The Kansas Legislature early Saturday morning passed a bill providing potentially hundreds of millions of dollars in compensation to small businesses that were hurt financially during the COVID-19 pandemic.
The bill directs a portion of uncommitted federal COVID-19 relief money coming to the state – as well as cities and counties – for settling claims for government-ordered shutdowns or restrictions during the pandemic.
The amount could be substantial since it requires the state to set aside 25% of its uncommitted federal COVID-19 relief money.
Cities and counties that put restrictions in place during the pandemic would have to earmark 35% of their federal relief money for compensation.
State and local governments are expected to bring in about $2 billion in federal COVID relief money, meaning the bill could be worth about $500 million if it was all unencumbered.
The legislation would only apply to businesses with 50 or fewer employees. Claims would have to be filed from this Oct. 1 through the end of December.
The bill would require businesses filing a claim under the law to forego any civil action against the state or any other government.
A three-person board – appointed by the governor, the House speaker and the Senate president – would play a pivotal role in how rhe money was doled out.
The board would not be subject to the state open meetings and open records law, largely because of the sensitive nature of the private information that businesses would submit to the board for review.
However, the bill requires the joint legislative Committee on Special Claims Against the State to meet and review the claims that were accepted.
The Legislative Coordinating Council, made up of legislative leadership, would have the power to authorize and approve the claims requested by the businesses
Democrats raised questions about whether lawmakers had sufficient time to thoroughly review the bill, whether the process for deciding the compensation was opaque and what happens if the federal COVID-19 money cannot be used for the compensation.
Democratic state Rep. John Carmichael of Wichita led the charge in the House to defeat the bill, raising a number of questions, including who would benefit from the program and whether it was appropriate to lock up the funds of local government
Carmichael criticized the late hour at which the bill emerged, giving lawmakers little time to examine the implications of the legislation.
“Haste makes waste,” Carmichael said. “I don’t want to insult Kansas businesses and Kansas workers, but I don’t want us to do the wrong thing.
“We don’t even have any idea how much money we are spending here,” he said.
“There is no fiscal note. It would be impossible to know the amount of available funds that remain. We don’t know the amount of the claims that are going to be made.”
“This is not a piece of legislation that we want to pass to aid Kansas businesses or Kansas workers,” he said.
Republican state Rep. Fred Patton, chair of the House Judiciary Committee, said he thought the Legislature came up with “decent product” for businesses to avoid costly litigation to get compensation for their losses.
The bill is intended to settle a lawsuit over whether the state should cover business losses suffered because of the shutdown.
Legislative approval came months after the owner of Sedgwick County gym went to court, arguing that he’s entitled to compensation under state law because the government assumed use of the property as it undertook efforts to contain the virus.
The lawsuit contends the gym owner is entitled to compensation under the state’s emergency management law, which provides compensation for the taking or use of property if it is “commandeered or otherwise used in coping with a disaster.”
Omega Bootcamps and its owner, Ryan Floyd, reached an agreement with the state to delay the case so legislative changes could be considered that would allow for a consistent statewide process for considering these types of compensation claims.
Attorney General Derek Schmidt has said that he generally agreed that a case could be made for someone seeking compensation whose property was “significantly damaged” by government actions undertaken for the public welfare during a state of emergency.
The agreement to delay the case, Schmidt said, was an attempt to give the Legislature a chance to consider the public policy implications of compensation during an economic shutdown.
Lawyers for the gym believed if they were successful in court, it could open the door to many similar claims from across the state and pile up legal judgments against Kansas.