Child care tax credit won’t fix crisis in Georgia. But it’s a step, experts say

Thanks to a scholarship funded by her employer, Atlanta Public Schools, and Quality Care for Children, Smith and her husband were able to save so much money they could buy a house, and pay for a new car she needed in cash, and afford to put their daughter in basketball.

“This is probably the most time we’ve been able to spend with our kids to be honest, because we don’t have to work as much,” the Douglasville resident said.

State lawmakers are taking a hard look at the cost of child care in Georgia. Families are faced with the difficult decision to spend thousands of dollars a year on child care, which increases exponentially when you have more than one kid; or take a step back from the workforce to stay home with kids, which creates an economic issue in a state that prides itself on being good for business.

The Georgia Senate is taking a stab at the problem this year. Sen. Brian Strickland, R- McDonough, filed Senate Bill 89, which would give families a $250 tax credit for every kid under the age of 7. It would also expand the tax credit for employer-sponsored child care programs, and expand the existing credit for child care and dependent expenses. It could save families a few hundred dollars a year in what they owe in state taxes, depending on their situation. The bill sailed through the Senate without opposition last month.

But child care experts say the credit is not a lot when you look at the numbers: In metro Atlanta, the average cost of infant care is close to $13,000 per year for one child. Tuition for infants exceeds the cost of in-state tuition at a four-year public college. And because of limited funding, it’s estimated that only 15% of eligible children in the state are receiving child care scholarships.

“These tax credits alone are not sufficient,” said Hanah Goldberg, director of research and policy at the Georgia Early Education Alliance for Ready Students, in an interview with The Atlanta Journal-Constitution. “They are certainly a step in the right direction, and in concert with other strategies … can help make a difference.”

Other strategies

The tax credits were an idea recommended by a Senate study committee in December. It’s one of more than a dozen steps the committee laid out for lawmakers that could help curb the burden felt by families, providers and employers.

While the tax breaks proposed in S.B. 89 and advanced by Lt. Gov. Burt Jones may not mean a huge windfall for families, it’s an important first step, said Danny Kanso, a senior fiscal analyst with the Georgia Budget and Policy Institute.

“Getting over that barrier of having a child tax credit in our tax code is an achievement that we can then build on,” he said. “But we are starting from a point where it is not a lot of resources initially being invested.”

A Senate committee on affordable child care met several times in the fall and published a list of recommendations to help keep providers in business and the workforce strong. In addition to tax credits, the ideas included increasing state funding to provide scholarships for low-income families, extending Georgia’s universal pre-K to 3-year-olds and establishing a child care trust to fund child care access in the state.

Some of those things are in the works, Strickland said. The early version of next year’s budget allocates an extra $4 million to the scholarship for low-income families, called the CAPS program, to open up 500 more slots.

Credit: AP

Credit: AP

That’s the kind of thing that could make a difference to a family like Dival Rivera’s. He quit his job to take care of his daughter, who is disabled, and her two kids. His granddaughter, who is 4, was in a child care program for about six weeks thanks to an emergency scholarship from Quality Care for Children. But after the scholarship ran out, he couldn’t afford the $140 a week it would cost to keep her there — even though it made a huge difference to the family.

“They feel like they have to help with their mother, but it deprives them of things,” said Rivera, an Atlanta resident. “(Child care) just gives them a chance to play, to release, to learn … It was just a big help on the mental side. It was just big. It was really, really precious.”

The family applied for the CAPS program, but was denied. It has strict requirements, and they weren’t able to meet the rules about regularly applying for work due to their situation.

Rivera likes the sound of a tax credit.

“All that stuff is necessary, necessary,” he said. “Whatever they could do to help.”

A bigger swing

Funding for the CAPS program swelled during the pandemic thanks to federal relief aid. But when that aid ended last year, restrictions tightened around who could access the remaining pot of money. Families like Rivera’s aren’t able to make the cut.

That’s why advocates are suggesting another approach: Take some of Georgia’s historic $16.5 billion budget surplus and establish a trust to fund child care expenses in the state.

With an initial investment of $7.5 billion, the Georgia Budget and Policy Institute estimates that the fund would generate a payout between 5-10% every year — similar to the existing Teachers Retirement System. If the first year yielded a 6% return, that would equal $486 million for the CAPS program, according to the institute. That’s almost half of the $1 billion the state spent on child care services in the previous fiscal year.

“That would be a historic, monumental shift in how we approach funding child care, and would be a real recognition of the challenge that families and these child care providers or small businesses really face,” said Goldberg at GEEARS.

It’s a heavier lift than the tax credits. It would take a constitutional amendment, which means it needs to be approved by two-thirds of the General Assembly, and then by 50%, plus one, of voters statewide. And although advocates have been pushing the idea, which has gained traction in states like New Mexico, Georgia lawmakers are more cautious. Everyone seems to be after a piece of the surplus.

“I’m going to start myself with tax credits, but I’m definitely open to seeing where things go,” said Strickland, a father of two. “(My wife and I) are living this, and frankly it’s about time that policymakers realize what a priority this is.”