Legislature(2021 - 2022)BARNES 124
03/17/2021 05:45 PM House LABOR & COMMERCE
Note: the audio ![]()
and video ![]()
recordings are distinct records and are obtained from different sources. As such there may be key differences between the two. The audio recordings are captured by our records offices as the official record of the meeting and will have more accurate timestamps. Use the icons to switch between them.
| Audio | Topic |
|---|---|
| Start | |
| HB100 | |
| HB121 | |
| HB45 | |
| HB100 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 100 | TELECONFERENCED | |
| *+ | HB 133 | TELECONFERENCED | |
| *+ | HB 121 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 45 | TELECONFERENCED | |
HB 121-EDUC.TAX CREDIT: EMPLOYER CHILD CARE COST
6:32:27 PM
CO-CHAIR SPOHNHOLZ announced that the next order of business
would be HOUSE BILL NO. 121, "An Act relating to education tax
credits for certain payments and contributions for child care
and child care facilities; and providing for an effective date."
6:32:54 PM
CO-CHAIR FIELDS, as prime sponsor, introduced HB 121. He stated
that the intent of the proposed bill is to offer a corporate tax
credit to employers who offer child care on premises or through
a stipend to employees. He shared that he had heard good things
about oil company BP offering child care on site, which brought
about the idea for the proposed bill. He noted that when Alaska
State Representatives Sara Rasmussen and Chris Tuck chaired the
Children's Caucus during the Thirty-First Alaska State
Legislature in 2020, there were a variety of discussions about
what could be done to improve child care and improve retention
of skilled workers in Alaska, and the idea for HB 121 came out
of those discussions.
CO-CHAIR FIELDS offered a PowerPoint presentation entitled,
"House Bill 121," and began on slide 2. He explained that many
companies might be eligible for this tax credit from a wide
range of industries. He moved to slide 3, which highlights the
issues HB 121 seeks to address and read as follows [original
punctuation provided]:
-Recognizes the urgent need for better access to child
care in the State of Alaska.
-Covid-19 pandemic laid bare the lack of access for
child care for many, and the impacts on working
families.
-HB 121 works to build off of the existing education
tax credit to help foster child care facilities and
incentivize access to child care.
-Would allow employers to deduct credits against
existing Alaska taxes, including for their own child
care facility or a stipend to send employee's child to
existing child care center.
CO-CHAIR FIELDS noted that as a country, "we have moved
backward" in terms of women participating in the workforce,
driven in part by the COVID-19 pandemic. Parents have had to
make difficult decisions, he continued, in order to find a
solution for child care during the pandemic. He shared that
there was a time during the pandemic where all of the lost jobs
in the United States were "women's jobs," which he said was due
to the tough decisions that parents had to make regarding child
care.
6:35:07 PM
CO-CHAIR FIELDS proceeded to slide 4, "Women suffer
disproportionate impacts from lack of child care access, con't,"
which depicted a graph of employment fluctuations in "non-
teleworkable" occupations during 2020. He stated that there
have been significant negative impacts for women with young
children in terms of workforce participation during the
pandemic, and there has not yet been a recovery from that. He
said that child care is key for women with children to have the
option to stay in the workforce.
CO-CHAIR FIELDS shared some statistics on net migration, stating
that although many young adults move to Alaska, many of these
individuals leave the state once they have children. Expanding
the availability of high quality child care would allow Alaska
to retain workers, he continued, and added that it is dangerous
for Alaska to have young families leaving the state. He said
that there are a lot of variables involved in this choice, but
child care is a deciding factor in young families' choice to
leave Alaska. By strengthening child care, he said, Alaska's
economy is strengthened as well.
CO-CHAIR FIELDS proceeded to slide 5, "Child care in Alaska,"
and shared that the child care problems experienced nationally
are particularly acute in Alaska. He opined that anyone who has
tried to find a daycare or hire a nanny knows how hard it is to
find affordable, high quality child care. He said that the
supply for child care in Alaska is not close to matching the
demand that Alaska needs to retain productive, high-earning
families.
6:37:23 PM
CO-CHAIR FIELDS advanced to slide 6, "Access to child care in
Alaska," which depicted some statistics from Thread Alaska
regarding child care. He moved to slide 7, "Access to child
care in Alaska: con't," and explained that the need for child
care in urban areas is acute and that the need in rural areas is
even more acute.
CO-CHAIR FIELDS proceeded to slide 8, "Workforce Participation,"
and explained that when employers can provide and subsidize
child care, it makes it more possible for everyone to
participate in the labor force and spend more money in the local
economy. He restated that there is a disproportionality of the
impacts of the pandemic on women, which can be seen in the
graphs on the slide.
CO-CHAIR FIELDS continued to slide 9, " Access to Child care in
Alaska: McDowell Group Report," and explained that the McDowell
Group conducted an extensive report on the impact of early care
and learning in Alaska. He shared his understanding that this
report made a commendable case that this is an area in which the
state should invest.
CO-CHAIR FIELDS advanced to slide 10, "Employer Provided
Financial Support: McDowell Group Report," and described some of
the benefits of child care provided by an employer, including
the convenience of being able to drop off children at work, the
ability for parents to spend more time with their children at
home, and increased quality of life. He stated that increasing
the availability of child care would make Alaska more of a
destination for "innovative, high-earning workers" and improve
economic development.
CO-CHAIR FIELDS proceeded to slide 11, "Benefits to Employers:
McDowell Group Report," and opined that there is nothing like
high quality child care to persuade young parents to remain at
their jobs. He reiterated that Alaska should give employers
more opportunities to obtain these highly productive employees.
He explained that this would also prevent women leaving the
workforce to take care of children, thereby increasing the
number of women in management positions.
6:40:41 PM
STEPHANIE BERGLUND, CEO, Thread Alaska, shared that Thread is a
35-year-old private, nonprofit that works across the state to
increase access to affordable early care and education, with a
specific focus on child care. She stated that Thread supports
HB 121 and that she intends to share more information about
child care that illustrates the importance of the proposed
legislation. She continued that she has worked in early
childhood sector for 15 years and has yet to meet a family who
has been able to find and utilize child care that operates in a
way that meets the price, access, and quality concerns of the
family. This means that parents have fewer choices when it
comes to child care, and this lack of choice can severely impact
parents' time and productivity. She shared that even working in
the early childhood sector herself, she has lost "great
employees" due to lack of access to child care. She opined that
Alaska needs HB 121 for businesses to be able to support
employees.
6:42:53 PM
MS. BERGLUND began a PowerPoint presentation [hard copy included
in the committee packet]. She drew attention to slide 1, "There
is a need for more supports for child care to support more
families able to work," and explained that the statistics on the
slide were compiled in 2019 and 2020 and represent pre-COVID-19
data. She paraphrased from the slide, and shared the statistic
that more than 88,000 children in 54,000 households are in need
of early childhood learning (ECL) services in Alaska. The
primary benefit of this access as reported by adults in the home
is that it allows the adults in the home to be employed. She
shared that there is a large gap in demand for child care needs,
and that only 60 percent of these houses have access to reliable
child care services.
MS. BERGLUND proceeded to slide 2, "Access to early care &
learning services is becoming increasingly difficult for Alaska
families," and explained that for households with children in
ECL services, 52 percent found it difficult or very difficult to
find services, which is up from 37 percent since 2015. She
shared that COVID-19 has made child care programs even more
fragile than the programs were before. Operating costs have
increased, and revenue has decreased, she said. This is due to
families keeping children home due to safety, or to parents
losing their jobs and no longer needing child care services or
being able to afford it. She shared that while working from
home is an option for some parents, parents have found it
stressful to work and take care of children at the same time.
She predicted that after the pandemic is over, there will be an
increased demand for child care. She stated that HB 121 would
help provide needed support to meet the demand.
6:44:30 PM
MS. BERGLUND moved to slide 3, "Child care is expensive and for
many families not affordable," and said that working families
carry the burden of both paying for and supporting the child
care system. She opined that families should not have to choose
between work and child care. In Alaska, child care costs more
than tuition to a university and costs families 17 percent of
household income on average. For single mothers, the cost is on
average 34 percent of household income. She expressed that HB
121 would help families afford child care and likely allow
businesses to recruit additional employees that these businesses
wouldn't currently be able to employ.
MS. BERGLUND continued to slide 4, "Child care services make a
stable workforce possible," and explained that quality child
care brings families peace of mind and allows parents to be more
dependable and productive at work. She shared that in Alaska,
16 percent of residents are able to participate in the workforce
because of access to child care. This has a large impact on
Alaska's economy as these workers earn $1.9 billion in wages.
However, she opined that this number could be bigger, and said
that 22 percent of households are not working or would like to
work more, but are prevented from working at the household's
preferred capacity due to lack of availability or cost of child
care.
MS. BERGLUND moved to slide 5, "Businesses benefit from
supporting employee child care needs," and explained that more
than just parents benefit from increased access to child care.
Children also benefit and are more prepared when they enter
Kindergarten, making these children more successful in school
and in life. She said that this makes for a more employable and
prepared workforce when these children grow up. When child care
is supported or subsidized by businesses, child care programs
are able to pay the workforce more livable wages and offer
benefits. As a result, she continued, this makes the sector a
stronger and more consistent workforce that generates more in
economic growth. She reported that many Alaska employers
consider themselves to be family friendly, and 8 in 10 working
parents report some support from employers related to child care
needs. This indicates that the tax credit benefit proposed in
HB 121 would be utilized. She shared that employers see better
recruitment and retention of employees with more child care
offered.
MS. BERGLUND continued that as a result of COVID-19, more
employers are aware of the importance of child care. This
conversation has been raised to a new level, she said, which
makes the proposed bill well timed. She concluded that HB 121
would give more options to support employees and ultimately to
support Alaska's economy. The bill would be beneficial for both
employees and employers, and would be a "win-win-win" for
businesses, families, and young children.
6:49:10 PM
REPRESENTATIVE NELSON asked Co-Chair Fields if he could talk
about the potential fiscal impact on the state should HB 121
pass.
CO-CHAIR FIELDS responded that fiscal notes have been submitted
and he deferred the question to testifiers online to explain the
fiscal notes.
6:50:12 PM
LORI WING-HEIER, Director, Division of Insurance, Department of
Commerce, Community & Economic Development (DCCED), responded
that the division can't predict how many insurance companies
would take advantage [of the tax credit proposed in the
legislation], but that she can disclose that education tax
credits have not been frequently utilized in Alaska in past
years. She shared that the highest year on record was $150,000
in 2015. She said that in 2016, it was $975, in 2017, it was
$0, in 2018 it was $500, in 2019 it was $5,000, and in 2020 it
was $0. Education tax credits have not been widely used in the
past, she reiterated, but credits might be utilized at a higher
rate for child care. She stated that the division "doesn't have
a handle" on how many companies would use this credit for child
care.
6:51:32 PM
NICOLE REYNOLDS, Deputy Director, Tax Division, Department of
Revenue (DOR), responded that DOR has submitted an indeterminate
fiscal note because it doesn't have specific data to estimate
how many tax payers will claim the expansion of the credit.
Also, it is unclear how many employers currently pay the child
care costs of employees. She stated that DOR can't estimate how
many employers will start paying child care costs or making
donations to child care facilities should this bill pass. She
explained that since this information is not available, DOR
can't give an estimate for the cost. She shared that for
calendar year 2020, the education credit that was claimed as the
statute is written now was about "$4 million across the board"
for all tax types to which it applied.
CO-CHAIR SPOHNHOLZ interjected that the education tax credit
that Ms. Reynolds is referencing currently applies to higher
education as well as Kindergarten through twelfth-grade, and HB
121 would expand the credit down to lower grades.
6:53:22 PM
REPRESENTATIVE NELSON asked Ms. Reynolds if she has an estimate
of the amount of people who utilized the maximum amount of
education credits.
MS. REYNOLDS answered that she doesn't have an estimate but can
get back to the committee with that figure.
CO-CHAIR SPOHNHOLZ shared her understanding that these
individuals mainly work in health care and oil and gas.
6:53:54 PM
REPRESENTATIVE NELSON shared that he is concerned about a
provision in the fiscal note that he understands as meaning that
"a credit for any taxpayer cannot exceed $1 million across all
tax types." He explained that he is fearful of the cost impact
of this provision on the state. He asked Ms. Reynolds how many
people hit the upper limit for educational credits.
MS. REYNOLDS responded that DOR would look into that and get
back to him.
CO-CHAIR SPOHNHOLZ added that to her knowledge, there are only a
few employers in Alaska that offer child care benefits to
employees.
6:55:01 PM
REPRESENTATIVE SNYDER directed attention to a statistic on slide
4 of Ms. Berglund's presentation, "Child care services make a
stable workforce possible," which read as follows [original
punctuation provided]:
16% of Alaska's residents can participate in the
workforce because of ECL services, earning a higher
income and enjoying a higher standard of living.
REPRESENTATIVE SNYDER asked Ms. Berglund if the 16 percent
figure is applicable to Alaska residents at any given time.
MS. BERGLUND responded yes, the data was collected in 2019 by
the McDowell Group through a representative sample household
survey across the state.
REPRESENTATIVE SNYDER asked if it would be fair to assume that
while the survey found that 16 percent of residents at any time
are benefiting from ECL services, it could potentially become a
much higher percentage of Alaska residents that would be able to
benefit.
MS. BERGLUND replied yes, that is a safe assumption. She added
that 16 percent is a consistent number and DOR has seen those
numbers stay consistent over the years. She directed attention
to another statistic on slide 4, which read as follows [original
punctuation provided]:
1 in 5, or 22%, of Alaska's residents cannot fully
participate in the labor force due to the cost,
availability, or quality of ECL services.
MS. BERGLUND explained that Alaska residents want to be
participating in the workforce with more access.
6:57:57 PM
CO-CHAIR SPOHNHOLZ shared her understanding that the reason the
16 percent figure is so low is because it only represents the
precise moment in time that a child is young enough to qualify
for ECL.
6:58:18 PM
REPRESENTATIVE KAUFMAN asked Ms. Berglund if all of the numbers
in her presentation are Alaska-based statistics.
MS. BERGLUND responded yes, it is specific data collected by the
McDowell Group in 2019 and 2020 on Alaskans. She reiterated
that these numbers came from the survey the McDowell Group
conducted in addition to labor and demographic statistics.
REPRESENTATIVE KAUFMAN asked if that information is available
online.
MS. BERGLUND replied that DOR just provided an update in the
last month and she would follow up to ensure the committee has
that information.
6:59:47 PM
TRISTAN WALSH, Staff, Representative Zack Fields, Alaska State
Legislature, on behalf of Representative Fields, prime sponsor
of HB 121, shared that there is a link on the final page of Co-
Chair Fields' presentation that leads to the McDowell Group
report. He said that he can ensure that committee members have
access to the link.
7:00:07 PM
REPRESENTATIVE SCHRAGE asked if the employer child care benefit
provided to a parent has to be a cash payment or whether it
could be a voucher, a stipend, or something similar.
7:00:33 PM
EMILY NAUMAN, Legislative Legal Counsel, Legislative Legal and
Research Services, Legislative Affairs Agency (LAA), shared that
HB 121 simply refers to a payment and is not specific as to
whether it would have to be a cash payment. She said that it
would depend on the interpretation by DOR, but that she doesn't
see a reason why it would be interpreted by DOR in a way that
doesn't include a stipend.
7:01:01 PM
REPRESENTATIVE SCHRAGE asked if there is anything to prevent an
employer from reclassifying regular wages already paid to
employees as child care support in order to write off those
wages.
7:01:27 PM
MS. REYNOLDS responded that DOR would need to implement some
regulations to clarify which types of contributions qualify for
the credit. She pointed out that there is no language in the
bill that would limit the qualifying contribution to those
incurred in Alaska or for Alaska child care facilities. She
stated that DOR would like to see an amendment that reflects
that stipulation to ensure that it is clear in statute that
contributions need to be for Alaska child care facilities.
7:03:18 PM
CO-CHAIR FIELDS provided clarification that the intent of the
proposed bill is to support both onsite child care and child
care provided through a stipend. He shared his understanding
that it should be easy to verify whether an employee is
receiving a child care stipend.
7:03:52 PM
REPRESENTATIVE SCHRAGE expressed that he is "wildly" supportive
of the proposed bill and that it is much needed. He said that
he wants to make sure that working families see benefits and
employers don't "gain the system."
7:04:14 PM
CO-CHAIR SPOHNHOLZ asked Ms. Reynold if she would view payments
made to an employee as a child care stipend as taxable or non-
taxable.
MS. REYNOLDS responded that a stipend provided to an employee
would most likely be considered taxable income under federal
law, but would not be considered taxable income under State of
Alaska law since Alaska doesn't have an income tax.
7:05:11 PM
CO-CHAIR FIELDS offered his understanding that some employers
that offer or subsidize child care presently might do so from
the employer to the child care provider which would shield the
employee from an additional tax burden.
CO-CHAIR SPOHNHOLZ agreed, and postulated that it might be
useful to find out whether the federal government would tax a
child care stipend paid for the benefit of an employee. She
shared that it could be viewed as a means by which to compensate
employees. She added that when her three children were young,
she spent more on child care than on her mortgage each month,
and that even a modest stiped for child care would've made a
significant impact on her wellbeing. She referenced child care
centers that BP, the University of Alaska (UA), and Providence
Alaska Medical Center have made available for employees, and
noted that many employers in Alaska are aware of the importance
of child care to employees.
7:07:18 PM
CO-CHAIR SPOHNHOLZ stated that HB 121 was held over.