Legislature(2023 - 2024)SENATE FINANCE 532
04/23/2024 09:00 AM Senate FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| SB131 | |
| HB89 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | SB 131 | TELECONFERENCED | |
| + | HB 89 | TELECONFERENCED | |
| + | TELECONFERENCED |
CS FOR HOUSE BILL NO. 89(FIN)
"An Act relating to education tax credits for certain
payments and contributions for child care and child
care facilities; relating to the insurance tax
education credit, the income tax education credit, the
oil or gas producer education credit, the property tax
education credit, the mining business education
credit, the fisheries business education credit, and
the fisheries resource landing tax education credit;
renaming the day care assistance program the child
care assistance program; relating to the child care
assistance program and the child care grant program;
providing for an effective date by amending the
effective date of secs. 1, 2, and 21, ch. 61, SLA
2014; and providing for an effective date."
9:37:39 AM
Co-Chair Olson relayed that it was the first hearing for HB
89.
9:37:55 AM
REPRESENTATIVE JULIE COULOMBE, SPONSOR, recounted that the
previous year she had been appointed to serve on the
Governor's Task Force on Childcare and work toward making
childcare more affordable to Alaskan families. She asserted
that childcare was a work force issue. She said that lack
of high-quality affordable care cost employers $152 million
per year. She had talked with private businesses and
childcare providers while crafting the legislation. She
related that the legislation addressed concerns raised by
the taskforce. She contended that it was not the job of the
government to provide childcare, but an environment could
be created to make it easier for those who wanted to start
a childcare business. Representative Coulombe pointed out
that women are over 60 percent of the state's workforce,
and housing and energy prices continued to increase forcing
women to work to support their families.
9:41:26 AM
Senator Bishop thanked the bill sponsor.
9:41:38 AM
EDRA MORLEDGE, STAFF TO REPRESENTATIVE COULOMBE, discussed
a presentation entitled "CHILDCARE: TAX CREDITS/
ASSISTANCE/GRANTS" (copy on file). She showed slide 2,
"Overview":
1. How the Childcare Assistance Program Works
Currently
2. HB 89 New Provisions
3. How the Childcare Tax Credits Work
4. Wrap-up
9:42:01 AM
Ms. Morledge turned to slide 3, "CURRENT PROGRAM":
• Provides a monthly subsidy to help with childcare
expenses based on a sliding fee scale for eligible
low-moderate income families up to 9%.
• The family benefit is based on geographic location,
type of care, age of child(ren), unit of care
authorized, and attendance at the childcare
facility.
• Parents must be participating in an eligible
activity of working, attending school or a job
training program, and meet non-financial and
financial criteria set by the department.
• The income limit is 85% of adjusted median income
for Alaska.
• Children between infancy and 12 years old are
eligible.
• Provides a $50 grant per child to childcare
facilities.
9:42:55 AM
Ms. Morledge reviewed slide 4, "HB 89 ~ PROVISIONS &
SECTIONS":
• Provides for the childcare tax credit, increases
education and childcare tax credits to $3 million
annually, and extends the tax credit sunset to
January 1,2028. (Secs. 1-21)
• Changes terminology throughout statute from "day
care" to "childcare." (Secs. 22-27, 29-32, and 36)
• Increases the income eligibility to 105% of the
State Median Income. (Sec. 24)
• Caps the family contribution at 7% (currently 9%).
(Sec. 28)
• Requires facilities to be designated as "high
quality" to receive childcare assistance funds.
(Sec. 31)
• Requires the prioritization of low-income children
for the childcare assistance program. (Sec. 34)
• Prohibits a childcare facility from denying a child
for acceptance at a facility based on disability or
socioeconomic status. (Sec. 34)
• Definition of "childcare facility" (Sec. 35)
• Eliminate the $50 per child grants to childcare
facilities. (Secs. 37 & 40)
• Effective Dates Tax credits sunset 1/1/2028 (Sec.
37); the Act takes effect 1/1/2026 (Sec. 39 & 41);
All other sections effective immediately (Sec. 42)
9:44:42 AM
Ms. Morledge addressed slide 5, "Childcare Tax Credits":
• Insurance Tax Credit Authorized Insurers in the
state (Sec. 1-3)
• Income Tax (Sec. 4-6)
• Oil & Gas Production Tax (Sec. 7-9)
• Oil & Gas Exploration, Production, and Pipeline
Property Tax (Sec. 10-12)
• Mining Business Tax (Sec. 13-15)
• Fisheries Tax (Sec. 16-18)
• Floating Fisheries Business Tax (Sec. 19-21)
o Raises the maximum tax credit (in
combination with the education tax credit)
to $3 million annually.
o Provides an inflation increase every 5 years
beginning in 2030.
o Includes contributions of cash or equipment
to a childcare facility, expenditures made
to a childcare facility for the taxpayer's
employees, or payments made to an employee
by the taxpayer to offset childcare costs.
o Education and Childcare Tax Credits sunset
January 1, 2028
9:45:33 AM
Ms. Morledge referenced slide 6, "IN WRAP-UP, - HB 89
WILL?":
• Incentivize the private sector to contribute to
childcare for their employees
• It does this by increasing the maximum contribution.
• Extends the sunset date to 2028
• Broaden access to the program for families, helping
parents return or enter the workforce, thus
increasing the number of children attending
childcare facilities, growing the industry and
increasing the seats available
• Lower the amount of the maximum contribution for
families to 7% of income
• Increase the eligibility threshold to 105% of the
State Median Income
Co-Chair Olson asked about the effective date of January 1,
2026.
Representative Coulombe relayed that the department had
requested the date because of the approval process on the
federal level.
9:46:54 AM
NICK MOE, PUBLIC POLICY MANAGER, THREAD ALASKA (via
teleconference), offered invited testimony in support of
the bill. He explained that Thread Alaska worked to provide
access to quality early education with a focus on
childcare. He relayed that the organization served more
than 10,000 families, 2,000 early educators and teachers,
and 400 early education programs. He mentioned a letter
with over 300 signatures in support of the legislation
(copy on file).
Mr. Moe emphasized that he was not using hyperbole when he
stated that there was a childcare crisis in the state. He
relayed that Thread anticipated more childcare programs
closing without stable and meaningful support from the
state.
Mr. Moe stressed that the state's economic infrastructure
struggled when there was not appropriate childcare
available. He stated that data showed that businesses were
impacted by families struggling to find childcare.
9:51:26 AM
Mr. Moe cited that lack of childcare impacted parents'
ability to be employed. He lauded the legislation and the
removal of the childcare grant program. He encouraged the
committee to support the legislation and budget items
related to childcare in the state.
9:53:55 AM
JEN GRIFFIS, VICE PRESIDENT OF POLICY AND ADVOCACY, ALASKA
CHILDREN'S TRUST (via teleconference), offered invited
testimony in support of the bill. She provided some
background to the work done by the Alaska Children's Trust
(ACT). She relayed that currently Alaskans spend 15 percent
to 35 percent of their income on childcare. She shared that
th
Alaska ranked 44 in the nation for economic wellbeing and
34 percent of Alaskan children had parents that lacked
secure employment. She said that parents that were able to
access the childcare they need reported reduced stress and
increased economic stability, which were important societal
factors for decreasing child abuse and neglect. She
believed that the bill was an important step in
revitalizing the childcare system in the state.
9:56:13 AM
CHAD HUTCHISON, DIRECTOR OF STATE RELATIONS, UNIVERSITY OF
ALASKA, offered invited testimony in support of the bill.
He discussed the education tax credit program, the three-
year extension, and the $2 million cap. He provided
examples of qualifying education tax credit contributions.
He names several companies that had contributed to the
past, such as Alaska Airlines and Glacier Fish Company. He
said that the credits varied over the years due to the
fluctuating economy from $2.1 million to $8.4 million.
9:59:26 AM
Senator Kiehl mentioned bill provisions related to
childcare quality. He mentioned training of childcare
workers. He asked for information regarding what UA
programs were available at various campuses.
Mr. Hutchison agreed to provide the information.
10:00:47 AM
LEAH VAN KIRK, HEALTH CARE POLICY ADVISOR, DEPARTMENT OF
HEALTH, addressed FN 2 from the Department of Health, OMB
Component number 1897. She cited that the amount of the
note was approximately $6.1 million. The largest portion of
the fiscal note was the grants and benefits line that
reflected the increased eligibility criteria; subsidies
would be provided to families above 85 percent of the state
median income and up to 105 percent. She said there were
18,000 additional children that met the criteria. A series
of assumptions had been developed to calculate the
projections and the calculations were broken down in 5
percent increments. The total, based on a 7 percent
utilization rate by 18,000 children, resulted in a total of
$5.6 million.
Ms. Van Kirk continued that additional staffing would be
required to administer the additional subsidies proposed in
the bill. Additional grant funding would be needed to
administer the program. She noted that all the positions
were eligible to be funded through 50/50 federal funds and
General Fund match.
10:03:45 AM
Senator Kiehl asked whether Ms. Van Kirk could discuss the
50/50 split in relation to the incentives for private
sector employers.
Ms. Van Kirk explained that the Childcare Development Block
Grant supported quality and subsidy initiatives at a 50/50
match, specific to the positions. Federal funds could be
used to support incentives for employers for developing
onsite or near site childcare centers.
10:04:58 AM
Co-Chair Olson requested that the Department of Revenue
comment on FN 3.
10:05:21 AM
MICHAEL WILLIAMS, ACTING DEPUTY DIRECTOR, TAX DIVISION,
DEPARTMENT OF REVENUE (via teleconference), spoke to FN 3
from the Department of Revenue, OMB Component 2476. He read
from the analysis on page 2 of the fiscal note:
This bill would expand the education tax credit to
include donations made to childcare facilities
(employer run or nonprofit) for the children of the
taxpayer's employees, or for payments made to an
employee of the taxpayer for the purpose of offsetting
the employee's childcare costs. The new provisions
would take effect 90 days from being signed into law
(est. July 1, 2024). This bill also would increase the
credit limit from $1 million to $3 million annually
per taxpayer. The bill extends the sunset provisions
to January 1, 2028.
Revenue Impact
The change in revenues reflected in this fiscal note
only include those eligible tax programs administered
by the Department. The bill's fiscal impacts can be
divided into three categories: (1) expansion of the
education tax credit to childcare facilities and
employer costs, (2) increase to the annual tax credit
limit, and (3) extending the credit repeal date.
(1) The revenue impact of the expansion of the credit
to childcare facilities and costs cannot be determined
because the Department of Revenue does not have
Alaska-specific data to estimate how many taxpayers
will claim the expansion of the credit, how many
taxpayers currently pay their employees' child care
costs or make donations to child care facilities for
the children of their employees, or how many taxpayers
will start paying their employees' child care costs or
making donations to child care facilities for the
children of their employees.
(2) The revenue impact of the increase in the credit
limit is estimated by applying historical information
at higher credit limits and interpolating the impact
of the $3 million annual credit limit. See the table
below. (3) The revenue impact of the increase in the
extension of the repeal date is estimated by using the
average of the last three years of actual credits
claimed as a basis going forward. See the table
below.
Mr. Williams said that the department could implement the
fiscal note using current resources.
10:08:15 AM
Senator Kiehl asked about the language in the proposed new
credits. He spoke of the payment to employee credit and
wondered whether the department had scrutinized the
language to be sure it covered payments to support only
childcare expenses. He feared that some businesses could
get tax breaks for wage hikes through creative wording of
the credit.
Mr. Williams relayed that the department had looked at the
language. He had a minor concern with the corporate income
tax statue language. He noted that the current wording of
the statute prevented double dipping. He said that he
could follow with specific language.
Senator Kiehl relayed that he would appreciate a follow up.
10:11:03 AM
Co-Chair Olson asked about tax credits pertaining to
childcare centers.
Mr. Williams noted that the statute would allow any
contribution for childcare to be claimed as a tax credit.
10:12:06 AM
Senator Kiehl mentioned his earlier question about
childcare quality and observed that there was a provision
that facilities be designated as "high quality." He asked
for discussion of the factors involved in the designation.
Representative Coulombe relayed that the task force had
discussed quality in depth. She said that the quality in
the bill was related to licensure. She said that all
childcare facility standards in Anchorage were equal to
Head Start programs. She explained that Head Start was a
federally subsidized program that could afford to meet
higher standards and other programs struggled to afford to
meet the standards. She stated that Thread had provided
training to ensure quality of centers and the balance
between quality and availability was hard to strike.
Senator Kiehl appreciated the response. He referenced
childcare facility grants and a new provision proposed in
the bill that prioritized children from low-income
families. He agreed that the need was tremendous and
queried compliance checks and auditing for centers. He
wondered if DOH would be auditing facilities' books.
Representative Coulombe relayed that the verbiage was added
in the previous committee of referral through amendment and
thought the department could speak about the matter. She
relayed that she was not sure how the provision would be
implemented.
10:15:59 AM
Senator Wilson agreed that there had been an amendment made
in the Senate Health and Social Services Committee. He said
that the language needed to be reviewed and an amendment
was forthcoming. He spoke on the previous topic of facility
quality and noted that the language had also been added by
amendment and that language still needed to be clarified.
10:16:49 AM
Senator Kiehl looked forward to working with the sponsor
and the HESS committee chair.
10:17:01 AM
Co-Chair Olson referenced page 20 of the bill asked if
there was a definition of quality childcare facility.
Representative Coulombe asked whether Co-Chair Olson was
referencing line 31, on page 20.
Co-Chair Olson answered affirmatively.
Representative Coulombe deferred to the department.
10:17:47 AM
Ms. Van Kirk relayed that there was not an identified
definition of "quality" in statute but thought there was a
road map to develop the definitions. She said that the
department supported grants that had developed a learning
growth system that had 5 different levels, 3 of which had
been launched in the state and integrated early childhood
education programs for quality. She noted that as the
sponsor had mentioned earlier, the initial base quality
rating was that a childcare facility was licensed.
CSHB 89(FIN) was heard and HELD in Committee for further
consideration.