Kansas Mulls Paying Businesses Hit by COVID-19 Restrictions

TOPEKA, Kan. (AP) — Kansas legislators are working on a plan for setting aside potentially several hundred million dollars in federal COVID-19 relief funds to pay businesses harmed by state and local restrictions imposed last year to check the virus’ spread.

The state Senate Judiciary Committee hoped to vote Monday on a proposal to set up a state fund to pay claims from businesses that either were shut down or had their operations curtailed by state restrictions. It also would require counties and cities that imposed pandemic restrictions to set up similar funds. The state, cities and counties would be required to set aside 25% of their federal COVID-19 relief funds that aren’t dedicated to a specific purpose.

The measure is designed to end the threat that the state, counties and cities could face a larger total payout from lawsuits from business owners. A Wichita fitness studio’s owner and his business sued the state in December, and his attorneys and Attorney General Derek Schmidt agreed to put the lawsuit on hold to allow state lawmakers to consider a plan for compensating businesses.

Ryan Kriegshauser, one of the attorneys representing the fitness studio’s owner, said the total that would be set aside under the proposal still is “a moving target,” but could reach $540 million.

“The general public relied on these businesses to shut down at a specific impact to them, at their expense, and so the general public should compensate them for it,” Kriegshauser told the committee during a hearing last week.

Republicans in the GOP-controlled Legislature have criticized Democratic Gov. Laura Kelly for imposing a statewide stay-at-home order for five weeks last spring and following up with different reopening rules for different kinds of businesses. Schmidt, a Republican, is running for governor in 2022; he has questioned Kelly’s actions, and his office would handle claims under the proposal before the Senate committee.

At least a few Republicans wonder whether the proposal sets aside enough money to help the thousands of businesses they believe were hurt by COVID-19 restrictions.

“Are these guys going to get 100 bucks for being shut down for a year?” asked Sen. Mike Thompson, a Shawnee Republican.

GOP legislators originally considered a proposal to create a state fund of $100 million but also to allow businesses to seek a state income tax credit or a break on their local property taxes. Some local officials balked at the idea of being pushed into giving out tax breaks, fearing it would force them either to cut local services or raise taxes for others.

Groups representing city and county officials withdrew their opposition once attorneys for the fitness studio owner and lawmakers abandoned the idea of providing tax breaks.

But Trey Cocking, deputy director and lobbyist for the League of Kansas Municipalities, still expressed concern that the measure wouldn’t require businesses to demonstrate that state or local restrictions actually cut into their revenues — rather than consumers’ fears about COVID-19.

“People weren’t going to bars. People weren’t going to restaurants, and it wasn’t because of the government shutdown order,” he said. “It was because people were scared for their lives.”

The lawsuit filed in December in Sedgwick County District Court by Kriegshauser’s clients, Omega Bootcamps Inc. and owner Ryan Floyd, argued that the state used their property for the public’s benefit by imposing restrictions. The lawsuit cited a provision in the state’s emergency management laws allowing people to seek compensation in court if their property is “commandeered or otherwise used” by state or local officials.

Schmidt said in December that he agrees “in principle,” but added that the laws weren’t written to deal with the restrictions imposed during the pandemic.

Kriegshauser acknowledged that a business might get “pennies on the dollar” compared to what they could win in a lawsuit but litigation could prove expensive and lengthy and come with “a lot of mines.”

“People could be willing to take less money through an expedited process,” Kriegshauser said.