We are grateful that before lawmakers adjourned they gave approval to H.217, a bill that will help bolster our failing child care system by significantly raising reimbursement rates for child care providers, and expanding eligibility for families to receive child care subsidies.
Overall, providers will be able to more easily hire staff, and families will be able to access more affordable child care, the bill’s sponsors maintain.
According to VOX, which did an analysis of the state’s child care crisis, the newly approved child care bill would expand state subsidies for families earning up to 575% of the federal poverty level (or $172,000 for a family of four) and families earning up to 175% of the poverty line (or $52,000 for a family of four) would now pay nothing out of pocket.
The new payments will mean an infusion of funds for child care, allowing providers to be reimbursed at a 35% higher rate than they currently are. The legislation also tasks lawmakers with studying how to create an affordable full-day pre-K system, VOX noted.
“Our economy and the lives of Vermonters have been detrimentally impacted by not having access to child care for too long. Without this policy, we cost Vermonters millions in lost wages and businesses millions in lost purchases yearly. By investing in universal child care, we are leading the nation, providing a tremendous benefit not just to families but to everyone in all 14 counties,” said House Speaker Jill Krowinski earlier this month.
Vermont Public reported that a breakthrough in negotiations between House and Senate lawmakers on May 11 cleared the path for legislation that will pump an additional $120 million a year into Vermont’s child care system.
The two chambers had been at an impasse for weeks about how to finance the child care legislation. Democratic leaders in the House finally conceded to the payroll tax that Senate lawmakers want to use to generate the revenue needed to pay for the program, journalist Peter Hirschfeld reported on Vermont Public. House lawmakers had favored an increase in the corporate and personal income taxes to fund the new spending.
Republican Gov. Phil Scott included a $56 million increase in child care spending in his budget proposal earlier this year, which he said Vermont could afford without raising new revenues. He’s called on lawmakers in recent weeks to defer to his plan, and threatening the veto.
Jack Hoffman, senior policy analyst for Public Assets Institute, recently blogged about the subsidy program. “There is more to be done, but this will be transformative for Vermont. Not just for families currently using paid child care and any family thinking about having a kid or another kid, going back to work or moving to Vermont, but also for the well-being of all our kids,” he wrote. “That means a better state for all of us. … Unfortunately, in the rush to adjournment, public debate about how to fund child care expansion got short shrift. … Vermonters never got a chance to weigh in on how they wanted to pay for improving the state’s child care system.”
Hoffman made clear the choice between a new payroll tax or increasing income taxes was “primarily a choice about who should pay. The House proposed a progressive tax increase. Tax rates would have been raised for all income brackets, but the increases would have been proportionally higher for those with higher incomes. And the increase would have applied to sources of income that tend to go to wealthier taxpayers, such as capital gains and other non-wage income.”
He argued the House plan “would have spread the cost of child care reform across a broader base of Vermont taxpayers.” Meanwhile, “The Senate took a narrower view and treated child care more as a workforce development program — one that primarily benefited employers and working parents. From this narrower perspective, it made sense to levy a tax on wages that would be paid by both employers and employees. It would be more like a user fee, but one that included employers rather than just parents, like the current system does.”
This week Rachel Cohen, a journalist at VOX, laid out the crisis: “Thousands of Vermont kids lack access to any child care program, and among families that have been able to land competitive slots, average costs exceed $26,000 a year, more than 30% of many families’ household income … Meanwhile, child care workers are some of the lowest paid employees in the state, earning about $15 per hour, and typically with no benefits.”
If it clears the governor’s veto hurdle, it is truly a big step for Vermont and our public investment into child care. The framework would be in place, but then the real work of building back the child care system would still need to be put into place. Therein lies the next challenge.
Editor’s note: For Into the Issues, we solicited commentaries, letters and feedback on this issue during the past four weeks. We received no responses.
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