Tax credits for child care and housing win approval from Alabama Legislature

The Alabama Senate Tuesday approved two bills creating tax credits aimed at improving access to affordable housing and child care in the state, despite concerns from the Senate education budget chair.

HB 346, sponsored by Sen. Cynthia Almond, R-Tuscaloosa, establishes the Alabama Workforce Housing Tax Credit Act and tax credits for housing projects. The authority “shall” incentivize and prioritize certain qualified projects. The bill states that it is the desire of the Legislature that creating jobs will be supported by multi-family rental housing opportunities.

After approving a federal low-income housing tax credit for a qualified project, a workforce housing tax credit can be awarded, as long as it does not exceed monetary limits set by the bill. The bill requires a certain amount of the award to go to rural areas.

The bill also outlines the allocation plan for the authority and the eligible years, as well as reporting requirements.

The bill passed 34-1.

More: Alabama Legislature passes $3.3 billion budget that includes a raise for state employees

“There’s a severe shortage of affordable housing in Alabama and specifically in certain areas of the state,” said Sen. Chris Elliott, R-Daphne, who carried the bill in the Senate.

HB 358, sponsored by Rep. Anthony Daniels, D-Huntsville, establishes an employer tax credit, a child care facility tax credit and a nonprofit child care provider grant program which aims to encourage employers to fund child care for employees. The bill sunsets in 2027 but can be extended. The bill passed 31-0.

“What this does is get working mothers, especially, to workers in the state of Alabama back to work,” said Sen. Garlan Gudger, R-Cullman, who carried the bill in the Senate.

The bills are part of a package of bills designed to address low workforce participation in the state. Alabama’s workforce participation rate in March was 57.7%, according to the Federal Reserve Bank of St. Louis. The national rate in April was 62.7%, according to the Bureau of Labor Statistics.

Experts have cited a lack of access to child care as one of the reasons for the low rate.

Sen. Arthur Orr, R-Decatur, who ultimately voted for both bills, expressed concerns about the state of the education budget and the specifics of the bills.

“My concern, senator, is the fiscal cost, our state that it’s going to cost and the money comes from the schoolchildren of the state,” Orr said to Elliott.

Orr had previously expressed concerns about potential decreases to the education budget due to tax credit bills. Legislation that creates state income tax breaks tends to lower revenue to the ETF, where all but a fraction of state income tax revenues go.

Orr also had questions about areas for the housing being identified as a priority area by the Department of Commerce. Elliott said he did not think that was the case.

Orr said his “counterpart” in the House – House Ways and Means Education chair Danny Garrett, R-Trussville – had amended the housing bill but Orr said the amount over time was still too high.

“Every time we take money away from the education budget, there’s a loser and the loser in that situation are the children of the state,” he said. “You can say there’s a winner that’s going to maybe get housing, I would argue economics. If people can’t afford housing, maybe they need to make more and so we can have that debate another day.”

He also expressed specific concerns about the child care bill, citing definitions of who are eligible employees and distinctions of eligibility between nonprofit and for-profit in the bill.

“If I drop my kid off at Happyland Daycare and I worked for a church, am I not eligible for this?” he asked.

Gudger said that nonprofits don’t have tax liability claims.

“It doesn’t matter if it’s the facility or the employees, you don’t have anything to go against,” he said.

The bill left the floor briefly to allow Orr and Gudger to discuss possible amendments. But the legislation was ultimately called back and passed without changes.

Both bills go to Gov. Kay Ivey.

Alabama Reflector is part of States Newsroom, an independent nonprofit website covering politics and policy in state capitals around the nation. 

This article originally appeared on Montgomery Advertiser: Tax credits for child care and housing approved by Alabama Legislature