Childcare Report Released, Questions on Availability Remain

A highly anticipated report from the RAND Corporation was released this week, detailing potential options for financing a childcare system with expanded state-sponsored subsidies for childcare workers and families. While legislators continue to digest the annual additional $179-$279 million price tag, the Governor suggested adding $56 million to existing programs without raising taxes. The Vermont Chamber will work toward solutions that will focus on the underlying workforce concerns to improve childcare availability. 

The study projects that if these investments are made, 600-2,800 Vermonters may re-join the workforce which equates to less than 1% of Vermont’s workforce. However, according to the “Child Care is Everyone’s Business” report there is a need for 2,500 additional professionals to work in childcare centers to create the number of spots currently in demand. The current proposal does not provide solutions to address the underlying workforce concerns that exacerbate the childcare issue. Childcare legislation is expected to be introduced in the coming weeks and while the focus of the RAND study was largely on affordability, questions remain on how the legislature will address the availability of spots for working families. 

The study, commissioned in 2021 by the legislature, identifies several potential tax increases: 

  • 0.9% payroll tax 
  • 2% sales tax increase 
  • 7.1-9.9% new service tax 
  • A combination of smaller payroll and/or service taxes, and a 15% tax on soda
  • A combination of smaller payroll and/or service taxes, and a 1% tax increase on rooms and meals

We are collecting information on how the proposed childcare payroll tax would impact businesses and their employees. We invite you to take a few minutes to complete this survey.