This article is from Cal-Tax Digest, published
by the California Taxpayers' Association.
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California's economy is booming, which is both a blessing and a burden for California families. While job growth has increased, so has the need for quality child care. Unfortunately, the supply of licensed child care facilities has not kept pace with the demand and this shortage could threaten California's flourishing economy. Californians can no longer afford to view child care as an individual "babysitting" issue; but rather, it needs to be elevated to the top tier of California infrastructure issues equal to transportation, housing and water.

Experts estimate that 2.3 million children need licensed care. California's licensing regulators report only 1 million spaces, leaving 1.3 million children without licensed child care. These numbers will only become worse as the state's population continues to increase and more welfare recipients enter the workforce. A conservative estimate reveals that California will need to invest $6 billion in "bricks and mortar" to build the needed facilities to serve the working public.

I have introduced AB 1923, the Child Care Facilities Tax Credit Act, because government and the California taxpayer cannot afford to tackle this challenge alone. Up to this point, the policy debate involving child care has focused on the need for more subsidies. While I recognize this as a key issue, other innovative solutions are needed to expand the pool of potential funding sources. AB 1923 provides incentives for taxpayers, including private industry, to assist the state in facilities construction and expansion through the use of a 50 percent tax credit for those contributing to child care facilities serving, or in close proximity to, low-income working families. This bill would extend a tax credit to lending institutions to provide further incentive for them to lend money at lower interest rates to child care facilities.

AB 1923 is essential to the stability and continued growth of a quality child care industry. Currently, providers are unable to carry debt and cannot qualify for lending given the narrow profit margins inherent to the industry. Even if a provider can afford the cost of a loan, the provider cannot obtain financing with current equity levels. AB 1923 addresses these challenges without unduly burdening the state's general fund. My bill will ensure that low-income, working class communities have equal access to quality child care.

The availability of quality child care facilities should be a basic human infrastructure issue worthy of a tax credit. When compared to various tax incentives that promote economic growth, this proposed investment in our children's future is at least equally important. The tax credit offered in my bill will provide the needed incentive for investment that will benefit California's long-term economic health. Unlike other tax credits that some would characterize as "corporate welfare," AB 1923 provides the taxpayer a solution and accountability. The bill's incentives are directly tied to providing quality child care relief to so many working Californians.

Assembly Member Tony Cardenas represents the 39th Assembly District, including much of the San Fernando Valley. He is chair of the Assembly Democratic Caucus.