The 2011 Kansas legislative session was all about the loss of revenues coming into the state and crafting a budget to reflect such revenue decline.  The session began with the House Appropriations Committee and Senate Ways and Means Committee failing to agree on an amended 2011 budget needed because of waning revenues for the remaining 2011 fiscal year.  Without such an agreement the pressure was on to not only build a FY 2012 budget, but also balance the current year budget.  The final 2012 budget considering All Funds is nearly $14 billion, a drop of nearly $1 billion from the FY 2011 budget.  Much of the reduction is a result of the loss of federal funds.  This reduction follows the $1billion in state spending cuts made the previous two years.  There were several challenging options as the Governor presented his recommendations for FY 2012.  The Senate and House approved a joint 2012 budget, with a $72 million ending balance, late in the night of the last day of the session. 

Governor Brownback’s economic development initiatives fared well during his first legislative session.  His comprehensive package included a new economic development model - expensing, a full income tax deduction provided in the year of equipment purchase and use rather than spreading the deduction over several years.  His plan also proposed a new Job Creation Program Fund, a closing fund to assist the state in securing new investment and jobs for Kansans.  The continuation of the High Performance Incentive Program (HPIP) was approved.  The threshold to utilize the HPIP incentive was increased from $50,000 to $1million in the state’s urban areas.  The number of years HPIP tax credits can be carried forward was extended from the current 10 years to 16 years to keep companies from losing the credits during trying economic times.  The yearly recertification process was also simplified to make the incentive more workable for Kansas businesses.  Unfortunately proposed changes to the incentive to make it more useful for unitary corporations did not pass this year.  It will be revisited next session.  The Topeka Chamber supported these bills.

In order to accomplish this proposal the Governor’s plan eliminated the 25% machinery and equipment refundable tax credit for property taxes paid, the Business and Jobs Tax Credit, certain associated sales tax exemptions, and the Kansas Economic Opportunity Fund.  The IMPACT program will phase out with the intended utilization of the future 2% withholding dollars to fund the Jobs Creation Program Fund.

Another economic development program, Promoting Employment Across Kansas (PEAK) was amended this legislative session.  The law was expanded to allow for its use for retention purposes.  The retention allowance is set for a limited timeframe with the understanding the Job Creation Program Fund will grow and be available for retention purposes in a couple years.  Added to the law was language allowing for PEAK’s use to incentivize certain non-profit corporations and third-party employers.  It also provides a 95% individual income tax exemption for Kansas resident business owners in certain circumstances when new jobs will be created.  The annual program cap was increased from $4.8 million to $6 million.  The Topeka Chamber has been very supportive of the PEAK program and the improvements over the last three years.

The Statute of Limitations to resolve sales tax issues was increased from the current 1 year to three years.  The 1-year limitation was established in 2009 to save the state funds, but immediately became problematic.  The Topeka Chamber opposed the change in 2009 and supported the change back to three years.

One of the most critical issues this session for the Topeka community was the proposed closing of the Kansas Neurological Institute (KNI), a cluster of group homes for severely developmentally disabled citizens from across the state.  The closure was proposed as a cost-cutting measure.  The Shawnee County Legislative Delegation along with the City of Topeka, the local medical community and the Topeka Chamber worked alongside the families of the residents from KNI and the religious community to express collective disapproval of this plan.  In addition to local legislators, several legislators from around the state were allies in this effort.  With outstanding efforts KNI received operational funding for the next fiscal year.  There will be an investigation into the actual costs to transfer residents from the KNI facilities to community-based housing should adequate housing exist.  There is great speculation that the insistence of cost savings is not only inaccurate but it will likely cost more to move such fragile citizens to other community settings.  The local medical community indicated if KNI was closed the impact on local hospitals would be catastrophic; doctors who work with KNI did not mince words in describing the impact such a move will have on their KNI patients and the Topeka community.  The special care KNI residents receive would be impossible to replicate in the community for most of the residents, resulting in increase medical needs with no other place to receive such services except in a hospital.  Unfortunately closure threats may surface again next session.  The Shawnee County Legislative Delegation deserves great credit for holding onto KNI.

A major agreement to rewrite Kansas Workers’ Compensation laws was accomplished this year.  Prior to the beginning of the session, attorneys representing business and labor interests worked out a compromise to accomplish many long desired changes to Workers’ Compensation laws.  Some of the major points in the legislation are:

• The definition of "accident" now includes the requirement that it be traumatic.  Also, it must be identifiable by time and place, must produce symptoms of injury, and must occur during a single work shift.       

• There's a definition of "repetitive trauma" that says it comes under work comp if it occurs as the result of repetitive use, cumulative traumas or micro traumas.  The repetitive nature must must deomnstrated by diagnostic or clinical tests.  It must also be the prevailing fractor in causing the injuury.  It must have occurred at work.       

• Date of accident is established in repetitive trauma cases.  The previous version of work comp law did not address this.       

• One of the most significant workers compensation changes is the requirement that work be the prevailing factor in causing the injury, medical treatment and disability.  The injured worker has the burden of proving that work was the prevailing factor.      

• The new legislation identifies events that are no longer compensable under Kansas workers compensation, including:

  •  Aggravations, accelerations, or exacerbations of preexisting conditions

  • Personal risks

  • Idiopathic events (arising from an unknown or obscure cause)

  • Voluntary participation in horseplay with another employee

  • Voluntary participation in a fight with another employee, whether work-related or not

  •  Reckless violation of workplace safety rules. 

•  A worker with a positive drug or alcohol test is pressumed imp[aired and the burden shifts to the injuried worker to prove their impairment did not contribute to the workplace accident.      

• The law now outlines when drug tests can be admitted into evidence.

• Employers who take drug samples must collect the sample within a reasonable time after an accident or injury and part of the sample must be split and made available to the employee within 48 hours of a positive test.

• Addressing the "Casco case," the loss of (or loss of use of) the bilateral upper extremities, bilateral lower extremities or both eyes will now be considered a general or whole body injury.  Under Casco, these were considered separate injuries.     

• The legislation sets thresholds that determine how much impairment qualifies for a work disability.

• Determining wage loss of an injured worker has changed.  The court must determine what the injured worker was earning before the injury and compare that with what the worker was capable of earning after the injury.  The actual or projected value of fringe benefits is to be included in past-injury wage-loss comparison.      

• There are significant changes to caps on benefits, which have changed little since 1993.  The changes to the caps are:        

  • $300,000 in death benefits and $1,000 to defray the cost of a conservator if one is needed

  • Permanent total disability is limited to $155,000, plus an injured worker cannot receive more than one award of permanent total disability

  • Temporary total disability is limited to $130,000

  • Permanent partial disability is limited to $130,000

  • Functional only claims are limited to $75,000. 

• Time of notice has changed.  An injured worker now has 30 days after the date of injury to notify the eomployer they have been injured on the job under most circumstances.

• Notice must now include the time, date, place, person injured and details of the injury.

• The effective date of the act is May 15, 2011. 

The Topeka Chamber actively supported the compromise developed for the Workers’ Compensation system.  The improved system should benefit all businesses. 

Another major issue in the House and Senate was Unemployment Compensation.  Kansas was forced to borrow funds from the federal government to fulfill unemployment compensation needs.  This situation resulted from the growing numbers of unemployed in Kansas during the nation-wide recession.  The interest payments on these borrowed funds must begin this fall.  In the Senate bill, provisions were added to phase-in an increase in the base wage-rate to provide funds to pay off the federal loan.  The House version of the bill did not include the increase in the base wage-rate. Late in the session, the Senate voted to agree with the House version of the bill to forestall an attempt by the House Conference Committee negotiators to force the Senate to accept a separate bill called the Pay-Check Protection Act which prohibited employee contributions made as payroll deductions for Political Action Committees. These issues are expected to be revisited next session.  Additionally, language in the approved bill reinstated the “waiting week” and eliminating the “trailing spouse benefit” (except for military spouses); the plan also increased the negative balanced rate groups and surcharge.  The Chamber supported the needed changes in the UI bill to pay off the loan and make the UI program and trust fund sustainable.

Late in the session as the House Appropriations Committee worked on its budget plan, a provision included reduced funding for Washburn University by $5.5 million, over half of the current state dollars Washburn receives.  WU and the Shawnee County Legislative Delegation worked diligently to eliminate that cut.  The Conference Committee agreed to reinstate the funds in their final budget negotiations.  Your Chamber contacted legislators advocating for WU funding.

A trying legislative action over recent years has been numerous raids on statewide transportation maintenance and improvement funds.  Last year a new T-WORKS Transportation Plan was approved and funded with a portion of the sales tax increase also instituted last year.  Throughout the state there are numerous unmet transportation infrastructure needs.  The transportation community, local chambers of commerce, cities and counties strongly supported T-WORKS and the funding proposal with the hope that there would be no further shifts in dedicated transportation funding for other purposes.  However to meet the shortage of revenues, the Governor proposed, in his budget, a $200 million transportation account transfer to the general fund with the promise that this fund raiding will end.  With that promise those who had advocated for the new plan and funding last session acquiesced.  Unfortunately, in the final hours of legislative budget negotiations, an additional $5 million was taken from transportation funding for the general fund.  Continued raids of this fund will deplete it in such a way that the state will not be able to keep its promise to Kansans that a number of transportation needs across the state will be met.

An Immigration proposal was debated by the House Judiciary Committee.  The chair of the committee and the new Secretary of State presented a bill to require the federal E-Verify program for all government new hires, state contractors and grant recipients.  The definition of contracts and grants was overly broad impacting virtually all state transactions bringing many businesses under such mandate.  The bill allowed third parties to bring actions against agencies or municipalities for failure to enforce the law with penalties up to $5000 per violation. This would allow any outside parties to report on assumed immigration violations causing businesses significant disruptions and costs to defend themselves even if not guilty of the acquisition.  The bill required local law enforcement to validate citizenship status upon a lawful stop and when someone is found without approved identification on their person they would be incarcerated in local jails/prisons until their status was verified or they were picked up by federal officials.  The cost to local government to replicate what the federal government is currently tasked to do would be an expensive new directive to local units of government.  Taxpayers, businesses included, would be paying the bill for increased costs to carry out the mandate and for dealing with the inevitable litigation that would follow.  Additionally local officials would be required to incarcerate persons who have committed civil violations or possibly a misdemeanor (not a felony).  The bill created a new crime of harboring/shielding an alien.  The crime would be a misdemeanor unless there were 10 or more persons involved then violators could be convicted of a felony.  If an employer provides housing for workers and families, the employer can only check the status of the employee, not the family members, so the employer could become a criminal without any way to prevent such activity.  Additionally there was concern that churches and non-profit agencies would be out of compliance if they administered aid to non-residents in their mission to assist people.  This bill and others proposed placed additional regulatory burdens on businesses and local units of government.  These would be unfunded mandates to local governments (cities, counties, townships, fire districts, drainage districts, etc.) that have no funds to carry out such mandates; the costs for such legislation falling squarely on property taxpayers.  No immigration bills made it out of committee, but there is little doubt this issue will be re-visited next year.  In the meantime a study is underway to determine the actual economic impact of immigrants and undocumented immigrants in Kansas and Missouri.  The study will be completed for the next legislative session. The position of the Topeka Chamber and the coalition of trade associations, chambers of commerce, and individual businesses is that immigration issues are the domain of the federal government and should be addressed by the federal government.  Litigation is ongoing regarding many of the provisions within the bill debated this year, some of which has been adopted by other states.

There were many other issues addressed by the Kansas Legislature during the 2011 Legislative Session.  Many bills were directed to specific business interests.  The Topeka Chamber testified, communicated with legislators the views of the business community and advocated for the positions adopted by the Board of Directors.  The Shawnee County Legislative Delegation was extremely successful and helpful in addressing a number of issues affecting our community.  The delegation remains attentive to the needs of the Topeka/Shawnee County business community.  The Greater Topeka Chamber of Commerce appreciates their assistance and understanding of issues affecting our community and businesses.  The Topeka Chamber also appreciates the assistance received from numerous business representatives in communicating to their elected officials.

Your Topeka Chamber remains involved and continues to communicate with elected officials and represents business interests on your behalf.

This report prepared by Christy Caldwell, Chamber vice president government relations.  For additional information contact her by email This e-mail address is being protected from spambots. You need JavaScript enabled to view it or by phone, 785.234.2644.