The House education budget committee approved a bill to give tax credits to developers who build affordable multi-family rental housing in areas where there is a shortage.
The same committee delayed a vote on a bill to give tax credits to employers who offer onsite child care or help pay for employees’ off-site care.
Both bills are efforts to remove barriers to the workforce and raise the state’s 57.4% labor participation rate. And both are part of Gov. Kay Ivey and legislative leadership’s seven-bill economic development package unveiled last month.
“This bill will expand the access to child care and our opportunities to bring people back into the workforce,” said sponsor and House Minority Leader Anthony Daniels, D-Huntsville.
In the first year, the credit would be capped at $15 million. It would gradually increase to $35 million. Each year, 25% of the credits are to be spent in rural areas or by small businesses.
As originally filed, House Bill 358 would allow employers to receive up to $1 million in credits on tax liabilities, including income tax. Their eligible expenses would include the construction and operation of on-site child care or payments to off-site centers for the care of employees’ children.
A substitute bill is expected but wasn’t filed as of Wednesday. As currently written, there is no minimum or cap on how much an employer could spend per employee’s child care.
Besides the employer tax credit, the bill also creates a child care provider tax credit to encourage facilities to improve and expand and a nonprofit child care provider tax credit. Both are capped at $5 million per year.
Daniels said the goal of the bill is to address the “quality, access and affordability” of child care
When fully implemented, the bill would have a fiscal impact of $45 million on the state’s tax revenue that supports education, according to a fiscal note. But Daniels said that number doesn’t account for the income taxes paid by family members returning to work because they could afford child care.
But the number does concern education advocates, several of whom spoke against the bill in a public hearing Wednesday morning.
Ryan Hollingsworth, executive director of School Superintendents of Alabama, noted the recent decline in revenues to the ETF. So did Whitney Miller-Nichols of the Council for Leaders in Alabama Schools, who said the group is concerned about the number of education revenue-cutting proposals currently pending in the Legislature. She said education in Alabama is “experiencing a death from 1,000 tax cuts.”
“While we understand the need to increase workforce participation, we disagree that that support should come at the expense of Alabama’s public school children,” Miller-Nichols said.
The state has had record revenues in both its budgets in recent years, but seven months into this fiscal year, the ETF is down 3.6% or $182.7 million. Sales tax revenue is down $24 million; income tax revenue is down $173.6 million. And when revenues do increase, another percentage point will come off the state’s sales tax on groceries, costing the ETF.
Representatives from some of the state’s large employers did speak in favor of the bill Wednesday.
Bettsie Norton, chief of staff at Airbus U.S. Manufacturing Facility in Mobile, told the committee about her struggles to find quality, affordable care for her children.
“I ask you to support this legislation because it will go far in encouraging Alabama businesses like Airbus to partner with child care providers and nonprofit organizations to increase the supply, the availability, the affordability and the quality of child care for their employees,” Norton said.
Child care in Alabama costs an average of $120 to $200 per child per week.
The trade association Manufacture Alabama is advocating for the bill.
“Manufacture Alabama and our extensive group of partners continue to support the Child Care Tax Credit legislation because we know just how important this bill is for the employees of our industry, small businesses, and the vital network of child care providers across the state,” executive director Jon Barganier told Alabama Daily News.
“The public hearing included overwhelming and compelling testimony as to why this bill is so relevant and important. We are all working toward the common goal of increasing the labor force participation rate in our state and this legislation is an important piece of the puzzle to help us break down a significant barrier for those who wish to contribute to the workforce but are faced with the increasing costs of child care.”
Daniels’ wasn’t the only child care bill before the committee.
House Bill 381 by Rep. Reed Ingram, R-Pike Road, creates an employer tax credit that would let them claim credits for up to 50% of eligible expenses up to $12,000 per employee and 50 employees per employer.
It’s capped at $15 million but Ingram said it would help more employers help more employees, Ingram said.
Some on the committee said they wanted to make sure a child care credit bill reaches people currently sidelined from the labor market, not those already working.
“It has to be an intentional program with an intentional result,” Chairman Rep. Danny Garrett, R-Trussville, said.
No votes were taken on either child care bill.
Garrett started the meeting with a word of caution to committee members about declining revenues and said some of the tax credit bills before them Wednesday would need more work and consideration.
“Just be mindful of our responsibility to protect the education budget,” Garrett said.
The committee approved Rep. Cynthia Almond’s bill to encourage the construction of housing for low- and mid-level earners in areas where there are housing shortages. That bill is capped at $5 million per year.
Almond said the goal is to “drive down the cost of living so it makes sense for someone to enter the workforce.”