Proposed property tax exemptions could increase — and cheapen — Indiana child care options

Republican lawmakers said Tuesday a pending bill would also incentivize businesses to offer care for employees’ kids.

By: - January 24, 2024 6:15 am

A bill under consideration in the Senate tax committee would offer property tax breaks to for-profit child care providers and certain businesses as a way to increase options for working parents. (Getty Images)

Indiana lawmakers are looking at new property tax breaks as a way to alleviate the state’s child care deserts and help working Hoosiers find more affordable options.

Senate Bill 147 seeks to make for-profit child care providers tax exempt, and provides a partial property-tax exemption for businesses that offer onsite child care for employees. 

Sen. Linda Rogers, R-Granger (From the Indiana Senate Republicans website)

Expanded access to affordable child care is high among the Republican majority’s priorities in this year’s session. Gov. Eric Holcomb additionally laid out a plan to increase the number of child care and early education providers across Indiana in his 2024 legislative agenda.

“Not only is it important in the Statehouse, it is important to every single employer and parent who really wants to enter the workforce. There is no silver bullet that is going to fix the problem and we have to look at multiple ways to address the issue,” said Sen. Linda Rogers, R-Granger, one of three GOP authors on the bill. “This legislation needs to move forward and provide one more tool to increase affordable child care and learning opportunities for families.”

The bill was discussed Tuesday in the Senate tax committee but has not yet moved. Committee chairman Sen. Travis Holdman, R-Markle, said amendments and a vote on the bill are expected next week.

Incentivizes for more child care

Already, child care centers in schools, nonprofits and churches are tax exempt.

Current Indiana law also allows for-profit early childhood education providers to be exempt from property taxes — but only those servicing children between the ages of four and six.

For-profit providers additionally have to meet other requirements to qualify for any existing tax breaks. The provider must be the property owner, and services offered must primarily be educational. Certain state standards of quality need to be met, too, and participation in the state’s early education evaluation program is mandatory. 

Senate Bill 147 would relax those requirements, though.

Rogers said many Hoosier parents who want to work have children of all ages, but “many” child care providers “are not willing to accept infants and toddlers.” 

She emphasized that her legislation would increase the opportunity for parents to find reliable care, including for younger kids, and encourage for-profit facilities — which the senator said are currently at a “disadvantage” — to charge lower fees.

The senate bill additionally requires Indiana’s Family and Social Services Administration  (FSSA) to prepare a report that evaluates all the licensing requirements for all different types of child care facilities in the state.

So many people who want to enter the workforce have these young children, and they have no place to take them

– Sen. Linda Rogers, R-Granger

“Currently, every single facility that is licensed has a multitude of different types of requirements,” Rogers said. “We need to look strictly at health and safety and what matters most and apply those to all different facilities.”

Holdman asked if the proposal “provides a carrot to put people into the business of child care that currently aren’t doing so in their places of business?”

Rogers agreed, saying the “current, narrow exemption” prohibits child care providers that want to accept infants or toddlers. 

“So many people who want to enter the workforce have these young children, and they have no place to take them,” she continued. “This certainly will provide an opportunity to bring more people into the child care business.”

Rogers noted, as well, that she doesn’t believe “there’s a huge fiscal impact to this.” She pointed out that Indiana has few for-profit child care centers, currently. And even if more providers come online, that means more people entering the workforce.

“So, that will kind of offset any of the fiscal impact due to the loss of property taxes,” Rogers said.

There are currently 21 such providers licensed in Indiana that would likely qualify for the exemption, according to a legislative fiscal analysis.

Bill still needs work

There are currently 64 on-site corporate-sponsored child care centers in Indiana, according to FSSA reports. That includes companies like Eli Lilly in Indianapolis and Toyota’s manufacturing plant in Princeton. 

Andrew Berger with the Indiana Manufacturers Association said most of those are in a separate building on the property.

Senators approve child care, prior authorization bills

He said there are 20,000 active manufacturing openings in Indiana, but without better child care options, filling those positions will be difficult.

“This is an economic development issue. We’ve had so many great manufacturing announcements in Indiana. The one thing that’s going to limit our ability to take advantage of that growth is going to be availability of workforce, and clearly child care is a critical element of that,” Berger said. “We need to support the growth. Having companies that are more incentivized to provide child care — and take advantage of that — is going to mean much more tax revenue economic growth in the long term. That is going to be an immediate hit.”

Mike Garatoni, president of for-profit Growing Kids Learning Centers, which operates nine licensed child care centers in Northern Indiana, said private providers are necessary to ensure parents have options, including for those working non-traditional shifts late at night or on weekends.

“If you’ve got a tax bill that comes due, regardless how many kids you’ve got, you have got to pay the taxes. That is a difficulty to opening a school and keeping it open,” Garatoni said. Although he was not aware of any child care providers that have been forced to close due to tax bill expenses, he added that “a lot of folks have a hard time making ends meet — and putting money back into a program — to make it successful and to serve the community.”

Still, as drafted, the bill stipulates that only the employees of a particular business can take advantage of the onsite child care facility.

Sally Rideout, representing several Indiana chambers of commerce and economic development organizations, explained that some Hoosier employers have “banded together” to create a shared program that might be housed at one site, with child care slots available to children of employees from other participating employers.

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Rogers said it was a “great point” and promised to look at possible fixes in the bill over the coming week.

Sen. Andrea Hunley, D-Indianapolis, further expressed concerns about the tax burden shift for Hoosier property owners. She emphasized that in Marion County, for example, “we already have many properties that are exempt from property taxes.”

“We use tax policy in ways that incentivize the kind of behaviors that we ideally would like to see … and we have identified, as a state, that child care is a crisis area, and an inhibitor, for all kinds of other economic activity,” Rogers said in response. “The reality is that without more seats, without doing something to address the supply side, those families are going to continue to face long wait lists, inability to access care, and rates are continuing to go up because of inflation. We have to figure out how to support providers and families both.”

Last week, another Senate committee unanimously passed a separate bill that aims to increase accessible and affordable child care options for Hoosiers families.

Senate Bill 2 would remove certain regulations for child care programs throughout the state and expand opportunities to work in child care.

The bill also expands opportunities for the children of childcare workers to be eligible for certain assistance, and gives child care workers currently employed by licensed child care programs eligibility for public subsidies.

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Casey Smith
Casey Smith

A lifelong Hoosier, Casey Smith previously reported on the Indiana Legislature for The Associated Press. Internationally, she has reported on water quality across South America. She holds a master’s degree in investigative reporting and narrative science writing from the University of California/Berkeley’s Graduate School of Journalism. She previously earned degrees in journalism, anthropology and Spanish from Ball State University, where she now serves as an instructor of journalism.

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