Child care tax credits, a top priority for Missouri governor, face uphill battle in the Senate

Missouri Gov. Mike Parson begins the annual State of the State speech to a joint session of the legislature on Wednesday with House Speaker Dean Plocher and Lt. Gov. Mike Kehoe beside him (Annelise Hanshaw/Missouri Independent).

For the second year in a row, the fate of a bill creating new child care tax credits — one of Gov. Mike Parson’s top legislative priorities — is in the hands of a faction of Republicans in the Missouri Senate. 

Designed to help improve access and affordability of child care, the package of child care tax credits has received bipartisan support and was the first bill approved by the House this year. 

But that bill, sponsored by Republican state Rep. Brenda Shields of St. Joseph, stalled in the Senate. Democratic state Sen. Lauren Arthur’s version of the legislation hasn’t fared any better. 

With the legislative session ending at 6 p.m. Friday, and gridlock expected in the Senate, the odds of the bill making it to the governor’s desk are slim. 

A similar dynamic killed the legislation last year. 

“Hope remains,” Arthur said Friday. “But things are still up in the air.” 

The governor has pushed the legislation as a way to help parents in the workforce, highlighting the proposal in his last two State of the State addresses to the legislature. The legislation has also gained support from child advocacy organizations, chambers of commerce and business groups, and received little opposition in committee hearings this year. 

Casey Hanson, director of outreach and engagement at the child advocacy nonprofit Kids Win Missouri, which has advocated in support of the legislation, said she’s trying to stay optimistic. 

But this session, Hanson said, is looking increasingly like 2023.

“Same roadblocks. Same characters,” she said. “Different year.”

‘It’s welfare’

A proposal by Arthur to add the child care tax credits bill onto another bill as an amendment was shut down by the Missouri Freedom Caucus last week.

State Sen. Bill Eigel, a Republican from Weldon Spring who is running for governor, characterized Parson’s child care priorities as promoting a larger government and making it “a great time to be a Democrat in Jefferson City.”

“…And it’s not to actually protect the rights of the children. In this case it’s to give them something,” Eigel continued. “In this case it’s, well, we want to give away free child care.”

State Sen. Rick Brattin, a Harrisonville Republican and a member of the Freedom Caucus, also spoke in opposition to the proposal, saying “government created all the regulations that literally decimated the child care industry” and now government is trying to “swoop in” to fix a problem it caused.

State Sen. Mike Moon, a Republican from Ash Grove, later piled on.

“I think it is welfare,” Moon said, adding that he and his wife decided she would stay home with their children years ago. “We should be establishing an environment so our families can take care of themselves and their children on their own dime.”

Eigel has alluded to a potential compromise between the Freedom Caucus and the sponsors of the child care tax credits legislation. Arthur said she has been in ongoing conversations with him about finding a compromise between his desire for personal property tax cuts and her child care tax credits. 

But she admitted their idea of a reasonable middle ground will likely be very different.

“I’m frustrated that I have to defend legislation that working families are desperate for,” Arthur said. “Meanwhile my male colleagues get on the floor and decry the idea that government is going to play any role in trying to make child care more affordable and available.” 

But the likeliest roadblock to the legislation finally heading to the governor’s desk is a Senate bill hoping to make it more difficult to amend the state’s constitution by way of citizen-led initiative petition. 

That top priority for Republicans is likely to cause strife between parties in the last week of session, potentially halting any other legislation from moving forward. 

Democrats have vowed to filibuster the legislation as Republicans threaten to invoke an unpopular and rarely-used tactic called moving the “previous question” to force a vote on the bill. 

If Republicans do that, Arthur said Friday, “ultimately they’re deciding that nothing else is going to get done.”

‘I can’t find care’

As the Senate runs up against the session deadline, emails supporting her child care tax credits bill continue to pour into Shields’ inbox.  

“It’s not affordable for me to go to work,” some say. Others send pleas: “I can’t find care.”

Those who have been able to find affordable child care lament that the quality of care isn’t up to their standards. Other Missourians relayed stories of their child care provider closing their doors with less than 30 days notice, leaving them scrambling to find a new provider.

Shields often cites a 2021 U.S. Chamber of Commerce Foundation study that found lack of accessible and quality child care forced many Missouri parents to change or leave their workplace. The foundation determined this workforce disruption cost the state more than $1.3 billion annually. 

She feels for those families. Thirty-five years ago, Shields said, she faced a similar choice between her career and being a mother. She wanted both, and, thanks to a last-minute child care opening in St. Joseph, she got both. 

An investigation of child care spending by The Independent and MuckRock last year found that almost half of Missouri’s children under age five, or about 202,000 children, live in child care deserts, with one or fewer child care openings for every three children. 

The average cost of full-time center-based care for an infant in Missouri was $11,059 as of 2022, according to Child Care Aware. Meanwhile staff at child care facilities often make just over minimum wage, presenting a challenge to hiring and retention. 

“If we want to grow our economy,” Shields told The Independent on Wednesday. “It requires us to help people get back to work.”

Her bill would add three tax credits: 

• The “Child Care Contribution” tax credit would let those who donate to child care providers receive a credit equal to 75% of their donation, up to $200,000 in tax credits. 

• The “Employer Provided Child Care Assistance” would encourage partnerships between businesses whose employees need child care and providers by allowing employers to receive tax credits equivalent to 30% of qualifying child care expenditures. 

• The “Child Care Providers Tax Credit” would allow child care providers to claim a tax credit equal to the provider’s employer withholding tax and up to 30% of a provider’s capital expenditures on costs like expanding or renovating their facilities. 

Kids Win Missouri recently embarked on a community project highlighting child care needs in several counties across the state. This included Shields’ hometown of St. Joseph.

There, in surveying community members and providers, they found that there are only enough child care slots available for 29% of infants and toddlers, and 69% of pre-kindergarteners and 53% of other preschoolers. Families in the county, on average, put at least 20% of their income toward child care costs. 

To survive this “massive societal crisis,” said Hanson, with Kids Win Missouri, it will take everyone, especially as the state approaches a fiscal cliff leaving it without the same levels of COVID-era federal funding in place now.

Child care subsidies 

Parson’s push to expand access to child care also included higher payments for subsidized care. To fund it, Parson asked lawmakers for an extra $51.7 million in the coming year, which followed a $78 million boost to funding in the current year.

Ultimately, the increase was funded, but not in the way the governor requested.

The budget includes language authorizing increased rates, House Budget Committee Chairman Cody Smith said in a news conference after the budget was passed.

The additional funding sought by Parson was based on every eligible parent using their benefits, Smith said. Instead, the budget allows higher rates by assuming that some money would otherwise be unspent.

If demand for the subsidy increases, lawmakers will have to return to the table to discuss ways to continue funding the increase in the future.

House Minority Leader Crystal Quade said Democrats are still trying to calculate whether there are funding shortfalls.

Quade said despite child care being a persistent issue, the legislature failed to address the shortage in a meaningful way.

“We know there are too many Republicans in positions of power in this state who do not believe that I have a voice in this room, that I should not be elected, standing here as a mother, and I should be at home,” Quade said. “And I’m tired of them telling us that.”

The Independent’s Rudi Keller contributed.

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