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Kansas governor vetoes GOP COVID relief plan for businesses

Some businesses are now adding a ‘COVID-19 surcharge’ to purchases
Posted at 2:46 PM, May 21, 2021
and last updated 2021-05-21 15:46:10-04

TOPEKA, Kan. — Democratic Gov. Laura Kelly on Friday vetoed a Republican proposal to set aside hundreds of millions of Kansas' federal coronavirus relief dollars to compensate small businesses that faced restrictions earlier in the pandemic.

Kelly said she is not opposed to compensating businesses for losses after the state, cities or counties forced them to shut down or limited their operations. But she said the process for paying claims set up by the GOP plan would not be open enough and the measure might violate federal law, jeopardizing relief funds.

Her action was certain to spark criticism in the Republican-controlled Legislature, particularly from conservatives who've argued for months that state and local government restrictions on businesses were too harsh and applied unfairly. Kelly kept a stay-at-home order in place for five weeks last spring, defending it as necessary at a time when officials knew little about how quickly COVID-19 might spread and feared that a surge in cases would overwhelm hospitals, as it had in Europe.

Supporters of the bill were short of the two-thirds majorities necessary to override a veto when the bill passed earlier this month because Republicans were split over it and Democrats opposed the measure. Lawmakers have been out of session since May 8 and have only one more day scheduled for possible business this year, on Wednesday.

The vetoed bill would require the state, cities and counties to set aside as business aid part of the federal relief funds that aren't designated for a specific purpose. Lawmakers and others estimated during legislative debates that the figure would be roughly $500 million.

Compensation would go to businesses with 50 or fewer employees if they could show they were harmed by pandemic restrictions. The bill's supporters said they targeted the compensation to small businesses because they're far less likely than large ones to be able to afford attorneys to file lawsuits.

But backers of the bill also argued that setting up a claims process also could avoid lawsuits and lessen the total payout for the state, cities and counties.

A Wichita fitness studio and its owner sued the state in December over how pandemic restrictions affected the business in what is believed the first such case arising from an emergency in Kansas. The studio and Attorney General Derek Schmidt, a Republican now running for governor, agreed to put the lawsuit on hold to give the Legislature a chance to provide compensation.

Kelly imposed a phased reopening of the economy in early May 2020, but Republicans later forced her to accept giving local officials control over such decisions to keep a state of emergency in place. As new case numbers dropped this year, some GOP lawmakers questioned keeping local restrictions in place.

Democrats balked at the compensation bill partly because an appointed, three-member board would examine the claims - and in closed meetings, to protect businesses' financial information and trade secrets. The board would be housed in the attorney general's office, and some Democrats derided the GOP plan as a setting up a "slush fund" or "pot of gold" program.

But the board's decisions would be reviewed by a joint legislative committee, and legislative leaders would have the final say. Supporters said that made the process open.

Some Democrats also balked at not requiring businesses to use some of their compensation to help workers and to telling cities and counties how to spend their federal relief dollars.