Monday, October 16, 2023

On Child Care - Senate WisGOP plays tax cut games, so Evers goes out on his own

We already knew that there was a lot of money still left in the state's bank account even after Governor Evers signed the state budget back in July. And we found out today that there will be even more funds available to pay for child care costs, tax cuts, or other needs, if we so choose.

It's nearly $200 million above the $6.877 billion that we were projected to start the 2023-25 biennium with, as General Fund expenses turned out to be below budgeted and projected amounts.

Evers had asked to use more than $1.078 billion of those funds to pay for a number of workforce initiatives in a special session last week. And among those items were a state-funded family leave program, and $304 million in state funds to continue the Child Care Counts program that was funded by the Feds during the COVID pandemic.

The State Senate held a hearing on that package of bills last week, but in typical WisGOP fashion, they used it as a pretense to play games with Evers' plans.

The Wisconsin Senate’s Republican leader put out a top-to-bottom rewrite Friday afternoon of the workforce bill Gov. Tony Evers proposed in August that replaces every item in the original $1 billion package with a $2.5 billion tax cut that Evers has already vetoed once....

The centerpiece of the substitute amendment to the original bill is another attempt to cut the state’s second-highest tax rate to 4.4% from 5.3%. According to the Wisconsin Department of Revenue, the incomes of taxpayers in that bracket range from $27,000 to $304,000 for single filers.

“Governor Evers has said that he would provide tax relief for the middle class in exchange for state-level investments in the child care industry,” LeMahieu said. “We hope he keeps his word.”

Calculations from the Institute on Taxation and Economic Policy in Washington, D.C., on an identical tax cut that Republicans proposed in August found that nearly two-thirds of the savings would go to the highest paid 20% of Wisconsin taxpayers with average incomes of $304,000. Along with the tax cut, this package of GOP Senate changes is generally a bunch of regressive junk that will be an immediate veto from the Governor (and anyone else with a fiscal clue and/or a drop of empathy), I do note that it includes a sizable increase in a tax break for child care.
Under current law, an individual who is eligible to claim the federal child and dependent care tax credit may claim a state income tax credit equal to 50 percent of the amount the individual may claim as a federal income tax credit. However, the amount of employment-related expenses that an individual may claim to determine the amount of the federal credit is limited to $3,000 if the individual has only one qualifying dependent, and $6,000 if the individual has two or more qualifying dependents.

The bill increases the amount of the state credit that an individual may claim by increasing the employment-related expense limitation to $10,000 for one qualifying dependent and $20,000 for two or more qualifying dependents, and by allowing an individual to claim a state income tax credit equal to the full amount that the individual could claim for the federal child and dependent care credit determined using the individual's employment-related expenses.
However, let's also note that this is something that wouldn't benefit lower-income Wisconsin parents as much (since they have less state tax to write off). And getting a tax writeoff for child care costs when you file in early Spring doesn't do much to pay the bills associated with child care today.

After the developments of the last few days, Governor Evers has made a counter move, saying that he is going to fund Child Care Counts on his own with left-over COVID funds.

Democratic Gov. Tony Evers authorized spending $170 million Monday to continue providing subsidies for child care providers in Wisconsin after Republicans repeatedly rejected his attempts to fund the program.

The federal funds Evers put into the program Monday represent about half the amount he asked the Legislature to spend to continue the pandemic-era Child Care Counts. The program has distributed around $600 million to over 4,900 child care providers in the state, according to the state Department of Children and Families.

"I promised I’d do everything I could to stabilize our child care industry, support kids and working families, and reduce barriers to work to ensure our workforce can meet the needs of the 21st Century,” Evers said in a statement.

Evers added that "this stopgap measure isn’t a permanent solution to the looming child care crisis facing our state," encouraging Republicans to fund the program permanently.
That'll at least keep us from going over a cliff in the next year or so. But I'm not counting on Republicans stepping up to keep Child Care Counts whole for the near future, given that they believe in outdated crap like this.

But maybe we have new maps and a new Legislature in 2025 that recognizes the realities of what working parents and businesses are dealing with, and this state doesn't have to be held back by Republicans that continue to try to jam 20th Century ideas into the reality of 2023.
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