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Apr 1, 2024

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An expert in policy advocacy and coalition building, Chaer has dedicated her career to helping people meet their basic needs and expanding economic opportunity. She serves on the executive committee of the All Families Deserve a Chance (AFDC) coalition. Staff page ›

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CCLP testifies in support of Child Care Tax Credit changes

by | Apr 1, 2024

Equity work, Family Economic Security, Income, Legislative Updates, Research and Policy Analysis

A close up of a mother and daughter. The girl is hugging her mother's shoulders and is smiling into the camera while the mother is smiling and looking to the left of the camera.

On Monday, February 26, 2024, Chaer Robert, CCLP’s Emeritus Advisor, provided testimony to the House Finance Committee in support of House Bill 24-1134, Adjustments to Tax Expenditures to Reduce Burden. CCLP is in support of HB24-1134.

 

Background: House Bill 24-1134, Adjustments to Tax Expenditures to Reduce Burden, by Representatives Mike Weissman and Manny Rutinel and Senator Nick Hinrichsen would increase the state Earned Income Tax Credit (EITC) to 50% of the federal EITC on an ongoing basis. It would also merge the Colorado Child Care Tax Credit and the Colorado Low-Income Child Care Tax Credit into one and increase the credit for all families earning below $60,000 adjusted gross income to equal 70% of the Federal Child and Dependent Care. The maximum possible credit for a tax filer is $735 for one child or another qualified dependent, and $1470 for two or more. It would align with the federal credit in adding dependent care for other dependent relatives who cannot care for themselves. The bill includes a partial pay for changing how Colorado calculates taxes for multi-state corporations to align with the practices of other states.  If the bill passes in its current form, it will result in an over $200 million per year paid to low- and moderate-income families to defray child and other qualified dependent care costs. Below is Chaer Robert’s testimony in support of HB24-1134.

 

Thank you, Mr. Chair,

I am Chaer Robert, representing the Colorado Center on Law and Policy (CCLP). We supported our state EITC beginning with its creation 25 years ago, and we support House Bill 24-1134.

Today, however, I will focus on the state Child Care Tax Credits.

Colorado created a Child Care Tax Credit in 1996 with House Bill 1121 for those who needed child care to work. It looked progressive on paper since those earning under $25,000 a year could claim 50% of the federal Child and Dependent Care Credit. Those earning between $25,000 and $35,000 could claim 30% of the federal credit, and those earning between $35,000- $60,000 could claim 10%.

However, CCLP recognized that working parents could not benefit if they earned too little to have a federal income tax liability. Since the federal credit is not refundable, they received $0 from the federal credit, and therefore, $0 for the Colorado credit.

So, in 2014 we led the effort for a child care tax credit for those earning under $25,000 with House Bill 1072. This credit is a fourth of their annual child care expenses capped at $500 for one child, or $1,000 for two or more children. Families who could claim any amount of the existing state credit, however, were ineligible for this credit. This built in a cliff effect in which the head of a household (i.e., single parent) today can receive a $500 credit for one child if they earn below $20,800, but if their income increases two dollars per month, their credit falls to $1.

The changes in Colorado Child Care Tax Credits proposed in sections 1 and 2 of this bill offer four improvements for struggling families:

  1. Merging the state Child Care Tax Credit and the low-income credit in 2026, and increasing the percentage for all families to 70% of the federal credit through an amendment, would increase the maximum tax credit for low-income families as well as for families who claim the regular Child Care Tax Credit. The amount of the credit represents only a tiny fraction of child care The annual cost for child care for a toddler in Colorado, for example, averages from $11,000 for home-based care to $16,000 for center-based care.
  2. The sunset[1] on the Low-Income Credit would be removed. The other Child Care Tax Credit does not have a sunset.
  3. Merging the two credits would eliminate the cliff for low-income families, preventing small income increases from causing their child care credit to plunge.
  4. Low-income families are more likely to live in multi-generational households. Including other dependents – like the federal Child and Dependent Care Credit does – could help many individuals remain employed by defraying some cost of care for a dependent spouse or other qualifying relative. Eligibility is tightly defined by the IRS to include situations in which the dependent is living in the same home and is unable to care for themselves.

We ask for your support for House Bill 24-1134.

Sincerely,

Chaer Robert
Emeritus Advisor
Colorado Center on Law and Policy

 

Update 4/1/2024:  HB24-1134 passed the House Finance Committee as amended on February 26th and was assigned to the House Appropriations Committee.

[1] https://coprrr.colorado.gov/how-reviews-work/sunset-reviews#:~:text=The%20Colorado%20General%20Assembly%20sets,if%20it%20is%20not%20reauthorized.

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CCLP testifies in support of TANF grant rule change

Apr 15, 2024

CCLP's Emeritus Advisor, Chaer Robert, provided written testimony in support of the CDHS rule on the COLA increase for TANF recipients. If the rule is adopted, the cost of living increase would go into effect on July 1, 2024.

CCLP’s legislative watch for April 5, 2024

Apr 5, 2024

For the 2024 legislative session, CCLP is keeping its eye on bills focused on expanding access to justice, removing administrative burden, preserving affordable communities, advocating for progressive tax and wage policies, and reducing health care costs.

HEALTH:
HEALTH FIRST COLORADO (MEDICAID)

To maintain health and well-being, people of all ages need access to quality health care that improves outcomes and reduces costs for the community. Health First Colorado, the state's Medicaid program, is public health insurance for low-income Coloradans who qualify. The program is funded jointly by a federal-state partnership and is administered by the Colorado Department of Health Care Policy & Financing.

Benefits of the program include behavioral health, dental services, emergency care, family planning services, hospitalization, laboratory services, maternity care, newborn care, outpatient care, prescription drugs, preventive and wellness services, primary care and rehabilitative services.

In tandem with the Affordable Care Act, Colorado expanded Medicaid eligibility in 2013 - providing hundreds of thousands of adults with incomes less than 133% FPL with health insurance for the first time increasing the health and economic well-being of these Coloradans. Most of the money for newly eligible Medicaid clients has been covered by the federal government, which will gradually decrease its contribution to 90% by 2020.

Other populations eligible for Medicaid include children, who qualify with income up to 142% FPL, pregnant women with household income under 195% FPL, and adults with dependent children with household income under 68% FPL.

Some analyses indicate that Colorado's investment in Medicaid will pay off in the long run by reducing spending on programs for the uninsured.

FOOD SECURITY:
SUPPLEMENTAL NUTRITION ASSISTANCE PROGRAM (SNAP)

Hunger, though often invisible, affects everyone. It impacts people's physical, mental and emotional health and can be a culprit of obesity, depression, acute and chronic illnesses and other preventable medical conditions. Hunger also hinders education and productivity, not only stunting a child's overall well-being and academic achievement, but consuming an adult's ability to be a focused, industrious member of society. Even those who have never worried about having enough food experience the ripple effects of hunger, which seeps into our communities and erodes our state's economy.

Community resources like the Supplemental Nutrition Assistance Program (SNAP), formerly known as Food Stamps, exist to ensure that families and individuals can purchase groceries, with the average benefit being about $1.40 per meal, per person.

Funding for SNAP comes from the USDA, but the administrative costs are split between local, state, and federal governments. Yet, the lack of investment in a strong, effective SNAP program impedes Colorado's progress in becoming the healthiest state in the nation and providing a better, brighter future for all. Indeed, Colorado ranks 44th in the nation for access to SNAP and lost out on more than $261 million in grocery sales due to a large access gap in SNAP enrollment.

See the Food Assistance (SNAP) Benefit Calculator to get an estimate of your eligibility for food benefits.

FOOD SECURITY:
SPECIAL SUPPLEMENTAL NUTRITION PROGRAM FOR WOMEN, INFANTS AND CHILDREN (WIC)

Every child deserves the nutritional resources needed to get a healthy start on life both inside and outside the mother's womb. In particular, good nutrition and health care is critical for establishing a strong foundation that could affect a child's future physical and mental health, academic achievement and economic productivity. Likewise, the inability to access good nutrition and health care endangers the very integrity of that foundation.

The Special Supplemental Nutrition Program for Women, Infants and Children (WIC) provides federal grants to states for supplemental foods, health care referrals, and nutrition information for low-income pregnant, breastfeeding and non-breastfeeding postpartum women and to infants and children up to age five who are found to be at nutritional risk.

Research has shown that WIC has played an important role in improving birth outcomes and containing health care costs, resulting in longer pregnancies, fewer infant deaths, a greater likelihood of receiving prenatal care, improved infant-feeding practices, and immunization rates

Financial Security:
Colorado Works

In building a foundation for self-sufficiency, some Colorado families need some extra tools to ensure they can weather challenging financial circumstances and obtain basic resources to help them and their communities reach their potential.

Colorado Works is Colorado's Temporary Assistance for Needy Families (TANF) program and provides public assistance to families in need. The Colorado Works program is designed to assist participants in becoming self-sufficient by strengthening the economic and social stability of families. The program provides monthly cash assistance and support services to eligible Colorado families.

The program is primarily funded by a federal block grant to the state. Counties also contribute about 20% of the cost.

EARLY LEARNING:
COLORADO CHILD CARE ASSISTANCE PROGRAM (CCCAP)

Child care is a must for working families. Along with ensuring that parents can work or obtain job skills training to improve their families' economic security, studies show that quality child care improves children's academic performance, career development and health outcomes.

Yet despite these proven benefits, low-income families often struggle with the cost of child care. Colorado ranks among the top 10 most expensive states in the country for center-based child care. For families with an infant, full-time enrollment at a child care center cost an average of $15,140 a year-or about three-quarters of the total income of a family of three living at the Federal Poverty Level (FPL).

The Colorado Child Care Assistance Program (CCCAP) provides child care assistance to parents who are working, searching for employment or participating in training, and parents who are enrolled in the Colorado Works Program and need child care services to support their efforts toward self-sufficiency. Most of the money for CCCAP comes from the federal Child Care and Development Fund. Each county can set their own income eligibility limit as long as it is at or above 165% of the federal poverty level and does not exceed 85% of area median income.

Unfortunately, while the need is growing, only an estimated one-quarter of all eligible children in the state are served by CCCAP. Low reimbursement rates have also resulted in fewer providers willing to accept CCCAP subsidies.