Legislature may not have the right to tell Sedgwick County how to spend its COVID aid
The state Legislature wants Sedgwick County to turn over about $35 million to compensate businesses for restrictions put in place during the COVID-19 pandemic, but the county may not have to, officials say.
Senate Bill 273, passed early Saturday morning in the final hours of the legislative session, would require the county to set aside 35% of its funding from the American Rescue Plan Act for a state-run business compensation program.
The county will receive about $100 million through ARPA, meaning it would need to set aside about $35 million of that, said county Chief Financial Officer Lindsay Poe Rousseau.
But new federal regulations governing the spending of ARPA funds conflict with the state’s plan, said Justin Waggoner, the assistant county counselor who’s handled most of the issues involving the pandemic.
“The federal guidance came out earlier this week,” Waggoner said. “I think the Reader’s Digest version is . . . the regulations and guidance says that states cannot dictate to municipalities how they can spend ARPA funding.”
The regulation is contained in what is called an “interim final rule” published by the Treasury Department.
While changes could still be made, the current draft of the rule says that states will get a block of money to distribute to small counties based on population, while cities and counties with 50,000 or more people will get their own allocations.
The rule also says that, “States may not place additional conditions or requirements on distributions to such units of general local government, beyond those required by the ARPA and Treasury’s implementing regulations and guidance.”
Yet to be decided is whether SB 273 will actually become a law.
That particular ball is in Gov. Laura Kelly’s court and she hasn’t indicated whether she plans to veto it or allow it to become law.
The bill passed the Senate 24-14, three votes short of what senators would need to override a gubernatorial veto. In the House it was closer, a 68-42 vote, well short of the 84 votes needed for an override.
SB 273 is an effort by the Legislature to pay back businesses that were impacted by state or county shutdowns, curfews, and/or capacity limits designed to limit the spread of the coronavirus that causes COVID-19 disease.
The pandemic has claimed the lives of 5,029 Kansans, 753 of them residents of Sedgwick County, according the latest data from the Kansas Department of Health and Environment.
The legislative majority agreed with SB 273’s premise that the public health rules constituted a “taking” of the businesses’ property, the equivalent of commandeering it for government use during the ongoing emergency.
Under SB 273, 25% of the state’s COVID allocation and 35% of county funds would be set aside for the “COVID-19 Small Business Relief Fund,” to be distributed by the state to pay businesses’ claims.
A three-member board under the jurisdiction of Attorney General Derek Schmidt would decide who gets the money and how much.
The decisions would be made behind closed doors. All records except the name of the business, its address and the amount awarded, would be closed.
The bill took a tortuous route to passage.
On Friday morning it appeared dead. But it was resurrected by some after-dark maneuvering by a House-Senate conference committee.
The Senate side favored a less generous bill more targeted at smaller grants to “mom-and-pop” businesses called House Bill 2313.
But that bill failed on its first pass through the Senate after House negotiators added in a property tax exemption for-profit health clubs, which has long been sought by Genesis Health Clubs co-owner Rodney Steven II.
HB 2313 returned to the conference committee with new members who stripped out the business compensation provisions, along with the Genesis exemption and tax breaks for senior citizens and disabled veterans..
That left SB 273 — originally numbered SB 286 — as the only viable alternative to provide COVID relief for businesses claiming to have been hurt by government COVID restrictions.
The bill passed just before adjournment about 2 a.m. Saturday.
This story was originally published May 12, 2021 at 6:47 PM with the headline "Legislature may not have the right to tell Sedgwick County how to spend its COVID aid."
