Bill Summary – FastDemocracy

130th MAINE LEGISLATURE
                    FIRST SPECIAL SESSION-2021
Legislative Document                                                                            No. 1678
H.P. 1249                                                           House of Representatives, May 5, 2021
            An Act To Support Child Care Providers and School Readiness
            through Tax Credits
   Received by the Clerk of the House on May 3, 2021. Referred to the Committee on
Taxation pursuant to Joint Rule 308.2 and ordered printed pursuant to Joint Rule 401.
                                                                                     ROBERT B. HUNT
                                                                                                Clerk
Presented by Representative MILLETT of Cape Elizabeth.
Cosponsored by Senator CLAXTON of Androscoggin and
Representatives: DOUDERA of Camden, MEYER of Eliot, SACHS of Freeport, TEPLER of
Topsham, Senators: BREEN of Cumberland, LIBBY of Androscoggin.
                                        Printed on recycled paper
 Be it enacted by the People of the State of Maine as follows:
     Sec. 1. 22 MRSA §5308, as amended by PL 2013, c. 368, Pt. CCCC, §6, is further
 amended by adding at the end a new paragraph to read:
      The office shall notify the State Tax Assessor immediately of any changes made to
 grading or scoring systems of child care provider quality standards and career qualifications
 for administrators, educators and staff of child care providers developed by the office or in
 cooperation with an entity outside of the office and used to determine tax credits pursuant
 to Title 36, section 5218, 5218-B or 5218-C. The office, in consultation with the State Tax
 Assessor, shall submit a report, including suggested legislation, to the joint standing
 committees of the Legislature having jurisdiction over health and human services matters
 and taxation matters implementing the changes necessary to the law to reflect the changes
 to the grading or scoring systems. Either joint standing committee may submit a bill to the
 Legislature based on the report of the office.
     Sec. 2. 36 MRSA §5218, sub-§3, as amended by PL 2003, c. 391, §10, is repealed
 and the following enacted in its place:
     3. Child care services provided at quality child care site. For tax years beginning
 on or after January 1, 2022, the credit provided by subsections 1, 2 and 2-A is increased by
 a percentage of the federal tax credit based on the quality rating of the child care site as
 provided in this subsection.
     A. As used in this subsection, unless the context otherwise indicates, the following
     terms have the following meanings.
         (1) "Federal tax credit" means the federal tax credit allowable for child and
         dependent care expenses in the same tax year.
         (2) "Quality rating" means the rating, expressed as a star number in a series from
         1 to 5, given to a child care site pursuant to a quality rating and improvement
         system based on standards for family child care programs developed by the
         Department of Health and Human Services, Office of Child and Family Services
         and detailed in the September 2020 report "Rising Stars for ME Pilot Report."
     B. The percentage increase is determined as follows.
         (1) If the quality rating of the child care site is star 1, the credit is 50% of the
         federal tax credit.
         (2) If the quality rating of the child care site is star 2, the credit is 100% of the
         federal tax credit.
         (3) If the quality rating of the child care site is star 3, the credit is 150% of the
         federal tax credit.
         (4) If the quality rating of the child care site is star 4 or 5, the credit is 200% of the
         federal tax credit.
     C. A taxpayer who has more than one child eligible for the credit under this section
     shall calculate the credit for each child separately. If the child of a taxpayer receives
     child care services from more than one child care site in the same tax year, the taxpayer
     shall calculate the credit based on the highest-rated child care site.
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     D. The credit calculated pursuant to this subsection is refundable.
     Sec. 3. 36 MRSA §5218, sub-§5 is enacted to read:
     5. Evaluation; specific public policy objectives; performance measures.
 Beginning in 2025, the credit provided under subsection 3 is subject to ongoing legislative
 review in accordance with Title 3, chapter 37. The Office of Program Evaluation and
 Government Accountability by January 15th annually shall submit an evaluation of the
 credit provided under subsection 3 to the joint legislative committee established to oversee
 program evaluation and government accountability matters and the joint standing
 committee of the Legislature having jurisdiction over taxation matters. In developing
 evaluation parameters to perform the review, the office shall consider whether the specific
 public policy objectives and economic benefit of the credit provided under subsection 3
 outweigh the loss of revenue to the State.
 The Office of Program Evaluation and Government Accountability by January 15th
 annually shall provide a report of its evaluation under this subsection to the joint standing
 committee of the Legislature having jurisdiction over taxation matters.
     Sec. 4. 36 MRSA §5218-B is enacted to read:
 §5218-B. Tax credit for child care providers and staff for certain Department of
        Health and Human Services program participants
     1. Definitions. As used in this section, unless the context otherwise indicates, the
 following terms have the following meanings.
     A. "Administrator" means, for an eligible child care provider, a director, administrator
     or lead staff person who is responsible for the day-to-day operation, supervision and
     administration of the eligible child care provider and includes a program director,
     supervisor, owner and education supervisor.
     B. "Department" means the Department of Health and Human Services.
     C. "Eligible child" means:
         (1) The child of a parent who is participating in the child care subsidy program in
         the Office of Child and Family Services within the department; or
         (2) A foster child who is in the custody of the department.
     D. "Eligible child care provider" means a child care center, a child care facility or a
     family child care provider, as those terms are defined in Title 22, section 8301-A,
     subsection 1-A, paragraphs A, B and C, respectively, that provides child care to an
     eligible child.
     E. "Individual qualification score" means the career lattice rating systems developed
     and established as of 2019 for family and center-based child care and administrators,
     educators and other support professionals through a collaborative partnership between
     the Cutler Institute of Health and Social Policy at the University of Southern Maine,
     the University of Maine Center for Community Inclusion and Disability Studies and
     the Department of Psychology at the University of Maine.
         (1) For administrators, the career lattice is a series of levels from 1 to 6 as
         established in the "Administration Management/Coordination Career Lattice" for
         2019.
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         (2) For educators and other professional support staff, the career lattice is a series
         of levels from 1 to 8 as established in the "Center Based Family Child Care School
         Age Direct Care Lattice" for 2019.
     F. "Quality rating" means the rating, expressed as a star number in a series from 1 to
     5, given to a child care provider pursuant to a quality rating and improvement system
     based on standards for family child care developed by the Office of Child and Family
     Services within the department and detailed in the September 2020 report "Rising Stars
     for ME Pilot Report."
     2. Tax credit for eligible child care provider. For tax years beginning on or after
 January 1, 2022, an eligible child care provider is allowed a refundable credit against the
 tax otherwise due under this Part as determined pursuant to this subsection. The amount
 of the credit is based on the average of the number of eligible children who are cared for
 by that eligible child care provider each month and the quality rating of that eligible child
 care provider, as follows.
     A. If an eligible child care provider's quality rating is star 1, the tax credit per eligible
     child cared for is $0.
     B. If an eligible child care provider's quality rating is star 2, the tax credit per eligible
     child cared for is $1,000.
     C. If an eligible child care provider's quality rating is star 3, the tax credit per eligible
     child cared for is $1,500.
     D. If an eligible child care provider's quality rating is star 4, the tax credit per eligible
     child cared for is $1,750.
     E. If an eligible child care provider's quality rating is star 5, the tax credit per eligible
     child cared for is $2,000.
      3. Tax credit for administrators, educators and other staff of eligible child care
 providers. For tax years beginning on or after January 1, 2022, an administrator, educator
 or other professional support staff member of an eligible child care provider is allowed a
 refundable credit against the tax otherwise due under this Part as determined pursuant to
 this subsection.
     A. For administrators, the amount of the credit is based on the individual qualification
     score as follows.
         (1) If the administrator is rated level 2, the tax credit is $1,000.
         (2) If the administrator is rated level 3, the tax credit is $1,500.
         (3) If the administrator is rated level 4, the tax credit is $3,000.
         (4) If the administrator is rated level 5, the tax credit is $3,500.
         (5) If the administrator is rated level 6, the tax credit is $5,000.
     B. For educators and other professional support staff, the amount of the credit is based
     on the individual qualification score as follows.
         (1) If the educator or other professional support staff member is rated level 2, the
         tax credit is $1,000.
                                          Page 3 - 130LR0718(01)
         (2) If the educator or other professional support staff member is rated level 3, the
         tax credit is $1,500.
         (3) If the educator or other professional support staff member is rated level 4, the
         tax credit is $3,000.
         (4) If the educator or other professional support staff member is rated level 5, the
         tax credit is $3,500.
         (5) If the educator or other professional support staff member is rated level 6 or
         higher, the tax credit is $5,000.
     4. Certification. Upon application by an eligible child care provider or an
 administrator, educator or other professional support staff member of an eligible child care
 provider, the Office of Child and Family Services within the department shall certify the
 quality rating achieved by that eligible child care provider or the individual qualification
 score achieved by the administrator, educator or other professional support staff member
 of an eligible child care provider. The Office of Child and Family Services shall provide a
 certificate of quality rating to the eligible child care provider and a certificate of individual
 qualification score to the administrator, educator or other professional support staff
 member of the eligible child care provider, as appropriate.
     5. Application for credit. In order to receive the tax credit specified in subsection 2,
 for an eligible child care provider, or in subsection 3, for the administrator, educator or
 other professional support staff member of an eligible child care provider, the taxpayer
 taking the credit must include with that taxpayer's return the certificate provided to that
 taxpayer pursuant to subsection 4.
     6. Evaluation; specific public policy objectives; performance measures.
 Beginning in 2025, the credit provided under this section is subject to ongoing legislative
 review in accordance with Title 3, chapter 37. The Office of Program Evaluation and
 Government Accountability by January 15th annually shall submit an evaluation of the
 credit provided under this section to the joint legislative committee established to oversee
 program evaluation and government accountability matters and the joint standing
 committee of the Legislature having jurisdiction over taxation matters. In developing
 evaluation parameters to perform the review, the office shall consider whether the specific
 public policy objectives and economic benefit of the credit provided under this section
 outweigh the loss of revenue to the State.
 The Office of Program Evaluation and Government Accountability by January 15th
 annually shall provide a report of its evaluation under this subsection to the joint standing
 committee of the Legislature having jurisdiction over taxation matters.
     Sec. 5. 36 MRSA §5218-C is enacted to read:
 §5218-C. Business-supported quality child care
     1. Definitions. As used in this section, unless the context otherwise indicates, the
 following terms have the following meanings.
     A. "Employing unit" has the same meaning as in Title 26, section 1043.
     B. "Providing child care services" means expending funds to build, furnish, license,
     staff, operate or subsidize a child care center licensed by the Department of Health and
     Human Services to provide early care and education services to children of employees
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     of the taxpayer at no profit to the taxpayer or to contract with a child care facility
45
     licensed by or registered with the department to provide early care and education
46
     services to children of the employees of the taxpayer. "Providing child care services"
47
     also includes the provision of child care resource and referral services to employees
48
     and the provision of vouchers by an employer to an employee for purposes of paying
49
     for early care and education services for children of the employee.
     C. "Quality rating" means the rating, expressed as a step in a series of steps from 1 to
     4, given to a child care site pursuant to a quality rating and improvement system based
     on standards for center-based child care programs developed by the Department of
     Health and Human Services, Office of Child and Family Services and in place as of
     January 1, 2021.
     2. Credit allowed for quality child care site expenses. For tax years beginning on
 or after January 1, 2022, a taxpayer constituting an employing unit is allowed a credit
 against the tax imposed by this Part for each taxable year equal to a percentage of the costs
 incurred by the taxpayer in providing child care services at child care sites as follows.
     A. If the quality rating of the child care site is step 1, the credit is 5% of the costs of
     providing child care services.
     B. If the quality rating of the child care site is step 2, the credit is 10% of the costs of
     providing child care services.
     C. If the quality rating of the child care site is step 3, the credit is 15% of the costs of
     providing child care services.
     D. If the quality rating of the child care site is step 4, the credit is 20% of the costs of
     providing child care services.
     3. Evaluation; specific public policy objectives; performance measures.
 Beginning in 2025, the credit provided under this section is subject to ongoing legislative
 review in accordance with Title 3, chapter 37. The Office of Program Evaluation and
 Government Accountability by January 15th annually shall submit an evaluation of the
 credit provided under this section to the joint legislative committee established to oversee
 program evaluation and government accountability matters and the joint standing
 committee of the Legislature having jurisdiction over taxation matters. In developing
 evaluation parameters to perform the review, the office shall consider whether the specific
 public policy objectives and economic benefit of the credit provided under this section
 outweigh the loss of revenue to the State.
 The Office of Program Evaluation and Government Accountability by January 15th
 annually shall provide a report of its evaluation under this subsection to the joint standing
 committee of the Legislature having jurisdiction over taxation matters.
     Sec. 6. 36 MRSA §5403, sub-§7, as enacted by PL 2017, c. 474, Pt. B, §24, is
 amended to read:
      7. Personal exemptions. Beginning in 2018 and each year thereafter, by the dollar
 amounts contained in section 5126‑A, subsection 1, except that for the purposes of this
 subsection, notwithstanding section 5402, subsection 1-B, the "cost-of-living adjustment"
 is the Chained Consumer Price Index for the 12-month period ending June 30th of the
 preceding calendar year divided by the Chained Consumer Price Index for the 12-month
 period ending June 30, 2017; and
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     Sec. 7. 36 MRSA §5403, sub-§8, as enacted by PL 2017, c. 474, Pt. B, §24, is
 amended to read:
     8. Personal exemption phase-out. Beginning in 2018 and each year thereafter, by
 the dollar amount of the applicab