Senate panel approves tax credits, grants to shore up child care

Lawmakers on the Senate Health Committee on Monday unanimously approved bills that would establish tax credits for child care, extend child care subsidies to more families, and establish grant programs to boost enrollment in early childhood education.

The moves come as New Jersey continues to struggle amid a shortage of child care workers and as its economy moves toward a post-pandemic correction still hampered by a dearth of affordable child care.

“As we face worker shortages across industries, reducing the cost of child care will allow more parents to return to the workforce at a time when we need it most,” said Sen. Teresa Ruiz (D-Essex), the chamber’s majority leader and sponsor of the bill package. “This multipronged approach works to tackle this issue from every angle to ensure the maximum impact on our economy and our children.”

Each of the bills must still clear committee votes in the Assembly.

One proposal would give workers at licensed child care centers and individuals registered as day care providers gross income tax credits of between $500 and $1,500, depending on the filer’s income and the age of the children they oversee.

To be eligible for the tax credit, child care personnel must hold their positions for six consecutive months in a given tax year. Supporters say they hope the credit will improve employee retention in the industry as economic pressure pushes wages up in other fields.

“Child care programs are having difficulty finding the staff to teach in their classrooms because they’re being hired away by places like Amazon and Target because they can pay a higher hourly wage,” Cecilia Zalkind, president and CEO of Advocates for Children of New Jersey, told lawmakers.

Another measure would expand eligibility for child care subsidies to middle and low-income families. It would raise the income threshold for New Jersey’s child care assistance program from 200% to 300% of the federal poverty level. For a family of four, that would raise the income cutoff from $55,500 to $83,250.

The program pays for a portion of child care costs for an eligible family’s first two children, with the remaining costs covered by copays.

As under existing law, the Department of Human Services would be able to establish a single tier above the income limit to provide an off-ramp for families who experience an increase in income that would otherwise make them ineligible for subsidies.

Habibah Johnson, a mother of four, testified that she earned, at times, just 3% more than the income cutoff for subsidies.

“After the birth of each of my children, I applied for subsidies and was denied. A subsidy would have been a lifeline to our already financially distressed family,” Johnson said.

Other bills would establish a $22 million grant program to fund a 1,000-seat expansion of the state’s child care industry. The program would offer separate grants that could be used to recruit and train more staff and increase program capacities by expanding or renovating existing facilities.

The fourth bill in the package would extend a pandemic-era program that saw state subsidies to child care centers delivered based on a center’s enrollment instead of its attendance. Gov. Phil Murphy signed a bill with the same requirements last year, but those provisions were set to lapse on July 1. The new measure would keep the program going through June 30, 2025.

As they have in the past, progressive and business groups offered support for the child care initiatives. Progressive groups have long advocated for widespread, and sometimes universal, child care, but the issue took on a new dimension for business groups with the arrival of COVID-19.

Even with the virus receding from public view, child care remains a hurdle to parents reentering the labor market. Ferlanda Fox Nixon, chief of policy and external affairs for the African American Chamber of Commerce of New Jersey, said the bills would help New Jersey’s businesses and Black households.

“Black moms are most likely to be breadwinners but less likely to be working from home, and then Black mothers earn less,” she said.