State: Controversial lawsuit over sweep of fee funds sent back to district court
Topeka A panel of the Kansas Court of Appeals on Friday reinstated a politically charged lawsuit that challenged the Legislature's taking of fees paid to state agencies to help balance the budget.
The lawsuit created an uproar because the business and trade groups that filed the lawsuit were represented by Mike O'Neal, who was speaker of the Kansas House of Representatives at the time.
In 2009, the Legislature swept $29 million in fees from various agencies to help balance the budget after state revenues dropped significantly during the Great Recession.
These were fees paid by certain businesses. Once the fees were transferred for general budget purposes, new assessments were charged to replenish the depleted fees.
O'Neal, a Republican attorney from Hutchinson, opposed the move and filed a lawsuit on behalf of plaintiffs affected by the sweep. The plaintiffs included such groups as the Kansas Bankers Association and Kansas Association of Realtors.
Democrats filed an ethics complaint against O'Neal, saying that by representing powerful business groups he acted improperly because he could use his power of speaker to benefit his clients. But a special committee ruled that O'Neal violated no laws or legislative rules.
Meanwhile, the lawsuit was dismissed after a state district court judge ruled that the business associations lacked legal standing to file a lawsuit.
But the appeals panel said the plaintiffs do have legal standing to challenge the sweeps because they had to pay increased fees.
The decision sends the case back to the district court for consideration.
"We do not know how this controversy will end, but we do know it can begin," the appeals court said.
O'Neal retired from the Legislature in 2012 to become president and chief executive office of the Kansas Chamber of Commerce.