Austin has become the first city in Texas to adopt a 100% property tax exemption for eligible childcare providers. The childcare property tax exemption from Austin comes just two days after Texas approved a constitutional amendment to allow cities and counties to exempt childcare providers from certain property taxes. The new legislation takes effect starting next year.
Childcare property tax exemption from Austin: what was the need?
On Thursday, the Austin City Council approved legislation from Council Member Alison Alter to allow a 100% property tax exemption to eligible childcare providers.
“Our childcare providers are thrilled to have this opportunity,” Alter said.
Further, she said that even if someone is leasing the childcare center, there are measures in place to allow the landlord to get the abatement and then pass it on to the childcare providers.
Alter told CBS Austin that the new measure will ensure that Austin childcare providers provide top-notch care to the children. Talking about other benefits of the legislation, Alter said it would prevent childcare facilities from closing and could even encourage childcare facilities to charge less from families.
During Thursday’s meeting, Alter informed that several childcare providers are expected to close following the end of the state’s Child Care Relief Fund (CCRF). The CCRF program is credited with keeping many of these facilities open by distributing $3.5 billion of federal grant dollars in the wake of the COVID-19 pandemic.
A survey by the Texas Association for the Education of Young Children found that 44% of the providers who responded to their survey, said they may shutter down next year.
The resolution was co-sponsored by most of the Council, including Leslie Pool, Jose Velásquez, Chito Vela, Zo Qadri, Vanessa Fuentes, and Ryan Alter. Also, the legislation enjoys broad community support.
Who qualifies for the exemption?
To qualify for the childcare property tax exemption from Austin, a childcare facility needs to meet the following requirements:
- It must be a licensed facility.
- Owner or operator of the facility must be part of the Texas Workforce Commission’s Rising Star Program.
- At least 20% of the children in the facility must be subsidized by state childcare funds.
The 100% childcare property tax exemption from Austin comes after Texas passed Proposition 2, which enables cities and counties to exempt some or all of a property’s appraised value from taxation if the property is used as a childcare facility. The exemption must not be less than 50%.
Alter noted that her resolution is wider in scope than Proposition 2 as it talks about offering relief to home-based and family providers as well.
Alter’s resolution directs the Interim City Manager to come up with similar assistance options for home-based childcare centers, especially those owned by women and those that are not eligible for tax relief under the state legislation.
Further, the legislation directs the City Manager to come up with the needed ordinance to finalize the tax exemptions at the first Council meeting of 2024, i.e., January 18.
