Tax credits for children and child care are advertised as a relief to many Nebraskans.
LINCOLN. If Nebraska wants to help solve its labor shortage, it needs to provide more help to families dealing with inflation and costly childcare bills, a legislative committee was told Wednesday.
Again and again, members of the Legislative Assembly Tax Committee were told stories of how parents were forced to quit their jobs and stay at home to care for young children because their income was not enough to pay for child care.
Magie Miller-Jenkins of Lincoln, a married mother of three, said despite having a degree in social services, she couldn’t find a job that could fund childcare bills, which the 2021 state survey showed were from 1500 to 1600 dollars a year. month. So now she stays at home while her husband works.
“Parental education is very expensive”
Miller-Jenkins said she is also taking care of her friend’s 18-month-old baby, a single mother who can’t afford the cost of childcare from her paycheck at a fast food restaurant.
“If I didn’t look after her child for free, she wouldn’t be able to work,” she said. “Education is very expensive.”
Three bills were introduced on Wednesday to help families deal with the cost of childcare, as well as windfalls and inflation-driven cost increases.
Legislative Bill 318, introduced by Senator Eliot Bostar of Lincoln, provides a tax credit of $1,000 to $5,000 per year per child, based on family income, to cover child care costs. The bill also provides tax credits for contributions that expand or improve childcare activities and tax credits for childcare workers seeking professional development.
The high cost of childcare and the loss of caregivers are forcing some people to leave their jobs, “which is the opposite of what we should be doing,” Bostar said.
Single parents can spend more than half of their income on childcare, he said.
LB 294, sponsored by Lincoln Senator Daniel Conrad, will provide a $1,000 per child tax credit based on family income. The bill is modeled after a federal tax credit given to families during the COVID-19 pandemic that supporters say has been successful in lifting millions of children out of poverty.
Conrad said 81% of all children in Nebraska would see benefits from her proposal, which will help families with unexpected expenses as well as the cost of raising children.
“I’m not sure we’ll find a better return in terms of supporting our families and the economy,” she said.
LB 295, also introduced by Conrad, will increase the state’s current earned income tax credit for working families from the current 10% federal credit to 17%.
The senator said it would bring Nebraska in line with similar tax breaks in neighboring states. According to estimates provided by Conrad, credit per eligible child will increase from $373 to $635 per year.
“It makes the job payable”
“It makes the job payable,” she said, calling it a “pretty moderate but meaningful investment” in families.
Bostar’s bill was supported by First Five Nebraska, which advocates early childhood education programs, as well as major business and agricultural organizations in the state.
According to First Five, the state has a high percentage of working parents: approximately 75% of Nebraska children under the age of 6 live in families where both parents work.
LB 318 provides targeted investments for children at “an important time for their development,” said Elizabeth Everett of First Five.
She and others have described the state child care system as “broken” due to the loss of caregivers and a 40% turnover rate.
“Nebraska’s public and private sectors are committed to rebuilding Nebraska’s broken, severely underfunded childcare system,” Everett said. “LB 318 is an important step in this direction.”
Conrad’s child tax credit was supported by Nebraska Appleseed, the OpenSky Policy Institute, the Children’s Movement of Holland, and the Nebraska Educational Association. At least 10 other states have similar loans, the senator said.
“There’s no better way to use the state’s current budget surplus than to give it back to our children,” said Diane Amdor of Nebraska Appleseed.
The Nebraska Catholic Conference and the Omaha Women’s Fund supported all three bills, which received no objection.
Can inspire more kids
Among the topics of discussion in support of the bills was that increasing tax credits for families and children could inspire couples to start a family.
Concern was expressed about the cost of the LB 294, which ultimately impacted a budget of approximately $370 million a year.
Conrad, however, said she was open to amendments that would reduce the financial impact by narrowing and reducing the child tax credit.
For example, a similar proposal under consideration by the Governor of Montana provides for a $500 loan and is only for children under 6 years of age.
The other two bills were of much lower value. The expected cost of the LB 295 was $20 million a year, while the childcare tax credit proposal was expected to cost about $34 million a year.
The Revenue Committee took no action on the three bills after their public hearings on Wednesday.
But Elkhorn Sen. Lou Ann Linehan said she hopes to hold an executive session on Thursday to begin deciding which tax bills will be introduced in the full Legislature this year.
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