May 2011 Legislative Report

By Ken Daniel
May 24, 2011

Machinery, Equipment, and Software Expensing.  Today Governor Brownback is signing House Substitute for Senate Bill 196. One feature of this bill allows an expense deduction against Kansas taxable income for machinery, equipment and certain canned software purchased starting in tax year 2012. Any excess deduction can be used as a net operating loss for state income tax purposes.

Eventually the state will recover all of that money except for the effects of interest.  In the meantime, Kansas businesses will have more money for operations and expansion.

WORKER’S COMPENSATION.  The worker’s compensation bill that small business supported passed, pretty much with no significant changes, and has been signed by the Governor.  This bill:

  • Ends payment of unwarranted claims by raising the threshold required for an incident to be compensable under the Work Comp Act.
  • Overturns the Bergstrom, Tyler, and Fernandez decisions which have caused so much chaos in the work comp system.
  • Clarifies that employers are entitled to a credit for pre-existing conditions.
  • Raises the benefit caps for the injured worker.
  • Preserves the exclusive remedy provision.
  • Adds clarity in defining the date of accident.
  • Retains employer choice of physician.
  • Removes the opportunity for multiple total disability claims.

HEALTH INSURANCE.  House Bill 2182 became a much larger bill when about a dozen bills were combined at the end of the session. The portion of most interest to us was that the bill provided the “Health Care Freedom Act”, which provides that no person, provider, or employer can be forced to participate in any health care system or to purchase insurance. 

FINAL BUDGET.  Provides a $50 million or $70 million ending balance, depending upon whether the “surprise” $20 million received in April is counted or not.  Remember that we started Fiscal 2011 with a projected $550 million negative balance budget for 2012.  School lobbyists and their minions sought to grab additional money for K-12 education, but were defeated in those attempts.

UNEMPLOYMENT INSURANCE.  The Secretary of Labor wanted a provision that would raise the wage base to $9,000 next year, $10,000 the year after, and $11,000 the year after that.  The rationale is that this would rebuild the Unemployment Insurance Fund very rapidly, probably by 2015.  However, remember that 100% of this “rebuilding” money will come from employers, and 100% of Kansas employers will experience a 37.5% increase in U.I. taxes in the 3rd year using this method.  This is at a time when the U.S. and Kansas economies are in the tank and businesses need that money to survive in the meantime.

This did not pass, however.  The base will stay at $8,000 for the next 3 years.

The elimination of payments for the first week was removed, as was the “trailing spouse” provision.

REGISTRY ISSUE.  Energy remains high to move forward on a registry program – we will continue to work on this bill as the next Session starts.