Kansas legislators know the economy is a major topic on Main Street, and it’s no coincidence they’re predicting it will be a major topic at the Statehouse.

“I think there is a strong desire across the state for some significant economic development policy to come out of this session,” said Rep. Kenny Wilk, a Lansing Republican and chairman of the House Economic Development Committee. “I think you’ll see a tremendous emphasis on economic development issues.”

A large part of that emphasis will be placed on the state’s efforts to build a life sciences economy.

“We think the biosciences field as a whole offers us an opportunity to create another plank in the Kansas economy,” Wilk said.

Tax plan

One of the first bills legislators are expected to deal with when the session begins Monday is a proposal by Wilk and others to create a “virtual benefit district” that would pump new tax dollars into bioscience research at Kansas University and Kansas State University.

Here’s how it would work: State officials would tally up how much all the biotech and medical research businesses in Kansas currently pay in state taxes. Anything more than that sum paid in subsequent years’ taxes would be earmarked for biotech research at the two universities, though it hasn’t been decided whether all the new money should be devoted to research.

Unknown is how much the plan may generate, though a previous estimate, based on taxes from Johnson County biotech companies, was $260 million over 10 years.

The bill is likely to face opposition, mainly because it would siphon off new tax revenue that could be used elsewhere in the state budget. Also, some legislators outside of university areas may balk because they think the bill would produce little benefit for their constituents.

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“We know it has to have statewide appeal and we are working hard to do that,” Wilk said.

He said the biosciences movement had the potential to become a boon to rural areas in addition to university communities such as Lawrence. For example, he said the state could become a major player in producing agricultural crops used in the production of pharmaceuticals.

“We know for a fact that those crops have to be processed fairly nearby where they were raised,” Wilk said. “That could mean good jobs for the rural parts of our state.”

‘What people care about’

Jobs will be the four-letter word on everybody’s mind this session, said Terry Leatherman, vice president of public affairs for the Kansas Chamber of Commerce and Industry.

“I think what a lot of the session will come down to is how we can create jobs for the state,” Leatherman said. “I think that is a fair focus. When you get outside the Statehouse, I think that’s what people care about.”

Some business leaders believe creating more jobs may require overhauling how the state recruits businesses, particularly high-tech companies.

Daniel Flynn, president of Deciphera Pharmaceuticals — a start-up company that moved to Lawrence from Cambridge, Mass., in February — said Kansas’ recruiting efforts significantly lagged other states looking to create high-tech economies.

“I willed myself to be here,” Flynn said. “The state didn’t recruit me. There are a lot of great intentions here, but there is wishing something to happen and then there is willing something to happen. We’re good at wishing right now.”

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Other issues

Several other economic development and business-related issues are expected to come up during the session. Among them:

• Rep. Tom Sloan, R-Lawrence, said he expected to introduce a bill that would allow the Kansas Development Finance Authority to issue special bonds for private bioscience companies to build new research facilities. The bonds wouldn’t be paid for with state dollars, but because they’re issued by the state they would allow businesses to obtain money at lower interest rates. The businesses would pay to retire the bonds.

“If we can lower the cost of building a biotech research laboratory, that is like giving the business a cash advance,” Sloan said.

• Lt. Gov. John Moore in a recent visit to Lawrence said he would put forward legislation making it easier for people to invest in venture capital funds. He also will have proposals for creating a more coordinated work force development plan and a program allowing start-up companies to raise cash by selling their tax credits to larger companies.
• New sales tax regulations approved last year are expected to be revisited. The Legislature approved a change requiring businesses to charge a rate based on where an item is delivered rather than the rate at the point of sale.

The law was approved as a first step toward collecting taxes on Kansas sales made by out-of-state Internet companies. But many in-state businesses that deliver large amounts of merchandise were caught unprepared by the law. Suddenly they were required to begin charging dozens of different sales tax rates instead of just one.

Sloan predicted the Legislature wouldn’t change the basics of the law, but would delay its implementation.

• A debate is expected over whether the unemployment contributions that businesses are required to make should be raised. The state-run unemployment trust fund, which is used to pay benefits to jobless Kansans, has been reduced as a result of the slowdown in the state’s economy and previous moratoriums on business contributions. But some businesses have said an increase in the required contributions would hamper their economic recoveries.

Wilk said he expected any increase in the required contributions to be small.

“We obviously have pulled very hard on that fund for the last three years, but that is what it was there for,” Wilk said. “Do we have to get it healed up in one year? No, I don’t think so, but we will have to get it shored up.”