Kansas has 86,607 children without licensed child care. That’s not the total number of children, or the number of children under 6. This is the number of children under 6 years old who live in households where both (or the sole) parents are working full time and can’t find child care even if they can afford it.
It’s safe to say we have a crisis on our hands.
Amid the reports of high-profile legislative battles — with high stakes for Kansas families — a small but important policy passed without much fanfare: an expansion of the employer child care tax credit.
With Gov. Kelly signing HB 2237, all businesses in Kansas can apply to receive a state income tax credit for helping their employees cover child care costs or if the business helps provide child care itself. This program has existed since 1993, but the credit has only been available to large corporations and financial institutions for the last decade.
Most Kansans are familiar with the saga of the 2012 tax bill and the ensuing state budget crises. The elimination of this credit for small businesses was a part of that bill, as lawmakers took most small businesses off the tax rolls completely.
Removing the eligibility for the credit made sense at the time — why would a business that doesn’t owe taxes need a tax credit? But unfortunately, the policy didn’t change with the times. When the Legislature reinstated business income taxes in 2017, they did not restore eligibility for this credit accordingly.
That brings us to this legislative session. After a few rounds of legislative Whack-A-Mole, lawmakers found a package of other tax credits that could house this small yet powerful provision.
Once the credit takes effect on July 1, 2022, Kansas businesses can apply to deduct from their state income taxes a portion of the child care expenses they incurred — such as providing child care for employees or helping employees pay for other child care — going back to January 2021.
While there is only $3 million available to be claimed each year, it is still important that lawmakers modernized this credit so more businesses could benefit. With the average cost of child care per kid — specifically infant care — in Kansas at $680 per month in a home care environment and $1,259 per month in a center, parents need help.
This bill begins to correct an inequity in the tax code and levels the playing field so small businesses can attract and retain employees, parents can cover the costs of child care, and children can remain in stable, nurturing environments.
We hope that by providing a financial incentive for doing so, more Kansas businesses will recognize how they benefit from their employees having reliable, high-quality child care and choose to support that financially. For years, parents and providers have been holding the child care system together with gum and good intentions, and it’s long past time for the rest of us to prioritize this investment in the next generations of Kansans.
Thank you to the Legislature and Gov. Kelly for stepping up for Kansas children and families. There’s much more that needs to be done to address the child care crisis in our state, such as increasing the funding for this valuable program. We look forward to building upon this foundation with you.
Mitch Rucker is the early learning policy adviser for Kansas Action for Children.