Senate building case for county, state payouts to businesses undercut by COVID-19 mandates

Counties to refund property tax, state to settle claims with $100M fund

By: - March 11, 2021 4:33 pm
Scott Schneider, a lobbyist with the Kansas Restaurant and Hospitality Association, said the 2021 Legislature needed to develop mechanisms for county and state governments to compensate businesses forced to close or reduce services during the COVID-19 pandemic. (Screen capture/Kansas Reflector)

Scott Schneider, a lobbyist with the Kansas Restaurant and Hospitality Association, said the 2021 Legislature needed to develop mechanisms for county and state governments to compensate businesses forced to close or reduce services during the COVID-19 pandemic. (Screen capture/Kansas Reflector)

TOPEKA — Senate Republicans picked up the torch Thursday of an effort to force counties placing COVID-19 restrictions on businesses to reimburse owners for payment of local property taxes and to require the state to establish a $100 million claims fund for benefit of businesses shut down or curtailed by executive order during the public health disaster.

Two bills in hands of the Senate Assessment and Taxation Committee were characterized by supporters as essential to holding state and local governments accountable for zealous overreaches that damaged or destroyed businesses. These measures, Senate Bill 149 and Senate Bill 286, could be viewed as part of a collective response by the Republican-led House and Senate to economic hardships arising from the pandemic. The GOP also views it as an opportunity to force Gov. Laura Kelly to accept income tax breaks for corporations and wealthy individuals she vetoed in the past.

Scott Schneider, who represents the Kansas Restaurant and Hospitality Association, said the Senate bills reflected reality of pending and future lawsuits filed by businesses against county and state governments that relied on emergency powers to mandate the largest taking of its kind in state history. He said one of every six restaurants in Kansas wouldn’t survive the pandemic.

“If the government takes your business for its purpose, it owes you something,” Schneider said. “Government shouldn’t tax businesses that it also stands down. It’s a very basic concept.”

Since March 2020, nearly 5,000 residents of Kansas who contracted the coronavirus have died.

Jay Hall, general counsel to the Kansas Association of Counties, said the Legislature needed to be wary of requiring counties to issue property tax rebates to businesses harmed by COVID-19 mandates because it could shift the tax burden more toward homeowners. (Screen capture/Kansas Reflector)
Jay Hall, general counsel to the Kansas Association of Counties, said the Legislature needed to be wary of requiring counties to issue property tax rebates to businesses harmed by COVID-19 mandates because it could shift the tax burden more toward homeowners. (Screen capture/Kansas Reflector)

Senate Bill 149 would allow the owner of a building with a business on the premises to apply to the county commission for reimbursement of property taxes paid while under order to temporarily close, reduce occupancy levels or restrict hours of operation.

The bill would direct county treasurers to make repayment to property owners filing a valid application for tax year 2020 and beyond. A business that was shut down could qualify for 1/12th of total property taxes for each month ordered to close its doors. In regards to operational caps, a business could be repaid an amount that took into account capacity limitations.

Jay Hall, general counsel with the Kansas Association of Counties, said the organization was opposed to legislation that forced counties to issue property tax refunds. One consequence of that approach will be higher residential property taxes, he said.

The state would be held financially responsible for business issues in Senate Bill 286. It calls for a $100 million fund to pay court judgments or negotiated settlements with businesses undermined by Kelly’s executive orders during the COVID-19 crisis. The bill would create the unprecedented compensation account, but also deliver state income tax credits to businesses and extend loan forgiveness options through the Kansas Department of Commerce.

Eric Stafford, a lobbyist with the Kansas Chamber, said existing state law presented a path for business owners seeking compensation for government of orders leading to economic harm to their business. He pointed to the conclusions of Attorney General Derek Schmidt that actions by the Democratic governor would likely prompt a wave of lawsuits by owners of Kansas businesses. Schmidt is a candidate for the GOP nomination for governor and could face Kelly in the November 2022 general election.

He said the 2021 Legislature had an opportunity to offer businesses in Kansas an equitable alternative to becoming a plaintiff in a lengthy court battle.

“If your business is used by the government, used to stop the spread of COVID, you have the right to compensation,” Stafford said.

Stafford, however, said the Kansas Chamber objected to Senate Bill 76 that would be known as the “golden years” property tax freeze act. He said the business lobbying organization was concerned the bill’s emphasis on residential property tax relief could result in more pressure on property taxes paid by commercial property owners.

Sen. Tom Holland, D-Baldwin City, said the state should adopt the equivalent of a local property tax freeze for benefit of homeowners 65 or older and disabled veterans. (Screen capture/Kansas Reflector)
Sen. Tom Holland, D-Baldwin City, said the state should adopt the equivalent of a local property tax freeze for benefit of homeowners 65 or older and disabled veterans. (Screen capture/Kansas Reflector)

Under this bill, a person qualifying for residential property tax relief would pay the assessed county property tax and then apply to the state for a rebate on that amount. This approach would require passage of a state law and avoid necessity of an amendment to the Kansas Constitution crafted to restrain authority of all 105 counties.

This tax benefit would be available to Kansas residents 65 years of age or older or disabled veterans who were honorably discharged and sustained a permanent disability on active duty. A qualifying person would have household income of less than $50,000 and a residential property valued below $350,000. The maximum benefit a taxpayer could claim under the legislation would be $2,500 annually.

The idea was raised several years ago by Sen. Tom Holland, a Baldwin City Democrat, based on recollections of a conversation with a 77-year-old man living east of the city. The elderly constituent was on a fixed income and shared concern about potentially being forced from his home due to rising property taxes.

“That has stuck with me forever,” Holland said. “It’s imperative that we provide  … home security for our fixed-income seniors and our disabled veterans. This provides peace of mind.”

Sen. Virgil Peck, a Republican from Havana, said income, property value and annual benefit limits in the bill could be adjusted by the Legislature if necessary. He said a key element of the bill was the benefit to disabled veterans.

“If there’s anyone from America that is owed something by Americans, it is our veterans,” he said.

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Tim Carpenter
Tim Carpenter

Tim Carpenter has reported on Kansas for 35 years. He covered the Capitol for 16 years at the Topeka Capital-Journal and previously worked for the Lawrence Journal-World and United Press International. He has been recognized for investigative reporting on Kansas government and politics. He won the Kansas Press Association's Victor Murdock Award six times. The William Allen White Foundation honored him four times with its Burton Marvin News Enterprise Award. The Kansas City Press Club twice presented him its Journalist of the Year Award and more recently its Lifetime Achievement Award. He earned an agriculture degree at Kansas State University and grew up on a small dairy and beef cattle farm in Missouri. He is an amateur woodworker and drives Studebaker cars.

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