MO ballot measure could lead to tax break for child care providers. Would it help shortage?

When Missouri voters head to the ballot box next year, they will decide on a measure designed to encourage business owners to offer more child care services as the state faces a major shortage.

The question, which will appear on the November 2024 ballot, will ask Missourians to amend the state constitution to allow lawmakers to pass legislation that exempts child care providers from paying taxes on personal and real property.

Missouri lawmakers from both parties approved the ballot proposal on the last day of the legislative session this year with little controversy. Republican Gov. Mike Parson has made expanding child care services a legislative priority as the state faces a major shortage, which has forced parents to leave the workforce due to the lack of availability.

And the COVID-19 pandemic has exacerbated the challenges of finding affordable care in rural parts of the state.

An estimated 50% of Missourians live in a child care desert, said Wendy Doyle, the president and CEO of United We, a nonpartisan policy and research group focused on enhancing equity for women.

“That means that there are three children in line for every spot,” she said. “Just in the Kansas City metro area, child care facility closures are happening because of the workforce — the lack of people who actually show up and work at the child care facilities.”

Supporters argue that the ballot measure could entice business owners to offer child care services and encourage more facilities. If voters approve it, lawmakers would have to pass additional legislation to offer the tax exemptions.

“There’s a huge child care need right now. We need more child care facilities and we need to incentivize the entrepreneurs who are starting them to provide more,” said state Sen. Travis Fitzwater, a Holts Summit Republican who sponsored the legislation.

But even some supporters of the ballot measure acknowledge that the tax exemptions would be a small piece to address the state’s larger problem.

“It’s part of the solution,” said state Sen. Lauren Arthur, a Kansas City Democrat and strong advocate for expanding child care services. “It certainly won’t solve the problem…It’s going to take a lot of action on behalf of a lot of people and it’s going to take major financial investment from the state as well.”

The goal of the ballot measure, Arthur said, is to provide financial relief to child care providers who then can pass that relief to low-wage workers and ultimately parents to make child care more affordable.

While Parson, in his State of the State address in January, made reducing the child care shortage a priority this year, few of his proposals made it across the finish line. The state budget, however, did include $78 million to raise child care provider subsidies as well as $56 million to expand pre-kindergarten programs.

Parson spokesperson Johnathan Shiflett, in an email to The Star, said the Republican governor was “supportive of new measures that help the state move forward in improving child care access and affordability.”

When asked about the failure of many of his child care-related proposals, Shiflett said Parson would prioritize child care and early childhood programs next year.

One of the bills that did not make it across the finish line was Arthur’s legislation that would have increased state reimbursements to school districts with early childhood programs. She said she was “extremely disappointed” by the failure of some of the child care-related proposals this year.

“This is the No. 1 issue for families. It’s the No. 1 issue for children and their nurturing and development. And it’s honestly the No. 1 issue for businesses,” she said. “I am disappointed that something that is a problem that is so widely experienced, and that has a solution that seems to bring people together from across the political spectrum is still not something that we were able to get done last year.”

Arthur noted that she understands those who are skeptical of motivations behind the legislation. The measure received support from Sam Lee, a longtime anti-abortion lobbyist in Missouri, and comes as some Republicans have focused on child care in the wake of the state’s near-total ban on abortion.

“I understand that skepticism,” she said. “I will also say that it says something pretty cynical and ugly about our politics that even when people with really different opinions come together on common sense issues that prompts pushback.”

Fitzwater said there’s a case to be made that because Missouri prevents abortion, “we want to make sure that we’re doing all that we can to incentivize taking care of those kids in our state.”

“I would say there’s a pro-life idea behind it,” he said. “But, in general, it’s not related to that as much as just there’s a need for child care facilities.”

Several lawmakers have framed the issue of child care as a business issue that poses major concerns for the state’s workforce.

A 2021 report from the Missouri Chamber of Commerce frequently cited by lawmakers found that Missouri misses out on $1.35 billion annually, including $280 million in tax revenue, due to child care issues. The report cited a study that showed 28% of respondents reported that they or someone in their household had left a job or not taken a job because of problems with child care.

“We’ve got to entice people to actually want to run a daycare and the opportunity for parents to be able to utilize that aspect of it to where they could go back into the workforce,” said state Rep. Bill Falkner, a St. Joseph Republican.

Under the proposal, all property used primarily for child care outside of a child’s home would be eligible for a property tax exemption. A person’s residential home would not be eligible. If a portion of a facility is used for child care, then only that portion would be eligible for an exemption.

When the legislation was up for debate in the House, State Rep. Sarah Unsicker, a Shrewbury Democrat who voted present, said that the proposal was too narrow and should be addressed in state law instead of an amendment to the constitution.

It’s unclear how much the tax exemptions would cost local governments, according to a state fiscal analysis. But the state estimates that the proposal could cost the Missouri Department of Social Services’ Blind Pension Fund roughly $400,000 each year.

The fund, which provides assistance to people who are blind and are not eligible for other benefits, is funded from a percentage of each $100 of assessed taxable property. The state analysis found that the tax exemption would affect the growth of the fund but would not decrease the current amount in the fund.

As lawmakers look ahead at the 2024 election, even those staunchly in favor of expanding child care services acknowledge that Missouri faces a long road ahead.

“There’s no silver bullet on this,” said Fitzwater. “It’s an incremental change, for sure. It’s not the answer to the child care issues that we have in Missouri, but it’s a part of a solution.”