Republican bill would offer tax credits to businesses that help with employees' child care
Lawmakers held an Assembly committee hearing Wednesday for a Republican-led bill that aims to incentivize business to help their employees find and pay for child care, which they think could encourage more parents to enter the workforce.
The bill would establish state tax credits for businesses who help their employees access child care. Democrats and Republicans on the committee that heard the bill agreed that the tax credits would not completely solve the state's child care supply and affordability problems, but would be a step in the right direction.
The bill is "by no means a magic bullet," said Rep. David Armstrong, R-Rice Lake, who introduced the bill. He said that at a recent meeting with businesses in his county, "all 22 employers' hands went up" indicating they would be interested in starting a child care or helping their employees pay for child care slots at existing programs.
"With less child care slots available and many parents being priced out of the market, we're losing much-needed participants in our workforce. One way to help address this is to get our business community involved," said Sen. Dan Feyen, R-Fond du Lac, another author of the bill.
The bill would establish a state tax credit for employers, up to $100,000, for costs involved with creating a child care program for its employees. Alternatively, an employer could receive this credit by making a contribution to a nonprofit to operate the program.
Under the bill, employers could also receive a state tax credit of up to $3,000 per employee's child for subsidizing the cost of child care, operating expenses for the program and certain administrative costs. The employer would have to pay at least half of the employees' child care costs in order to receive this credit.
The credits specified in the bill are refundable, meaning that if the credit is more than the employer owes in taxes, the employer receives a refund of the difference. The bill goes further than an existing federal credit, which has a limit of $150,000 and 25% of qualified costs.
Lawmakers at Wednesday’s hearing also discussed another Assembly bill that would alter the business development tax credit to allow a business owner to claim tax benefits up to 15% of their investment to establish a child care program for its employees.
Bill could give businesses the push they need, might not be enough for small companies
Alex Ignatowski, director of state budget and government reform for the Institute for Reforming Government Action Fund, a conservative think tank that is lobbying for the bill, testified in support of the bill.
Ignatowski told USA TODAY NETWORK-Wisconsin that for employers who are considering starting a child care program or partnering with an existing facility to help their employees, the potential to obtain a $100,000 credit could be the push they need to take the plunge.
At the same time, he said, the bill incentivizes employers who have already done so to continue supporting their employees in this way.
“You could see access to child care open up and child care be more affordable to the average middle-class Wisconsinite, but also you’re bringing in maybe a more stable funding source for some of these child care facilities,” Ignatowski said.
Rep. Sue Conley, D-Janesville, said when she asked employers in her district for their thoughts on the bill and "nothing negative came back." But she also said small businesses she heard from doubted they would take advantage of the new credits.
"We know that many families can't afford child care, and if you don't work for a business that cares about that, you're still going to be left out," Conley said. "I see this as maybe one puzzle piece of the whole child care need."
AriensCo., a Brillion-based outdoor power equipment company, partnered with KinderCare a few years ago to open the Brillion Early Learning Center. In addition to providing close access to care for its employees, AriensCo. offers a 50% tuition discount to children and grandchildren of its employees who attend the center.
But not all AriensCo. employees’ children are enrolled at the Brillion Early Learning Center, and the company currently cannot afford to extend child care discounts to those employees.
With the maximum $3,000 per child credit outlined in the bill, the number of employees AriensCo. provides with financial child care assistance could double, said Steve Servais, the company’s executive vice president of administration.
He said the high costs associated with creating and maintaining a center could be barriers that prevent other businesses from starting child care centers for their employees. Costs can also be a barrier in providing child care discounts.
“You’ve got the upfront hurdle and then the ongoing commitment, and this bill addresses both,” said Servais, who reached out to IRG about child care workforce issues before the bill's introduction. “So I believe it could get a lot more employers over some of those hurdles to be able to build (a child care center) or provide a subsidy to their employees that go to any day care location.”
More: Ariens Co., KinderCare open new child care center for Ariens workers and Brillion community
Republicans have opposed continuing stabilization grants to providers
While the Wisconsin Early Childhood Association did not testify at Wednesday's hearing, the organization supports the bill. But its effect will be limited if not coupled with other action, said executive director Ruth Schmidt.
"We support it because there certainly isn't anything harmful or detrimental about instituting employer tax credits to supporting child care," Schmidt told USA TODAY NETWORK-Wisconsin. "However, for these types of programs to be successful, the broken child care market needs to be stabilized for the long term. The long-term solution is an ongoing state investment in child care."
But if — and how — the state should take additional action to help the industry is debated. Democrats have long said Child Care Counts, which provides stabilization payments to child care businesses throughout the state, is the answer.
The program was expected to end early next year with federal pandemic relief running out. But in October, Democratic Gov. Tony Evers directed $170 million of unspent pandemic-related funding to continuing Child Care Counts at its current reduced levels through June 2025.
Meanwhile, Republicans have been advancing their own plans that Evers opposes. They put forth a package of six bills that include loosening child care regulations and creating a revolving loan program for providers.
The bills were passed in the Assembly and have not yet been taken up by the Senate. They also passed a plan that expands a tax credit for child care expenses, which Evers recently vetoed.
The tax credit bills heard today have to be taken up in the Senate-side committee and passed in both committees before they would head to both full chambers for votes.
Madison Lammert covers child care and early education across Wisconsin as a Report for America corps member based at The Appleton Post-Crescent. To contact her, email mlammert@gannett.com or call 920-993-7108. Please consider supporting journalism that informs our democracy with a tax-deductible gift to Report for America.
Hope Karnopp can be reached at HKarnopp@gannett.com or on X at @hopekarnopp.
This article originally appeared on Milwaukee Journal Sentinel: Republicans propose helping employers beat the state child care crisis
