AUSTIN (KXAN) – The Austin City Council approved a resolution to implement a 100% property tax exemption for eligible childcare facilities just two days after Texas voters approved a proposition allowing the city to do so.
Roughly 65% of Texans who voted Tuesday approved Proposition 2, which amended the state constitution to provide some financial relief to childcare facilities through property tax exemptions. In anticipation of the proposition’s passage, District 10 Council Member Allison Alter wrote a resolution to ensure eligible centers can receive 100% abatement by the time the 2024 financial year begins.
“As federal funds expire, we are on the precipice of what experts call ‘a child care cliff,’” Alter said, referring to a Texas Association for the Education of Young Children survey reporting that “without more funding, up to 44% of child care centers in Texas could close their doors.”
“Our economy can’t function without affordable childcare,” she continued. “This property tax exemption will provide financial relief to providers so they can continue serving Austin’s working families.”
Alter’s resolution was approved on consent at the Nov. 9 City Council meeting, making Austin the first Texas city to advance the proposition approved by voters.
Alejandra Gardner is the director of the the south Austin preschool House of Little Angels Child Care Center. She told KXAN that since the pandemic, running the school has been tough.
“The biggest challenge was getting staff,” Gardner said. “Driving down the street, you can see Dairy Queen [and] Target – they’re all paying 20 bucks, or they’re saying they’re paying $20 An hour – like starting rate. And we just can’t compete with that.”
In order to maintain staff, Gardner and the owners of the preschool have had to raise the tuition on a couple of occasions. Thus is especially tough for the parents of children at Gardner’s school, as over half of the students are using tuition subsidies to pay.
“The [parents] get upset and I understand it,” Gardner said. “I try my best to explain this isn’t something we want to do but in order for us to maintain what we have, we have to do it.”
Cathy McHorse, Vice President of Success By 6, said that many Texas childcare facilities have been forced to raise tuitions to attempt to keep staff and afford rising rents.
“Childcare programs work on razor-thin profit margins, they collect revenue from whatever families can pay in tuition, from the reimbursement rates from the state subsidies, which we know were insufficient to cover the costs of being very high quality,” McHorse said.
McHorse said that the legislation passed in the state and Austin will undoubtedly help these facilities stay open but that it is no “silver bullet.”
“We think it will stave off closures for a while and it will definitely make a difference for the programs,” McHorse said. “We still need to find ways to get more public dollars invested in childcare, to stabilize the workforce and to increase the capacity of our community to meet the need that we have,” she continued.
Gardner said the new law will make it easier for her to continue to enroll more children using tuition subsidies — something that causes childcare centers to lose profit — and make salaries for competitive for her teachers.
“I tell my staff all the time. ‘Like, guys, this is a hard job but it’s more of a heart job,'” she said. “With this bill, we won’t have to have so much of the [hard parts] because this will alleviate some of that, and [we can] focus on the heart part of it,” she said
In order for a child care facility to qualify for benefits, it must be licensed, have more than 20% of children enrolled in subsidized state child care fund and the owner must be involved in the Texas Workforce Commission’s Rising Star Program.