2019 Kansas legislative session summary
The construction industry no doubt dodged some bullets this session as so much of legislators’ time and attention was devoted to taxes, spending, school funding and other key issues facing the Kansas Legislature. Some 660 bills were introduced in the House (419) and Senate (241) this year. A relatively small number of bills became law this session as Governor Laura Kelly signed 38 House bills into law, one became law without her signature and another 28 Senate bills were signed into law. The governor’s veto of an important tax relief bill was narrowly sustained while her veto of certain spending line items was overridden on the May 29 formal “sine die” end to the 2019 legislative session. Following are brief summaries of bills of interest to the building construction industry. The effective date for all signed bills is July 1 unless otherwise indicated below.
BILLS REGARDING LOCAL CONTROL OF WAGES PAID FOR CONSTRUCTION STALL
Legislation Did Not Pass
Several bills that would have provided local control of wages were introduced this session, but 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 House Bill 2017 would have repealed current law that prohibits city, county or local governments from enacting any ordinance or resolution that would, among other things, require compensation or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 House Bill 2061 would also have repealed the current prohibition on municipal regulation of minimum wages. House Bill 2060, would have repealed the current prohibition on municipal regulation of paid leave for employees and would have allowed municipal or county governments to enact an ordinance that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 REPEALER IS IGNORED
Legislation Did Not Pass
House Concurrent Resolution 5008 would have repealed the “right to work” amendment (section 12 of article 15) to the Kansas Constitution if adopted by two-thirds of the members of each house and if a subsequent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. The prospects for the first step of that process happening were virtually nonexistent, however, given the composition of the current Kansas Legislature and the resolution died in the House Commerce, Labor and Economic Development Committee where it was referred. No hearing was held on the proposed resolution.
PROPOSAL TO REINSTATE SALES TAX EXEMPTION FOR CERTAIN CONSTRUCTION FAILS
Legislation Did Not Pass
On Feb. 14, the Association provided testimony in support of House Bill 2131 which would have reinstated the Enterprise Zone sales tax exemption (that expired on Dec. 31, 2011) 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 have been required to create at least two jobs, nonmanufacturing businesses would have been required to create at least five jobs, and retail businesses would have been 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. Although aimed at rural areas of the state it was indicated that the provisions of the bill could apply to other areas as well. An extremely high projected revenue cost to the state ($118,000,000 average per year) reported by the Department of Revenue likely caused the bill to die in committee.
NEW LAW DELAYS ENFORCEMENT OF SCRAP METAL THEFT REDUCTION ACT
Legislation Passed
The Conference Committee Report on House Bill 2248 was adopted by the Senate (39-0) and House (110-11) on May 4 and approved by Governor Laura Kelly on May 16. As originally introduced, HB 2248 would have amended law regarding the operation of all-terrain and work-site utility vehicles. The Conference Committee struck those provisions, however, and added the contents of Substitute for SB 219 regarding the Scrap Metal Theft Reduction Act, with further modifications. Among other things, the bill sets a July 1, 2023 expiration date for the Act and delays or makes unenforceable certain provisions until July 1, 2020. This new law delays the ability of the Attorney General, upon finding a scrap metal dealer has violated any provision of the Act, to impose a civil penalty of not less than $100 nor more than $5,000. It also delays requirements that a scrap metal dealer obtain a copy of an identification card of a seller of scrap metal and a photograph of the item or items being sold and a prohibition on certain actions related to purchasing and disposing of scrap metal. The law establishes the Scrap Metal Data Repository Fund (Fund) in the State Treasury, to be administered by the Director of the Kansas Bureau of Investigation (KBI). The KBI is given rule and regulation authority to provide which information and photographs will be entered into the database and the manner for submitting the information and photographs to the KBI. In statutes regarding scrap metal dealer registration, the new law also removes criminal history records check and fingerprinting requirements for persons filing for registration.
BILL REQUIRING MONITORING OF BILLABLE HOURS FAILS
Legislation Did Not Pass
The Builders’ Association and Kansas City Chapter, AGC strongly opposed both Senate Bill 56 and House Bill 2115 which would have affected all state agency contracts greater than $100,000 and would have required contractors to 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 to contractors. Fortunately, the Department of Administration shared our view that adoption of this legislation would cause companies to elect not to submit bids for contracts, particularly those that view the requirements as too intrusive or difficult to implement as well as small businesses that may not have the means to meet the requirements. Limiting the number of bidders by the imposition of such requirements would reduce competition for such projects and increase cost. In addition, the Office of the Attorney General indicated that the bill would likely result in outside counsel being unwilling to contract with the state for legal services. Legislation such as this has been proposed by the software program developer in many states across the country. Fortunately, both of these intrusive and self-serving bills died in committee in their house of origin.
ECONOMIC DEVELOPMENT AND TRANSPARANCY BILL SIGNED INTO LAW
Legislation Passed
The Conference Committee Report on House Bill 2223 was approved by the Senate (37-0) on April 5, approved by the House (123-0) on May 2 and signed by Governor Kelly on May 13. Originally introduced as a bill amending existing law concerning farm winery licensees, HB 2223 became the vehicle for authorizing a systematic and comprehensive review, analysis, and evaluation of state economic development programs every three years and establishes an online database to collect and disclose non-confidential data on the recipients of the tax credits and incentive programs in the state.
The bill extends, from 15 to 25 years, the maximum maturity on bonds issued to finance projects under the Kansas Rural Housing Incentive District Act. Subject to appropriation and as directed by the Legislative Post Audit Committee, the Post Auditor must include in each evaluation the following: a description of the economic development incentive program, including its history and goals; a review of the effectiveness of the incentive program; an estimate of the economic and fiscal impact of the incentive program; and any other information the Committee deems necessary to assess the effectiveness of the program. The Department of Commerce must establish a database for the purpose of disclosing information on economic development incentive programs and must provide data on certain programs providing more than $50,000 in annual incentives. The database must contain the names and addresses of recipients receiving Sales Tax and Revenue (STAR) Bond benefits, as well as the names of principals and officers for each STAR Bond project developer; the 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; the program cost and return on investment including assumptions used to calculate such return; annual reports; and the amount of incentives by county.
NEW LAW REGARDING UNDERGROUND UTILITY DAMAGE PREVENTION DUTY TO MARK
Legislation Passed
House Bill 2178 was amended and passed by the Senate (38-1) on March 27 and the House concurred with the Senate’s amendments (120-0) on April 1. This bill was signed into law on April 11 and became effective upon its April 18 publication in the Kansas Register. This new law amends the Kansas Underground Utility Damage Prevention Act regarding the duty of an operator to mark the tolerance zone (i.e., the area not less than 24 inches of the outside dimensions in all horizontal directions) around an underground facility. Specifically, the bill amended the definition of “operator” to specify that an electric public utility is not considered an operator of any portion of an underground facility that is on the other side of the point where ownership of the facility changes from the electric public utility to another person or entity. If the operator of a facility used for transporting, gathering, storing, conveying, transmitting, or distributing gas, electricity, communications, crude oil, refined or reprocessed petroleum, petroleum products, or hazardous liquids is also a provider of electricity, the duty of the operator to mark the tolerance zone does not extend to another person’s or entity’s side of the point where ownership of the facility changes from the operator to such other person or entity. The bill also clarified the definition of “operator” to include any person who leases (rather than operates) an underground Tier 1 or Tier 2 facility. On and after July 1, 2019, the notification center established by the Act is required to notify any person or excavator requesting identification of the location of underground facilities that utilities are only required to identify the location of utility-owned facilities and not the location of privately-owned facilities.
FIRE SPRINKLER INDUSTRY ACT DERAILED
Legislation Did Not Pass
As noted in our mid-session report, House Bill 2026 ran into 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 in committee. Most of the opposition concerned infringement of a statewide program on local sprinkler regulations and on city and county home rule authority. The Builders’ Association and Kansas City Chapter, AGC also opposed HB 2026. Among other things, HB 2026 would have required 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 have been 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 required fire sprinkler companies to possess a license and every company would have been 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. Application fees for licenses and license renewals were required and 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. The bill further required that 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.
BOE-SPECIFIED PRODUCTS OR INSTALLATION METHODS PROPOSALS DIE
Legislation Did Not Pass
Senate Bill 148 and its companion bill in the House, House Bill 2207, both died in committee 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 could specify a particular product or particular installation method. The board could not specify a proprietary product or proprietary installation method however. 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, these measures provided that, 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.
REHABILITATION OF ABANDONED PROPERTY
Legislation Did Not Pass
House Bill 2314 was approved (97-27) by the full House on March 26 but died in the Senate Committee on Ethics, Elections and Local Government at the close of the session. Among other things, this bill would have revised current 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. The definition of “abandoned property” for residential real estate would have been modified to mean property that has been unoccupied continuously for 365 days and has a blighting influence on surrounding properties. “Blighting influence” would have been 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 have allowed a court to extend the time a defendant has to come into compliance with all applicable codes and prohibited the striking of any affirmative defense solely on the basis of delinquent property taxes.
OTHER BILLS OF INTEREST
Legislation Did Not Pass
Fair Share Act – HB 2175 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. HB 2175 died in the House Commerce, Labor and Economic Development Committee.
Legislation Did Not Pass
More Employment Related Bills – Several other employment related bills of interest also died in their house of origin this session. HB 2253 would have allowed a plaintiff to be awarded any costs incurred, including attorney fees, as part of a judgment relating to unpaid wage claims. 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 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.
Legislation Did Not Pass
Kansas Act Against Discrimination – HB 2130 and a companion bill, SB 84, would have amended 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 was scheduled on either of these bills.
Legislation Did Not Pass
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 also died in their house of origin. Those bills included HB 2022 and SB 141 which would have also provided for increases in each year thereafter pursuant to a formula set out in the bill.
Legislation Did Not Pass
Numerous Harmful Workers Comp Bills Fail – A number of workers compensation bills of interest failed to pass this session. 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 and 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. SB 172 would have increased the limit of healthcare expenses allowed as a 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 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 actual 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.
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.