Child care issues contribute to Wisconsin's workforce shortage. This Republican bill aims to help.
A Republican-authored bill that its authors say would help tackle Wisconsin’s workforce issue by incentivizing employers to help their employees with child care drew praise from the business community and frustration from child care providers during a Senate committee hearing.
The bill, which had a public hearing Wednesday, would give employers state tax credits for helping employees access and afford child care.
Here’s what to know about the bill, and why it’s garnering both so much support and opposition.
More: Republican bill would offer tax credits to businesses that help with employees' child care
There are multiple ways employers could receive tax credits for helping with child care
Under the bill, employers could claim up to $100,000 in state tax credits for costs associated with establishing a child care program to help its employees or contributing to a separate nonprofit to do so. Proposed amendments could make it so they could contribute to any regulated child care program.
Employers who operate a child care center for their employees could claim a state tax credit for expenses associated with operating the center. They could claim up to $3,000 per employee's child served at the center. This could be in addition to a state tax credit claimed for capital expenditures.
Employers partnering with another child care program could receive a state tax credit for subsidizing the cost of care, along with certain administrative costs associated with doing so. To claim this credit, the employer would have to pay the same amount — if not more — as the employee pays for care. The total amount that an employer could claim for these expenses would be limited to $3,000 per child of participating employees. This would be in addition to the state tax credit claimed for capital expenditures.
In the original version of the bill, the tax credits were refundable, meaning if the credits were more than the employer owes in taxes, the employer would receive a refund of the difference. The proposed Senate amendments would make the credits nonrefundable; employers could carry the difference forward as a credit that may be applied in future tax years.
Child care is a workforce issue, testimony shows. Bill supporters say the bill can help.
Colan Treml, economic development director for the Oshkosh Chamber of Commerce, recounted several stories of child care struggles to the committee: a single dad planned to reduce his work hours when it appeared his trusted child care center was closing; a University of Wisconsin student had to postpone her education due to child care issues; and several individuals are forgoing having children due to the “broken” child care system.
In testifying in favor of the bill, Michael Welsh, vice president of legislative affairs and communications for the Wisconsin Economic Development Association, cited data points to further illustrate how child care affects Wisconsin’s workforce.
Welsh explained that, according to Raising Wisconsin, nearly 80% of Wisconsin employers believe the state economy is affected by access to affordable, quality child care. Most business owners responding to a survey from the Wisconsin Department of Children and Families link child care issues to workforce shortages.
“I can say that the biggest issue I have seen from employers, providers and families has been child care,” Treml said, later stating, “Obviously this (bill) won’t be a silver bullet to solve all problems … but it will go a very, very, very long way in helping create that stepping stone path for the private sector to be able to solve some of their workforce shortages.”
Alex Ignatowski, director of state budget and government reform for the Institute for Reforming Government Action Fund, also testified in support of the bill.
One of the Assembly bill authors, Rep. David Armstrong, R-Rice Lake, said over 50 Wisconsin employers thanked him for the bill. Like Treml, Armstrong maintained the bill is not meant to be a fix-all solution.
Related: Ariens built a center in Brillion to provide subsidized daycare to employees. It's working.
Questions about how — and whether — the bill would help child care providers arise
Sen. Kelda Roys, D-Madison, said there are other solutions to the child care crisis that could go further.
“My concern about this proposal is that it doesn’t address the root of the problem — and could in fact exacerbate it — which is that child care providers can’t provide enough slots because they can’t keep workers, because (child care workers have) poverty-level wages.”
But Armstrong said that because employers could reserve child care slots for their employees, this could, in turn, raise revenue for child care programs, which they could put toward increasing wages.
Macy Buhler, owner of Yahara River Learning Center in DeForest, and Brooke Leger, owner and director of New Glarus’ The Growing Tree Child Care Center and co-founder of a grassroots child care advocacy group, told the committee about the effects of their staffing shortages. Leger said she has classrooms sitting open, and Buhler said Yahara has 20 slots that she cannot fill because of staffing.
“I keep hearing about building, building, building, but we don’t have teachers. You can build these beautiful places — we don’t have the teachers,” Buhler said.
Leger also thought the credit would not be applicable to all employers; even with the credits, setting up a child care center or helping to subsidize employees’ care costs can be a substantial undertaking that not all employers can manage.
A more wide-sweeping solution, Leger and Roys suggested, would be investing in Child Care Counts, a program that provides stabilization payments to Wisconsin child care providers that is credited with keeping child care providers open during the pandemic.
The program was set to end in January as federal pandemic-era funding ran out, but Gov. Tony Evers directed $170 million — approximately half of what Democrats and advocates wanted to devote to the program — in emergency funding to continue it through June 2025. He said the emergency funding is a “stopgap” measure, and not a sustainable way to support the industry long term.
“What I don’t understand is the disconnect between a policy that was successful and was working and was implemented, and we heard from people all over the state of all political stripes that it was effective,” Roys said. “And yet, in the conservative-aligned business communities there’s such a strong argument in favor of a bill that is unproven, that is inefficient, that is indirect and it’s a suboptimal approach to the one we already had.”
More: Gov. Tony Evers announces $170M in 'emergency funding' to extend Child Care Counts
More: Wisconsin families may soon see child care costs rise as funding help declines
What's next?
Also at Wednesday’s public hearing, lawmakers discussed a bill that proposes expanding the business development tax credit. One aspect of this would change the credit so a business owner could claim benefits up to 15% of their investment for establishing a child care program for its employees, as well as up to 15% of their investment in workforce housing for its employees.
So far, both bills’ Assembly companions have passed in their committees. The Senate versions of the bills are awaiting committee action.
Armstrong’s office previously told USA TODAY NETWORK-Wisconsin that they expect both bills to go to the Joint Committee on Finance.
After all committee action is taken, the bills would become available for scheduling on the floor of their respective houses, but it’s unclear whether they would pass before the legislative session adjourns.
Related: Republican lawmakers hope to change 4K in Wisconsin to bolster child care. Here's what to know.
More: Here's what Wisconsin lawmakers did — and didn't do — regarding child care this year
Madison Lammert covers child care and early education across Wisconsin as a Report for America corps member based at The Appleton Post-Crescent. To contact her, email mlammert@gannett.com or call 920-993-7108. Please consider supporting journalism that informs our democracy with a tax-deductible gift to Report for America by visiting postcrescent.com/RFA.
This article originally appeared on Appleton Post-Crescent: Bill hopes to help with one facet of workforce shortages: child care
