Gov. Kathy Hochul included new tax credits and investments in her executive budget proposal aimed at helping the state’s deteriorating child care system, but business leaders and providers in the industry say they’re not the best ways the state can address the crisis.
The governor’s spending plan commits investing $7.6 billion in child care over the next four years, which Hochul says will expand access to care for 500,000 New York children.
“To help the affordability crisis for parents, we’re going to continue our investments in child care,” Hochul said during Wednesday’s budget address delivered in the state Capitol. “As the first mother to lead this state, I know how real this is. I know how important it is.”
About 10% of families eligible for child care assistance are enrolled to receive it, Hochul said.
The state is increasing the income threshold for families eligible for assistance to 85% of the state’s median income for a family of four, or $93,200 annually. The child care application process will also be streamlined, and families who receive other government support will be automatically eligible for the program.
The governor’s proposal includes $389 million in grants for child care programs, but Peter Nabozny, policy director with The Children’s Agenda in Western New York, says the temporary reimbursement won’t help families long-term.
“While that may help a provider offer a hiring bonus or a retention bonus and things like that, they need to be able to offer sustained, higher wages, and a six-month-long grant program does not do that,” he said.
The state has suffered steep reductions in the number of child care providers since the start of the COVID-19 pandemic. Providers say Hochul’s ideas are promising, but that they’ll increase the number of families who can access care without addressing the child care program and staffing crisis.
Providers part of the Empire State Campaign for Child Care say the final state budget must invest $1 billion to increase wages for the child care workforce — especially with the governor’s commitment to tie annual increases in the minimum wage to inflation.
“If the minimum wage goes up and there isn’t more state funds available, the only way to sustain that is through increasing fees on parents and on families,” Nabozny said. “…If they can’t afford to pay that increased cost of care, that starts to create decisions that families make about a parent leaving the workforce, reducing hours and things like that.”
Without a significant increase in compensation for child care workers, Nabozny says providers will continue to lose staff, close their doors and will not be able to accommodate the additional families given assistance under the governor’s proposals.
Hochul wouldn’t say why she didn’t include a universal child care plan in the executive budget, but agreed providers need more support. She didn’t specify how much.
“We need to continue supporting the providers — they need more resources,” she said.
The $227 billion executive budget includes $25 million for a new refundable tax credit for businesses that create or expand child care opportunities.
Crystal Griffith, director of workforce development with the Business Council of New York State, says the council applauds the credit and the flexibility it will give businesses. But Griffith added it’s only a step toward what the state needs.
Officials with the Business Council support more money from the state’s general fund to create a publicly funded universal child care system along with a growing number of lawmakers and child care providers. Many testified in favor of a model without barriers at $5 billion annually at a legislative public hearing last week.
“Universal child care is definitely something that needs to be a top priority for the governor and for the Legislature,” Griffith said. “…We don’t want businesses to be the ones responsible for taking on the challenge or having to take on universal child care.”
Hochul’s budget also proposes a Child Care Pilot program where the employer, employee and state each split one-third of child care costs.
But Nabozny says tying child care to a person’s job might impede their ability to seek other employment, and the funding for that and the business tax credit would be better spent bolstering the state’s child care assistance program outright.
Several Republican lawmakers agree the child care sector needs more funding for the workforce.
“Support there would go a long way to make sure there are adequate child care centers and locations people can actually go to along whatever subsidies the state’s going to provide the parent,” said Assemblyman Ed Ra, a Republican from Garden City South on Long Island.
Republicans continue to push back against the minimum wage increases and pegging future hikes to inflation amid an uncertain economic climate, and the potential it will exacerbate the workforce shortage.
Assembly Speaker Carl Heastie would not rule out supporting a universal child care system while speaking with reporters Wednesday after the governor’s address, but noted the high cost. The Bronx Democrat noted his colleagues in the Assembly majority support expanding child care, but those conversations will be ongoing.
Both chambers of the Legislature will present their one-house budgets to counter the governor’s proposal next month.
Meanwhile, child care providers will be fighting hard for legislative leaders to secure funding for the child care workforce in the state’s final spending plan due April 1.
“There’s a lot we need the Senate and the Assembly to build on before the enacted budget comes through,” Nabozny said.