Austin became the first city in Texas to offer property tax relief to child care providers just two days after Texas voters approved Proposition 2. The passage of Prop 2 allows Texas cities and counties to give property tax breaks to eligible child care operators. It's a move that local leaders hope will provide some financial relief for child care operators and the families who frequent them.
The state allows the exemption to be between 50% and 100%. Austin's City Council voted Thursday to give a 100% property tax exemption to eligible child care operators beginning next year.
Child care is one of the leading costs for families and has become difficult to afford for many working and low-income people. Many providers are struggling with inflation and high property taxes that can result in high rates and low wages for workers. The limited number of child care facilities also leads to waitlists, contributing to high costs and accessibility issues.
State Rep. James Talarico, whose district includes Austin, said that motivated him to author Prop 2.
“This is a game changer,” he said. “Right now, child care is more expensive than college in many communities around our state.”
He said thanks to voters, each community can now “provide overdue financial relief for child care centers, child care workers and working families across the Central Texas community.”
Council Member Alison Alter agreed. She said the city was anticipating that Texans would agree with them in being able to give child care operators much-needed relief that will hopefully translate to more affordable child care and better wages for workers.
This also comes as COVID-era funding is coming to an end for many child care providers.
“This is a sign that Texans understand the importance of child care for our working families and our state’s economy,” Alter said. “We know that our economy can’t function at full productivity without affordable and accessible child care centers… I am hopeful that this action will help provide more financial stability and support to some of our local child care operators who are currently operating on very thin margins.”
But only some operators can take advantage of this exemption, under the new law. Home-based child care providers were left out of the legislation, so Alter said Austin will also look for ways to offer similar relief to them.
Anthony Carrillo, who runs a home-based childcare center in South Austin, said that’s crucial.
“[Home-based] operations are arguably the ones who need the relief the most because they are operating at razor-thin margins,” he said.
City staff will look at how to offer relief to those operations and plan to engage with the community so that home-based operators get relief as well.
The council has taken a series of other steps in recent months to make it easier to operate a child care center in the city. In October, the city changed its land rules to expand where child care centers can operate. The city also launched a grant program to help day care centers cover city fees associated with opening a center.
Alter said the tax exemption is another step in helping make child care more affordable and accessible in Austin. The goal is to have the tax exemption implemented before March 31, in time for the 2024 tax year.
