As Minnesota families continue to face increased costs for child care, a second-term legislator from the northwest suburbs has introduced legislation that would provide more incentives for in-home day-care providers to stay in business and new families to start such businesses.
Rep. Danny Nadeau, R-Rogers, is sponsoring HF633, which would establish a 50% market value exclusion on property taxes for in-home family day care or group family day care providers. That would equate to a reduction of property taxes that families who operate in-home day cares would pay on their residential homesteads.
Last month the bill passed on a divided voice vote in the House Children and Families Finance and Policy Committee, despite concerns from DFL legislators who intimated that they believe not all child-care providers need a tax break. Last Tuesday, it received push back from a handful of Democrats, and was laid over for possible inclusion in an omnibus bill.
“I’m trying to provide some relief for in-home family care providers,” Nadeau told his colleagues during a Feb. 18 hearing on the legislation. “This bill is a very simple, common sense bill that I hope helps stabilize in-home family child-care providers.”
Among the testifiers supporting the bill was Grant Johnson of Edina. His wife has owned an in-home child-care business for nearly 40 years and he said the regulatory and operational costs have increased exponentially, which has resulted in a much higher barrier for new families entering the industry.
“The costs continue to go up and our costs in utilities, insurance, taxes have skyrocketed in the last several years,” Johnson told legislators. The families operating those businesses are “old, like we are, we don’t see very many new, young faces, and I think we need to provide some home-based day care for those families who want to have the opportunity not to go to a center. And that tends to be a little bit cheaper. But it is not an as attractive of a small business to be in anymore as it used to be.”
Nadeau said his bill comes at a time when Minnesota has seen its licensed child-care providers shrink by more than 50 percent over the last decade-plus. From 2000 to 2020, the metro area alone saw a reduction of 40,000 licensed family child-care slots, according to Department of Human Services reporting. During that same time span, Greater Minnesota saw a loss of more than 20,000 child-care slots. While that deficit has been mostly made up for in the Twin Cities by an increase in center-based child care, a deficit of child care remains across the state, Nadeau said, as costs and waitlist times for families seeking child care continue to climb.
“As the number of providers declines, the costs increase and waitlists get longer. Family care providers have been hit the hardest and that’s what [this legislation] is trying to help,” Nadeau said.
Among DFL legislators who expressed some skepticism over the bill was Rep. Jessica Hansen, DFL-Burnsville, who told Nadeau that while some in-home day-care providers are struggling to make ends meet, others have “boats and cabins.”
“I just think it’s really important in this day and age of our economy that we talk about there are ‘haves’ and ‘have nots,’” Hanson said. “As a single mom living paycheck to paycheck, I know folks in my neighborhood, they are struggling to keep their in-home day cares open a lot harder than folks maybe on the other side of my district who don’t struggle to make ends meet.”
“I think there is some work to do assessing whether is this the best way to fund something like this. Again, I appreciate where you are going with this, and I support this and I would be happy to help with that, but I do think we need to be aware that when we are giving tax breaks to folks who don’t need them, I think that’s an important piece to talk about,” she explained.
Nadeau said the goal of the bill is to encourage existing in-home day-care operators to stay in business by effectively reducing their operating costs through the property tax exclusion.
During the March 4 hearing in the House Taxes Committee, Rep. Cheryl Youakim, DFL-Hopkins, told her colleagues she would like to see the bill narrowed in its scope so that only in-home child-care providers who take on children who are on state assistance, and thus qualify as a nonprofit, receive the benefit of the proposed property tax exclusion. She didn’t provide an explanation for why she would want to exclude hundreds of in-home day-care businesses from the bill.
“I will look into that for sure,” Nadeau answered, “but to me it doesn’t really matter if you are a for-profit in-home family care provider or if you have identified as a nonprofit.”
Senate authors of the bill include two Democrats
While the bill would need support of at least one DFL legislator to pass in the House, its path in the Senate looks more promising. The sponsors of the companion bill in the Senate, SF339, include two Republicans, Bill Weber and Gary Dahms, and two Democrats, Aric Putnam and Grant Hauschild. All four senators are from Greater Minnesota. Nadeau emphasized to his colleagues that rural families have even more dire child-care resource conditions than those in the metro.
Hank Long
Hank Long is a journalism and communications professional whose writing career includes coverage of the Minnesota legislature, city and county governments and the commercial real estate industry. Hank received his undergraduate degree at the University of Minnesota, where he studied journalism, and his law degree at the University of St. Thomas. The Minnesota native lives in the Twin Cities with his wife and four children. His dream is to be around when the Vikings win the Super Bowl.
