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SPONSOR: |
Marquardt |
DATE TYPED: |
|
HB |
640 |
||
SHORT TITLE: |
Child Daycare Gross Receipts Deduction |
SB |
|
||||
|
ANALYST: |
Smith |
|||||
REVENUE
Estimated Revenue |
Subsequent Years Impact |
Recurring or
Non-Rec |
Fund Affected |
|
FY03 |
FY04 |
|
|
|
|
(1,335.0) |
(1,455.0) |
Recurring |
General Fund |
|
(890.0) |
(970.0) |
Recurring |
Local Funds |
|
|
|
|
|
(Parenthesis ( ) Indicate Revenue Decreases)
Responses
Received From
TRD
SUMMARY
Synopsis
of Bill
House Bill 640 provides
a gross receipts tax deduction for the receipts of child daycare providers received
pursuant to a contract with the Children, Youth and Families Department (CYFD).
FISCAL
IMPLICATIONS
TRD relied on CYFD numbers for this analysis.
They reported paying $68 million in daycare subsidies in FY 2000. The funds come primarily from the federal
child daycare block grant, which provides childcare assistance programs for low-income
families. The 1997 Economic Census reports that 58% of total payments for child
daycare services were to for-profit daycare providers, 42% to non-profit
providers. 501(c)(3) non-profit
providers are not subject to gross receipts tax under current law. This estimate assumes modest growth in CYFD
daycare subsidies to $70 million for FY 2004, suggesting that approximately $40
million in payments.
OTHER
SUBSTANTIVE ISSUES
TRD makes the following observation about unintended
consequences:
“Under this bill, amounts reimbursed by CYFD are
deductible, but co-payments made by parents are not. Most parents participating in the childcare
subsidy program are required to pay some fraction of the cost of their child’s
care. The percentage of costs payable by
the family increases with family income, but total reimbursement to the
provider (state share plus family share) is the same regardless of family
income. Providing a gross receipts tax deduction for the state’s share but not
the family’s share of childcare costs makes providing care to some subsidized
families more profitable than providing care to others. Also, this could cause a significant amount
of complication for providers as they try to determine how much GRT to charge
each of their clients.”
SS/yr