor Brownback vetoed Senate Bill 338on April 11. No motion was subsequently made to reconsider the bill and the veto was sustained. Senate Bill 338 would have expanded the definition of abandoned residential property to include houses that have been unoccupied for at least a year and have a blighting influence on surrounding property. It would have allowed a district court to give a local government or nonprofit group possession of such property. Under current law, residential property must be delinquent on property taxes for two years and must have been unoccupied for 90 days to be considered abandoned and owners can extend the process by making partial payments. In his veto message to legislators the governor characterized the legislation’s goal of creating safer communities laudable but he went on to say that the measure would grant cities the power to craft zoning laws and codes that could unjustly deprive citizens of their property rights without adequate safeguards.
Kansas Bioscience Authority Sale, STAR Bond Reform adopted
Legislation Passed
House Bill2632 passed the Senate (40-0) and House (89-32) and was signed by the governor on May 12. Among other things, this bill authorizes the State Finance Council to oversee the sale of the Kansas Bioscience Authority or substantially all of its assets. The bill also revises provisions of the Sales Tax and Revenue (STAR) Financing Act pertaining to the annexation of area into a STAR Bond district, pledges for future financial support from the State, and the definition of an “eligible area.” The bill allows the Secretary of Commerce to pledge a portion of state sales and use tax revenues to a STAR Bond district; under previous law, the pledge had to be all state sales and use tax revenues. By January 31 of each year, the Department of Commerce, with cooperation from the Department of Revenue, shall report to the Senate and House Commerce Committees on each STAR Bond district for the past three calendar years and year to date information such as: the amount of sales and use tax collected; the amount of bond payments and other expenses incurred; the amount of bonds issued and the balance of the bonds, by district and byproject; the amount of bonds issued to repay private investors, identifying the share ofindebtedness which is financed by private and public financing; the percentages of state and local effort committed to the district; and the number of visitors to the district (identifying the number of in-state and out-of-state visitors).This law became effective on May 19 when it was published in the Kansas register.
ASBESTOS CONTROL ACT APPROVED
Legislation Passed
House Bill2516 was passed by the House (122-0) and Senate (39-0) and signed by the governor on March 24. This bill eliminates requirements for Kansas-specific training and certification of individuals who perform asbestos abatement work. The bill instead requires these individuals to meet federal training requirements, which are identical to current state requirements. The time period for which companies licensed under the Asbestos Control Act are required to keep records of employee training is reduced from six years to three years in order to be consistent with the document retention policies of other Kansas air programs.
OTHER BILLS OF INTEREST
Legislation Did Not Pass
Contaminated Property Redevelopment Act – SenateBill 365was approved 36-4 by the Senate and recommended “do pass” by the House Commerce Committee but was not taken up by the full House. As amended, this bill would have established the Contaminated Property Redevelopment Act, which would allow a purchaser of real property acquired after July 1, 2016, to be released from environmental liability for pre-existing contamination. The bill also would have created a redevelopment program for municipalities. A purchaser would have been allowed to apply to the Kansas Department of Health and Environment (KDHE) for a Certificate of Environmental Liability Release (CELR) by providing certain documentation set out in the bill. A CELR would not relieve the purchaser of the requirements or duties of an applicable environmental use control agreement or risk management plan. A CELR would be revoked or voided if the purchaser failed to meet certain requirements. If fraudulent information was provided to KDHE, the Secretary would be permitted to modify or revoke a CELR, including an order to clean up the site and an administrative penalty of up to $500 per day.
Legislation Passed
Workers Compensation–House Bill 2617was passed unanimously in the Senate (39-0) and House (113-0) and was approved by Governor Brownback on May 9. The bill allows workers compensation claims to be filed electronically and eliminates the requirement for the Department of Labor to maintain a licensed physician on staff. The bill also broadens an exception to the open records exemptions, allowing federal orstate governmental agencies access to medical records and accident reports for the purpose ofchild support enforcement, provided the disclosure would not be open for public inspection. Under previous law, governmental agencies had access to this information solely for fraud andabuse investigations.
Legislation Did Not Pass
Reinstating compensation for the UC waiting week –Senate Bill 433 died in the Senate Commerce Committee. This measure would have made unemployment compensation benefits payable for the one week waiting period upon completion of three weeks of unemployment consecutive to such waiting period.
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 Affairs Director for The Builders’ Association, at 816-595-4121 or . We also encourage you to contact your elected representatives on these pieces of legislation and other issues important to you and your business.