Child care contribution tax credit proposed

The Revenue Committee heard testimony Feb. 4 on a bill intended to improve access to child care and early childhood education programs for Nebraska families.

Under LB531, introduced by Albion Sen. Tom Briese, taxpayers who make a qualifying financial contribution to certain child care and early childhood education programs in Nebraska could apply for a nonrefundable income tax credit equal to a portion of the contribution.

Briese said the bill would drive private investment in Nebraska’s early childhood system, which he said is key to the state’s economic security and quality of life. Improving access to child care is especially important in encouraging working parents to live in rural areas, he said.

“Making child care more accessible and affordable to parents will help us realize the full benefit of other investments we currently make in housing, worker training and business attraction,” Briese said.

The contributions would have to promote or enhance quality child care and early childhood education programs in the state.

Among other purposes, they could be used to operate a child care or early childhood education program, create a grant program for parents who need financial assistance placing their children in such a program and help child care providers improve their facilities.

An eligible child care or early childhood education program would have to be enrolled in the quality rating and improvement system developed under the Step Up to Quality Child Care Act and meet other requirements.

The credits would be available for taxable years beginning on or after Jan. 1, 2022, and before Jan. 1, 2027. The department could approve up to $15 million in credits each year.

Nebraska resident and nonresident individuals, estates, trusts and corporations could claim credit, which could not exceed $100,000 per taxpayer in any single year.

Elizabeth Everett, deputy director at First Five Nebraska, testified in support of LB531. She said the state suffers from a chronic shortage of openings in child care programs and loses approximately $745 million annually due to inadequate access to child care.

Even in good economic times, Everett said, the child care industry faces high employee turnover, low profit margins and high operating costs.

“In the face of an unprecedented challenge such as COVID-19,” she said, “it is more important than ever that our public and private sectors are actively involved in helping to sustain this critical industry.”

Diane Temme Stinton, CEO of TMCO in Lincoln, testified in support of the bill on behalf of the Nebraska and Lincoln chambers of commerce.

Since the start of the pandemic, she said, many workers have left their jobs because they cannot find adequate child care. A disproportionate number of those workers are women, which threatens to worsen gender inequalities and wage gaps in the workplace, Temme Stinton said.

She said TMCO offers a child care benefit to its employees, but it is one of few businesses its size to do so. LB531 would encourage more employers to make that investment, Temme Stinton said.

“The business community needs an incentive to get the conversation going and to build awareness around the effects and consequences of inadequate child care resources for the economic future of Nebraska,” she said.

No opponents were present at the hearing and the committee took no immediate action on the bill.