Advocacy
Alabama leaders say tax credits could help shortage of affordable child care
ADVOCACY
Alabama leaders say tax credits could help shortage of affordable child care
Leaders from the Alabama Legislature and from the private sector spoke in support of a plan to offer state tax credits and grants to create more affordable, quality childcare options for parents, especially women, to help them start or return to work.
Toyota North American executive Karen Johnston and Women’s Foundation of Alabama President Melanie Bridgeforth joined lawmakers at a State House news conference Tuesday.
“Our message is quick and simple,” Bridgeforth said. “Childcare is just as important an infrastructure as a road or bridge for families to get to work.”
Last week, the Alabama House unanimously passed a bill to provide tax credits to employers for their investments in child care centers for their employees, tax credits to private child care centers, and grants to nonprofit centers to expand or make improvements.
The bill, HB358, is part of the “Working for Alabama” legislation intended to help people overcome barriers to working. The bills come in response to Alabama’s low labor participation rate, which ranks near the bottom among states.
“Women are the manufacturing industry’s largest talent opportunity,” Johnston said. “Yet, unfortunately, the main barrier for women to enter or reenter the workforce is lack of childcare. Providing high quality, affordable, and reliable child care really is the key to maximizing workforce participation in manufacturing.”
HB358, by House Minority Leader Anthony Daniels, D-Huntsville, is part of the bipartisan package of bills intended to remove barriers to the workforce. The bills came from ideas developed by groups led by Lt. Gov. Will Ainsworth and House Speaker Nathaniel Ledbetter and have sponsors and supporters in both parties.
The House passed HB358 by a vote of 103-0. It moves to the Senate, where the sponsor is Sen. Garlan Gudger, R-Cullman. Gudger, who chairs the economic development committee in the Senate, said he consistently hears about the need to bring more people into the workforce. But he said about 85,000 Alabama families lack access to affordable, quality child care.
“We are committed to removing these obstacles that keep Alabamians, and especially women, on the sidelines of participating in this labor force,” Gudger said.
HB358 would provide employers with a tax credit of up to $600,000 for providing or expanding onsite child care facilities for their employees or for working with childcare providers to provide slots for their employees. The total amount of tax credits would be capped at $15 million a year the first year and go up to $20 million in 2027, the third year of the program.
HB358 would allow child care providers to apply for tax credits of up to $25,000. The amount of the credit would be based on the number of eligible children enrolled and the provider’s quality rating on a system developed by the Department of Human Resources called STARS.
Nonprofit child care providers could apply for grants of up to $50,000 to make improvements or expansion.
The total cost of the program is capped at $25 million the first year and $30 million the following two years. The legislation will expire after 2027 unless lawmakers extend it. Lawmakers have said the purpose of the “Working for Alabama” bills are to increase labor participation and they want to assess their impact after three years.
Ledbetter said Alabama is in a financial position to try to fix a serious shortage of accessible, affordable, and quality child care for women who want return to work. A summary sheet about the bill estimates it would provide child care options for about 7,000 families the first year and about 24,000 over the three years of the program.
“When you’re paying $12,000 a year or somewhere in the neighborhood of that for childcare, and you’ve got a couple of kids, it makes it hard,” Ledbetter said. “You’re talking about two kids and it’s $24,000. And you’ve got to pay for utilities and gas and overhead for your family, for a single mom, it’s almost impossible.
“So I do think what this does is enable them to get back in the workplace, where they would like to be anyway. And also gives them an opportunity to have good childcare for their children.”