Kelly Rejects Alternative Method Of Distributing COVID-19 Aid To Businesses

By Tim Carpenter, Kansas Reflector

May 21, 2021

TOPEKA — Democratic Gov. Laura Kelly vetoed a bill Friday that would create a new system for distributing perhaps $500 million in federal stimulus funding to Kansas businesses claiming damages from city, county and state governments that imposed COVID-19 restrictions.

Kelly said the vision of Senate Bill 273 was “well-intentioned,” but violated federal rules for use of aid delivered under the American Rescue Plan Act. She said the legislation would have set impermissible conditions or requirements on appropriation by local governments of the federal assistance.

Instead of establishing a three-person board not subject to open meeting and records act laws, Kelly said, the existing SPARK task force, or Strengthening People and Revitalizing Kansas, would better accomplish that purpose. She said SPARK, initiated by the governor in 2020, brought together business, legislative and community leaders from across the state to make “data-driven, innovative investments.” Previously, SPARK had directed approximately $238 million to help Kansas small businesses.

“The COVID-19 pandemic has presented many challenges for Kansas businesses over the last year,” Kelly said. “All recovery initiatives should go through the transparent, federally compliant, bipartisan and efficient process we have already established through the SPARK task force.”

The controversial bill was passed 24-14 by the Senate and 68-42 by the House, both of which were margins short of the two-thirds majority necessary for a veto override.

On Thursday, the Kansas Chamber and Kansas Restaurant and Hospitality Association had encouraged the governor to sign the measure. The vetoed bill would require businesses receiving aid to forgo lawsuits against the state, cities and counties for orders related to temporary closures, restriction of business hours, modification of store capacity and other limits tied to COVID-19.

“Operation restrictions put in place by the state of Kansas and county and city governments helped our state fight the COVID-19 pandemic, but they also forced thousands of small businesses to close their doors, reduce their business hours and stop their production lines,” said Alan Cobb, president and chief executive officer of the Kansas Chamber.

Adam Mills, president of the association of restaurant and hospitality businesses, said the vetoed legislation contained a clause that would have prevented relief funding destined to cities and counties to be included in the program if forbidden by federal regulation.

The veto was applauded by Senate Minority Leader Dinah Sykes, D-Lenexa, because the bill sought to undermine federal guidance on use of relief funds and a SPARK task force that demonstrated good stewardship of $1 billion funneled through the state during the pandemic.

“This poorly-vetted, last-minute bill gives immense authority over millions of dollars to three unelected people hand-picked by legislative leadership,” Sykes said. “A bipartisan group of Senators voted against this unabashed power grab.”

Under the bill, eligible businesses would include any sole proprietorship, partnership, limited partnership, limited liability partnership, limited liability company or corporation with 50 or fewer full-time equivalent employees beginning March 12 and ending on the date the business filed a claim. Qualifying businesses — nonprofits don’t qualify — must have been in operation on March 12, 2020.

Some legislators complained the bill lacked guardrails to prevent political manipulation of the three-person board, which would hold unilateral authority to decide which businesses received aid and how much each deserved. Board members would be appointed by the governor, Senate president and House speaker, giving it a likely 2-1 Republican majority.

The bill mandated cities and counties earmark 35% of available COVID-19 funding for potential claims, while the state would have to set aside 25% of federal resources for this effort. The board would have until September 2022 to decide how much governments had to pay out.

State auditors would look at a random sample of 10% of applications from businesses for a report due to the Legislature in February 2023. The checks to businesses would be issued, according to the bill, by April 2023.

This story was originally published by Kansas Reflector. For more stories from the Kansas Reflector visit Kansas Reflector.