HOUSE BILL REPORT
HB 1143
BYRepresentatives Heavey, Brough, O'Brien, K. Wilson, Sayan, May, Dorn, D. Sommers, Jacobsen, Ferguson, Crane, Kremen, Todd, Jones, Vekich, Rasmussen, Brekke, Anderson, Scott, Miller, Cantwell, Wineberry, Bristow, Winsley, Inslee, Patrick, Jesernig, P. King, G. Fisher, Doty, Valle, Dellwo, Wang, R. Fisher, Van Luven, Beck, H. Myers, Locke, Phillips, Cole, Spanel, Rector, Cooper, Tate and Ebersole
Promoting employer-assisted child care.
House Committe on Trade & Economic Development
Majority Report: The substitute bill be substituted therefor and the substitute bill do pass. (9).
Signed by Representatives Cantwell, Chair; Wineberry, Vice Chair; Kremen, Moyer, Rasmussen, Raiter, Tate, Walk and Youngsman.
House Staff:Charlie Gavigan (786-7340)
AS REPORTED BY COMMITTEE ON TRADE & ECONOMIC DEVELOPMENT
FEBRUARY 21, 1989
BACKGROUND:
Child care is licensed and coordinated by the Department of Social and Health Services (DSHS). In addition to regulating child care providers, DSHS also provides technical assistance and other programs to help child care providers.
In 1987, the Legislature created a coordinator for Child Care Resources in DSHS, and directed the coordinator to help encourage employer-provided assistance for child care.
In 1988, the Legislature established a Child Care Coordinating Committee to help coordinate state agencies in this area and to provide recommendations to the legislature regarding child care subsidy programs. Currently the major state subsidy programs are: (1) child care assistance provided through Aid to Families with Dependent Children (AFDC); (2) child care assistance to low income, employed, and non-AFDC persons; (3) child care assistance to teenage parents who are completing their high school education or General Education Development Test (GED); (4) child care for seasonal workers who are low income; and (5) child care associated with Child Protective Services.
The Legislature created but did not fund a Child Care Expansion Grant Fund to provide one-time start-up grants to persons, organizations, or schools for new child care facilities, or to expand existing facilities to handle children with special needs.
The Legislature established a child care policy in statute in 1988. The policy encourages the participation of families and businesses in operating and expanding the child care system in the state to meet the needs of the labor market and to assist families. The policy encourages traditional at-home parenting, but also promotes the availability and affordability of quality child care for families that need child care assistance.
The Business and Occupation Tax is a tax on the gross income of a business.
SUMMARY:
SUBSTITUTE BILL: Tax credits are provided to companies for providing or assisting child care services or facilities. The tax credits apply to the Business and Occupation Tax.
The tax credit is available to employers or property owners: (1) who provide on-site care or donate space for child care; (2) who join with other businesses to provide care on-site at one of the participating employers; or (3) who assist community organizations in providing child care. The incentive for the first two is $3 per square foot per year up to 3,000 square feet. The incentive for the third is 25 percent of the money spent. Additional credits are available under the first two incentives when the company provides additional child care services such as care for sick or handicapped children.
The child care facility may provide services to non-employees if additional capacity exists after employee needs are addressed.
In order to receive the credits, the child care must meet all the state and local licensing and operating requirements and must not exceed 300 square feet per full time child.
The Department of Social and Health Services and the Department of Revenue are to work together to carry out this tax credit program, including establishing an application process and prioritizing available tax credits when the state limits may be exceeded. These departments are to report to the legislature in December 1991, including recommendations for improving the program.
The total tax credits available are limited to one hundred thousand dollars in 1989, two hundred thousand dollars in 1990, three hundred thousand dollars in 1991, and four hundred thousand dollars each year thereafter.
SUBSTITUTE BILL COMPARED TO ORIGINAL: The substitute clarifies that the tax benefit is a credit against taxes owed and that the tax credit is available for space donated for child care. The substitute also provides for establishing an application process and for prioritizing applications for tax credits when the state tax credit limits may be exceeded.
Revenue: The bill has a revenue impact.
Fiscal Note: Requested February 22, 1989.
Effective Date:The bill contains an emergency clause and takes effect on July 1, 1989.
House Committee ‑ Testified For: Sandra Burud, Patty Siegal and Karen Tvedt, Department of Social and Health Services; Bill Dethlefs, U. S. Sprint - General Telephone and Electronics; Denise Bohanna, Washington Association for the Education of Young Children, Cliff Finch, Association of Washington Businesses; Salina Chow, City of Seattle; and Randy Ray, National Association of Industrial Parks.
House Committee - Testified Against: None Presented.
House Committee - Testimony For: The dramatic increase in the participation of women in the workforce has resulted in the demand for child care exceeding the supply provided by the market. There is a lack of quality affordable child care. Employees with child care concerns or problems affect economic development. Child care problems cause higher absenteeism, lower productivity, and prevent some women from participating in the workforce.
Most employers know little about providing child care assistance. Tax credits would provide a small incentive that could significantly increase the availability of quality and affordable child care to employees by encouraging businesses that are thinking about child care to actually become directly involved. Although there is a fiscal impact, a small investment by the state can lead to large investments by the private sector in providing child care assistance.
In addition to encouraging ongoing child care assistance by an employer or property owner, this legislation encourages the owners of buildings to donate space to be used for child care.
House Committee - Testimony Against: None Presented.