Lawmakers advance daycare tax credit with steep startup cost
April 24, 2017
Nevada lawmakers advanced a bill Monday to give medium- and low-paying businesses a break on payroll taxes if they help employees pay for child care.
The proposal would offer Nevada-based companies a discount off their annual state taxes for half the amount of daycare aid they provide each worker, up to $5,000 per parent.
"It's another way to make sure people who want to work have an opportunity to work and we're not putting the squeeze on employers," said Sen. Pat Spearman, Democratic co-sponsor of the bill from North Las Vegas.
Businesses would qualify for the tax break if they assist workers who make 85 percent or less of Nevada's median household income, which would have been an annual take-home pay of $44,000 or less in 2015, according to the most recent data from the U.S. Census Bureau.
The proposal would also be limited to offsetting costs at professional child care providers recognized by the state, which excludes in-home nannies, until children reach age 13.
Nevada already spends about $60 million a year on welfare programs that assist low-income families with daycare costs and support certain child care providers, according to executive budget summaries.
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The proposal's steep startup costs, like any expenses exceeding the state budget, concern Republican Gov. Brian Sandoval, spokeswoman Mari St. Martin said.
The state welfare agency has estimated it would need just under $6 million annually to hire 102 new employees to manage the program. The Nevada Department of Taxation projected it would need to hire two people at a cost of $133,000 a year.
The governor's office had not planned to fund those positions.
"He'll review the final policy should it arrive on his desk for signature, but the governor does not have an interest in pitting child care needs against senior citizens programs or K-12 funding, especially when the need is undefined," St. Martin said.
Tax department analysts have said there is no way to know how much the credits would cost the state's piggy bank in the future.
"We can't determine the impact on revenue because there's no way for us to estimate how many businesses would use the credit," department spokeswoman Stephanie Klapstein said. "It's just not calculable."
Legislative analysts may or may not provide more insight into potential fiscal impacts as the bill wends through the Democratic-controlled Legislature.
State senators adopted changes to Senate Bill 455 clarifying how the credit process would work on a day that legislators and staff largely devoted to procedural moves adopting bill changes, many of which committees had recommended over a week earlier.
Lawmakers set themselves up for a long day Tuesday, with scores of bills needing a vote to survive a looming midnight deadline.