SALT LAKE CITY — A bill that would give employers a tax break for offering child care benefits ignited a very heated debate Friday during a Utah House panel meeting.
Utah’s strong economy is creating a challenge — competition for “top talent” and a shortage of qualified employees, according to HB187 sponsor Rep. Suzanne Harrison, D-Draper.
“Utah is last in the nation in terms of access to child care. The number of licensed child care providers has been steadily decreasing since 2005, and many families face long waitlists for openings, and this is impacting both rural and urban communities,” Harrison said.
Sixty-three percent of Utahns are unable to afford quality child care, she said.
Among those Utahns, Janelle Griffin — who spoke with her toddler draped across her arm when the meeting opened for public comment — said she and her husband switch off days working so one of them can be home with their daughter at any given time.
Because of that, the couple works opposite schedules and doesn’t get to spend time together.
“We never have a day together, my husband and I, so that we can raise our child,” Griffin explained.
“I don’t need the child care for the entire time, just for a couple days,” she said, which would allow her time to see her husband.
While government helps cover costs for some low-income families, Harrison said the business sector needs to do its part to address the scarcity of quality child care. Offering the benefit could also help save businesses money, she said, by preventing employee absenteeism and decreasing job turnover.
HB187 would create a state income tax credit for employers providing or helping to pay for child care for children under the age of 13, and children with disabilities under the age of 18. It would provide a credit equal to 50% of those child care expenses up to $50,000 for one company, with a sunset date in five years.
Through the bill, the state would also encourage investment into the languishing child care sector, Harrison said.
Sixteen other states have a similar tax credit, she added.
Jessica Lloyd, owner of the Creative Learning Academy day care center, helped Harrison present the bill. She said she meets people every day desperate “for quality child care at an affordable rate.”
As a business owner, Lloyd said she needs to balance quality with costs to her business and to parents. She runs into “pitfalls” as the profit margin in child care is not high, and there’s not a lot of room for expansion.
Lloyd said she believes the bill would help the child care industry in Utah raise wages and increase quality of care.
The bill would help Lloyd pay her employees more, aiding with employee retention and quality of care for children, she said.
Steve Daly, CEO of software company Ivanti, also helped present the bill due to his history working with a small startup.
“This bill, in my opinion, would help in one of the areas that I think the tech industry in particular is struggling, and that’s in recruiting,” he said.
As demographics in the workforce change, the ability to provide child care is becoming more important to job candidates, Daly said. Most tech companies are small and economically unable to help with child care for employees, he said.
Daly said he moved to Utah “because it’s a great place to raise a family.” He called the bill “a great balancing act” in partnering government with business to help workers raise families, saying the bill would allow the state to build on its strengths.
Charlie Workman, 5, participates during circle time at the Intermountain Child Development Center in Salt Lake City on Friday, Feb. 21, 2020. Ivy Ceballo, Deseret News
Olivia Brinkley, 5, and Remy McWidemer, 4, chat while Xavier Flaherty, 5, and Heather Cummings work on a craft at the Intermountain Child Development Center in Salt Lake City on Friday, Feb. 21, 2020. Ivy Ceballo, Deseret News
Rachel De La Garza plays with Olivia Brinkley, 5, Charlie Workman, 5, Adelaide Flaherty, 3, and Peter Hardy, 4, at the Intermountain Child Development Center in Salt Lake City on Friday, Feb. 21, 2020. Ivy Ceballo, Deseret News
A group of children sit during circle time at the Intermountain Child Development Center in Salt Lake City on Friday, Feb. 21, 2020. Ivy Ceballo, Deseret News
“I think in Utah we’re innovators. We’ve never tried this type of program here,” Harrison said. She believes the return on investment would be “huge” in getting people back into the workforce and increasing the income tax base.
The presentation fell on skeptical ears in the House Revenue and Taxation Committee, some of whom expressed concern about government encouraging employers to offer a specific benefit, and how effective it would be in actually bolstering the child care industry for parents.
Rep. Tim Quinn, R-Heber City, asked Daly whether the tax incentive would encourage Ivanti — which has hundreds of employees in Utah — to offer the benefit.
As the tax incentive would only apply to $50,000 of child care costs, Daly said it probably wouldn’t factor into his company’s decisions but would appeal to smaller companies.
Rep. Norm Thurston, R-Provo, questioned whether the presenters had considered that flexible spending accounts can already help pay for child care.
“The status quo is not addressing overwhelming need in this,” Harrison said, adding that the maximum benefit a family would get from a flexible spending account is $1,500 a year.
Thurston asked Lloyd where the money she might get due to more employers offering child care benefits “would end up.”
Lloyd said she would use the money to offer raises to decrease turnover, which would benefit children. When asked whether she has the capacity to handle more kids today, Lloyd said she already has a waiting list but would start new projects.
Expansion for child care facilities is difficult due to the cost of land, unique building requirements for child care, including retrofitting buildings and other “hurdles,” according to Lloyd.
When asked whether incentivizing child care would drive prices up, Harrison emphasized the program would sunset. Tax credits are often used in the state to “encourage what we want more of,” she said.
“And I would argue in a state that has one of the highest rates of difficulty finding employees, and a state that values and loves our families and children and wants to support them, what better way to invest in Utah families than have this type of public-private partnership,” Harrison said.
“We need a little oomph” in vitalizing child care in Utah, she added.
Quinn expressed concern that the bill would cost the state $500,000 in lost tax revenue simply to “get the foot in the door” in improving child care, and said a sunset date doesn’t alleviate his concerns as sunsets often get extensions without debate.
Harrison countered that the way to look at the issue isn’t “how much is this going to cost the state of Utah” but how many people would be allowed to work outside of home because of it. She also pledged not to run a sunset extension.
Rep. Mark Strong, R-Bluffdale, said he was concerned over the “proper role of government.” He acknowledged that he was in a “fortunate situation” in having a wife who chose to stay home and that he is able to provide for his family. But he said he believes the bill would be an overstep of government.
“I struggle with taxing people — all people — some, to cover these for everyone,” Strong said.
Harrison responded: “To be clear, this is not a tax, this is an employer tax credit,” she said, adding that the state offers other tax credits.
When the meeting opened for public comment, Rusty Cannon, with the Utah Taxpayers Association, called the bill “a dangerous foot in the door and a dangerous, slippery slope,” adding that it could create a path for tax credits on a variety of different benefits like yoga and gym memberships.
Business leader and former state legislator Pat Jones, representing the Salt Lake Chamber, said the chamber supports the bill.
In her role running the Women’s Leadership Institute in Utah, Jones said many businesses contact her desperate to find qualified women workers.
“I have a fairly good idea of why these are not listed as high priority in our benefits,” she said. “I want to ask, ‘Who is in the room when those questions are asked?’
“My guess is, like most of our C-suites, it’s mostly men,” Jones pronounced.
Many women are home “wanting to have personal development” but can’t because they can’t find quality, affordable child care, she said.
Thurston, in response, echoed concerns about the state government selecting a benefit to champion, and said that if businesses thought it in their best interest to offer child care, they already would. He called the idea that men are making decisions that hurt their companies “problematic.”
As the debate became increasingly heated, Rep. Robert Spendlove, R-Sandy, the committee chairman, said he would “restrain” the Q&A session.
After public comments, the meeting adjourned without a vote on the bill.
Harrison is sponsoring another bill related to working parents that would allow the Governor’s Office of Economic Development to consider whether an employer will provide working parent benefits when awarding economic development tax credits.
HB89, which was also scheduled for presentation during Friday’s meeting, will be reviewed by the committee on Tuesday.
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