New laws address child care costs
Legislation closes loop hole that had prevented some low-income families from receiving assistance
Three bills that became law last week aim to alleviate the high cost of child care in Colorado.
The laws, signed by Gov. John Hickenlooper on May 22, address a number of financial areas and are a response to Colorado being the fifth least affordable state for child care.
A key piece of the package creates child care tax credits for families that make less than $25,000 a year.
The new credit — which is capped at $1,000 per family per year — is available to those who do not qualify for existing child care tax credits that are tied to federal returns.
“It's a lot of money when you're only making $25,000 a year and trying to pay for child care,” said Rep. Brittany Pettersen, D-Lakewood, a bill sponsor.
The bill fixes a loophole that disqualifies many low-income families from receiving a tax credit that was set up by the state in 1996.
The child care tax credit that the new law replaces applied to families that earn less than $60,000 a year. But that credit was tied to federal income taxes, which doesn't apply to many low-income families because their earnings are sometimes too low to even have to file federal taxes.
Pettersen also co-sponsored a bill with Sen. Jeanne Nicholson, D-Black Hawk, that addresses cases when families receive pay increases at work that disqualifies them for continuing to receive child care assistance — a significant financial issue for families that has been dubbed the “cliff effect.”
The legislation sets up grant funding for the Cliff Effect Pilot Program, which allows families to phase out of assistance they receive through the Colorado Childcare Assistance Program, whenever they receive higher pay through their jobs.
“This bill helps parents seek jobs, promotions and pay raises without worrying about suddenly losing the assistance that helps them afford child care and be reliable employees,” Nicholson said through an emailed statement. “This will eliminate a hurdle, or disincentive, for families working towards financial security.”
Nicholson also co-sponsored a third piece of the child care affordability package. That legislation creates a reimbursement program that lowers child care center payments for low-income families and recognizes child care centers that perform at a high level.
Pettersen said the bills should mitigate child care costs for people who could use help the most.
“We have some of the most expensive child care in the nation and this is one of the big barriers that families face,” she said.