Kansas Can Compensate Firms Broken By COVID-19 – Or Go To Justice

The March 31 deadline of most Kansas laws is fast approaching, as is the urgency to address COVID-19-related corporate compensation.

“My fear, quite frankly, is that we’re running out of time. We have to take care of it and the right people have to be at the table,” said Senator Molly Baumgardner, R-Louisburg, on the fact that this was only investigated a few weeks ago .

As of Friday, lawmakers hadn’t gotten any compensation bills out of the Kansas House or the Senate, but they seem to have settled on a definitive, workable solution to compensate companies for damage caused by virus restrictions.

Lawsuit from Wichita Gym Omega Bootcamps

All of this is the result of a December lawsuit filed by a Wichita gym against the state alleging the state’s emergency management law allows it to seek financial damage related to the COVID-19 shutdown imposed by Governor Laura Kelly.

Continue reading: Is Kansas Company Guilty of Shutting Down? A lawsuit says yes.

Just before January, Attorney General Derek Schmidt announced that he and the gym had agreed to suspend the lawsuit in hopes that lawmakers might find out something during the session.

“I agree with the basic principle, which is reflected in the applicable law, that at least some of those whose property is significantly damaged by government measures for the benefit of the general public in a state of emergency should be compensated for their loss,” said Schmidt. “However, the current law was not designed to regulate these types of business closure orders.”

Companies across the state are now watching and seeing what the law does, said Ryan Kriegshauser, an attorney on the Wichita Gym case. If lawmakers can’t pass, the state and local governments may have to prepare for more lawsuits.

“There is significant risk to local government entities, many of which, in my opinion … probably failed to realize that this provision and statute are available to companies that have been closed during an emergency,” Eric Stafford said with the Kansas Chamber .

However, it’s not that companies want to sue governments. If there could be a simpler legislative process to get compensation it would help the state and businesses.

“There has to be a more manageable way to efficiently settle these claims, hopefully without the deep involvement of attorneys who are just burning money to settle these claims,” ​​said Kriegshauser. In return, “the purpose of the bill is to exempt the state and county from this liability for current KEMA claims for damages.”

Some Democratic lawmakers asked earlier in the year why federal paycheck protection program loans weren’t enough to help businesses hurt by COVID-19 restrictions.

“It’s not like it’s free money … it’s money to keep people busy so they don’t get laid off,” said Stafford. “It’s not like it necessarily adds to the company’s bottom line or income. I think that’s a major difference.”

Use of the federal government’s COVID-19 aid

Originally, a bill called the COVID-19 Governmental Use of Business Compensation Act provided several options for companies to apply for COVID-19 compensation.

These included income tax credits for affected companies, the reimbursement of property taxes from the county, and a business loan program created by the State Department of Commerce. Some of these provisions – in particular property tax – met with opposition.

That provision would force counties, out of their general income, to reimburse property taxes on businesses harmed by county-imposed virus restrictions. However, some noted that measures in other areas could lead to tax increases to offset the lost revenue.

“Local officials are tasked with serving as the public health committee. This bill would penalize local officials for taking action consistent with those responsibilities,” said Jay Hall, a member of the Kansas Association of Counties.

Continue reading: Kansas Corporations Affected by COVID-19 Restrictions May Receive Property Tax Refunds

But the more than $ 2.1 billion in federal funds flowing to the state and counties from the latest Congressional COVID-19 aid package has changed the way things are done. Companies are instead hoping to get some of this as compensation, and so lawmakers plan to strip all tax sections of the bill.

This move eliminated, if not additional support, almost all opposition to the law.

To replace these possibilities, the new proposed solution would introduce the same state, county, and city compensation process that companies place on COVID-19 restrictions.

All of these governments would have to set up a debt fund dedicated to compensating companies, which would be filled with 25% of all “unencumbered” federal aid funds received by the company.

To be clear, federal regulations may mandate that certain amounts of money be spent on certain things. After this is fixed, a quarter of the remaining funds would go to the fund.

Kansas Attorney General Derek Schmidt called on lawmakers to look into COVID-19 compensation for companies harmed by virus-related government restrictions.

This money must be reserved for compensation until 2024. After that, the money will be released for other purposes. By the end of 2024, the debt fund would be gone, and all of the remaining money would go to the general budget to match the federal deadline for issuing the aid money.

Companies can file a claim for this money until the end of 2022. The claimant would file an affidavit and some tax documents, and he or she would need to identify the order that caused the damage and the amount of damage claimed. The attorney general would determine the validity of the claim and then issue a certificate allowing the company to receive the money.

This will “hopefully bring some of this federal money to companies that urgently need it,” said Kriegshauser.

Details, including mask mandates, remain to be clarified

What kind of COVID-19 restrictions harm companies and allow this compensation to be changed is still likely to change.

Effective immediately, the proposed legislative solution includes mandates that restrict occupancy, operating hours, business resources and business functionality. Mask mandates are also considered a restriction.

The League of Kansas Municipalities, which represent cities, want to change this last part. She would like a mask mandate that is only liable to compensation if the company needs the mandate to enforce it.

“I don’t know of any city that had any restriction other than a face mask ordinance,” said Trey Cocking of LKM. “Most companies will tell us … that after the introduction of face mask regulations, they had a boom in business because people felt safe and they went out.”

That request was okay with the Kansas Chamber, the main drawer of the bill. But it has angered some conservative lawmakers.

“A mask mandate creates restrictions. In certain areas, it creates economic restrictions,” said Senator Dennis Pyle, R-Hiawatha, explaining that there are people, especially in rural areas, who do not shop in mask mandate areas.

Tension has been reduced and issues have been cut in both directions, including people who do not patronize companies that do not have face coverage requirements.

Signs for representatives and visitors to the Kansas House floor encourage visitors to wear a mask and social distancing.  It remains to be seen whether mask mandates are liable to compensation.

Pyle was curious why only 25% of federal coronavirus aid is earmarked for corporate compensation. He said he think it should be more. Others didn’t like that it was a percentage rather than a fixed amount.

“That statement bothers me. You are not looking at the actual damage, but the funds available,” said Senator Caryn Tyson, R-Parker.

The debate over this amount is a result of the uncertainty surrounding federal regulations governing the spending of the aid. How much money is left for compensation and whether that is enough to cover all companies making claims is still unclear.

The US Treasury Department hasn’t even issued full instructions on how to spend (aid). But we know it’s for recovery, “said Kriegshauser.” We know that the intention of the federal government is to give government units more discretion than with previous relief efforts. “

Ultimately, the legislature has to make decisions by Wednesday.

While some questioned whether government restrictions or just people’s fear of COVID-19 played a bigger role in the economic damage, most in the legislature see this law as something that needs to be passed.

For some Republicans, it’s not enough.

“The levels of government that have intervened in our economy with marginal to nonexistent scientific data,” said Senator Mark Steffen, R-Hutchinson. “You have to feel pain. You have to feel pushed back.”