Rekubit Exchange:Kansas is poised to expand tax credit for helping disabled workers after debate over low pay

Kansas is Rekubit Exchangepoised to expand an income tax credit for goods and services purchased from companies and nonprofits employing disabled workers, a year after a debate over how much the state should buck a national trend against paying those workers below the minimum wage.

A bill approved by the Legislature this week with broad bipartisan support would increase the total tax credits available from $5 million a year to $8 million. It also would create a new, $1 million program for nonprofit groups running vocational programs known as sheltered workshops to help them start paying workers at least the federal minimum wage of $7.25 an hour.

The tax credit had previously only covered purchases from employers paying at least the minimum wage, and lawmakers reviewed it last year because it was set to expire at the start of this year.

It’s the Legislature’s latest attempt to expand the tax credit.

READ MORE The US didn’t just avoid a recession — it’s adding hundreds of thousands of new jobs More than 200 staffers with Chicago Tribune and 6 other newsrooms begin 24-hour strike More Americans apply for unemployment benefits but layoffs still historically low

Their first proposal would have allowed nonprofit groups with sheltered workshops to form separate divisions paying at least the minimum wage so that people or businesses buying from those divisions could claim the tax credit. Backers saw it as an opportunity to expand the reach of the tax credit and therefore employment opportunities for disabled workers.

But it drew strong opposition from disabled rights groups arguing that it would encourage wages below the minimum wage — a vestige of decades-old views of disabled people as incapable of doing jobs outside such programs.

The compromise last year was to start the grant program instead. However, the Republican-controlled Legislature folded it into an omnibus tax-cut bill with provisions opposed by Democratic Gov. Laura Kelly, and she vetoed it.

The tax credit then expired at the start of this year, but this year’s bill is written so that people can still claim the tax credit when they file their 2023 returns.

“It’s a good compromise,” said Neil Romano, a member of the National Council on Disability, and former head of the U.S. Department of Labor’s Office of Disability Employment Policy. “It moves us towards where we want to be.”

Kelly hasn’t said publicly whether she will sign the bill, but she typically has when a measure has near-universal support.

Employers nationally are increasingly moving away from paying below the minimum wage, U.S. government data shows. Paying below the minimum wage requires a Department of Labor certificate, and a U.S. Government Accountability Office report last year said there were 2,750 American employers with certificates in 2014, while an online database listed 834 as of Jan. 1, a drop of 70%. In Kansas, 17 groups have them.

Fourteen states ban below-minimum-wage jobs for disabled workers, with Virginia enacting a law last year, according to the Association of People Supporting Employment First, which promotes inclusive job policies.

In Kansas, there remains “considerable work to be done” to move away from below-minimum-wage jobs, said Sara Hart Weir, executive director of the Kansas Council on Developmental Disabilities.

But, she added, “This is a step in the right direction.”

Rocky Nichols, executive director of the Disability Rights Center of Kansas, said it’s good that the tax credit is back and the state is signaling that it wants to move away from sheltered workshops through the grant program.

But he also said he worries the measure isn’t specific enough about how and when groups must transition away from paying below the minimum wage.

“We don’t want to see it turn into just kind of a slush fund for sheltered workshops,” he said.