Tax credits could become a tool in fixing Minnesota’s child care crisis

Yesterday was an emotional day at Little Learners Child Care for owner Karen DeVos and her staff.

The Annandale facility was forced to let go of a foster child client, as they could no longer afford a long-term teacher to meet the child’s needs as she learned she will not be returning to her biological family.

“We do not have it in our budget to provide an extra teacher long term,” DeVos said. “So yesterday we had to say goodbye to this little girl who did not choose this situation, who is brilliant and so loving, and who is going to go a long way, but unfortunately not with our help.”

Rep. Jenifer Loon

The story is not an anomaly as Minnesota faces a crisis in child care accessibility and affordability.

Sponsored by Rep. Jenifer Loon (R-Eden Prairie), HF3853 would establish a series of tax credits aimed to make the state’s child care more affordable and accessible. The bill was held over by the House Taxes Committee Tuesday for possible omnibus bill inclusion. Its companion, SF3515, sponsored by Sen. Melisa Franzen (DFL-Edina), awaits action by the Senate Taxes Committee.

“There is a shortage of quality child care settings throughout the state of Minnesota – most critically, I think, in Greater Minnesota,” Loon said. “We have fewer workers employed in that very important line of work and it’s difficult for families to afford quality child care.”

The first of five proposed tax credits would be for payments made by parents to a qualifying child care facility to help offset the cost of tuition. Individuals employed as child care professionals, who care for children participating in a child care assistance program, or act as foster parents would also receive a tax credit.

WATCH Full video of committee debate on the bill 

The bill would extend tax credits to businesses that pay for employees’ child care and businesses that build or renovate a child care facility. An additional tax credit would apply to contributions to the R.E.E.T.A.I.N. program, which provides cash incentives for child care workers who complete training and professional development.

Rep. Jennifer Schultz (DFL-Duluth) recommended broadening the bill so tax credits would apply equally to all child care facilities. As introduced, the bill would scale the tax credits so that payment credits equal 150 percent of the amount paid to facilities with a four-star quality rating, and only 25 percent to a one-star facility.

Schultz said an equal tax incentive could grant some providers the opportunity to grow and improve to achieve a three- or four-star rating.