Senators discuss freezing child care subsidies


March 21st, 2017

Hammurabi off H Street on the Nebraska Capitol (Photo by Fred Knapp, NET News)

The reality of the state’s budget crunch hit home Tuesday, as lawmakers debated freezing child care subsidies – a move that could save money now, but at the risk of costs down the road.

Lincoln, NE – Under current law, the state conducts a survey every two years of how much child care costs. Then, for people who qualify for a subsidy – a family of three with income less than about $26,000 for example – the state pays between 60 and 75 percent of the market rate. That can amount to a subsidy of anywhere from $2.75 an hour for a school age child to up to $7.70 an hour for an infant.

This year, Gov. Pete Ricketts has proposed freezing those subsidies, regardless of whether the survey shows that costs have increased. His administration projects the move will save about $7. 4 million.

Sen. Merv Riepe, chairman of the Health and Human Services Committee, introduced the bill for the governor. Riepe said the child care subsidy is important to the more than 18,000 families it serves, but the change is needed, as the state faces a projected budget shortfall in the hundreds of millions of dollars.

“This is a difficult session as we approach the upcoming budget. It is not going to be easy. But it is our constitutional duty to balance the budget,” Riepe said.

Sen. Bob Krist of Omaha warned against cutting the subsidy too far.

“Think about the young mother, the single mother, or even the working family that need child care subsidy in order to go on earning money. If one of them has to stay home it’s less taxes being paid to the state of Nebraska,” Krist said. “We want them in the workplace. But we want their children taken care of properly. And this childcare subsidy is extremely important.”

Krist proposed an amendment under which the subsidy could not drop below 50 percent of the market rate. Several senators said they supported that idea, but not the bill itself. Among them was Sen. Adam Morfeld, who suggested saving money by cutting child care subsidies for poor people would backfire.

“If we think for a minute…the pathway to getting out of this downturn in our economy and in our revenue streams is going to be borne on the back of working Nebraskans by making it harder for them to work and then generate revenue for the state, we are sorely mistaken,” Morfeld said.

Sen. Sara Howard warned new federal guidelines that take effect next year will require states to show low income people have access to childcare, or the state will lose federal funds.

“If we allow rates to go lower in the months leading up to 2018, and we see childcare providers start to drop off, we will not be able to assure that access for those children. If we can’t assure that access, we have to return $30 million of our childcare subsidies,” Howard said.

Sen. Kate Bolz supported both the amendment and the bill, but said it was appropriate only because the state is facing a budget deficit.

“We cannot get into the habit of underfunding rates, whether it’s Medicaid rates or child care provider rates or any other type of rates as a budget balancing mechanism. We have to be fair to our service providers and our systems and we have to create truth in budgeting,” Bolz said.

Sen. Patty Pansing Brooks said the cuts were an example of skewed priorities.

“Attempting to cut and deal with our budget on the backs of the most poor, the most vulnerable, those without a voice – those who cannot hire lobbyists to come in here and pull us off the floor – I think it’s morally wrong,” Pansing Brooks said.

Sen. Matt Williams said the subsidies are important, but the budget situation means people have to share in the pain of cuts.

“I encourage us all to consider the compromises that are necessary to meet our constitutional requirement of balancing our budget. And doing that means making these tough choices,” Williams said.

And Sen. John Stinner, chairman of the Appropriations Committee, said the freeze was a budget necessity.

“I have to set my satchel down and say we just don’t have any more money. If we can just freeze this, move it forward, and try to keep the providers in as good a shape as we can until we have some kind of an abatement on this revenue shortfall, that would probably be helpful to the providers,” Stinner said.

Senators voted 27-14 for Krist’s amendment saying subsidies could go no lower than 50 percent of the market value. But before they could vote on the bill itself, Sen. Ernie Chambers moved to kill it. Chambers zeroed in on senators’ support earlier in the week for “Choose Life” license plates.

“Choose Life.” Playing like you care about these children. Now what’s the first thing that you do? You cut this program. You can call it whatever you want to. “Choose Life” – hypocrites – all of you. All of you,” Chambers said.

Lawmakers adjourned for the day without reaching a first-round vote on the bill. Debate on the measure is scheduled to resume Wednesday morning.

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