How Will S.56 Achieve Legislative Intent of Addressing the Workforce Needs of Employers?

The cost and revenue of the Senate childcare bill, with a last-minute paid parental leave program amendment, were finally revealed. The expected cost exceeds $190 million. This would be in addition to the $125 million that the state already pays for childcare. The revenue is a combination of new base funding from state revenue growth, a repurposing of the child tax credit for childcare, and a .42% payroll tax. Testimony in the Senate Finance Committee this week was heated at times as tough questions were posed to the committee on how, and if, this policy would provide any of the workforce relief that employers have asked for. Specifically, more childcare availability for employees that are struggling to find and keep childcare spots.  

As ultimately passed by the committee, the new payroll tax would be put on employers, with businesses given the option to withhold up to 25% of the cost from an employee’s payroll. The committee added self-employed individuals to those that pay into the system and re-added a work requirement for benefits that had previously been removed from the bill.  

The Vermont Chamber testified that addressing the availability of childcare spots is important to businesses, but that taxing employers to spend hundreds of millions on the sector without solving the underlying problems of childcare availability is not an acceptable outcome. Businesses are being asked to shoulder another new tax on the promise of added workers, but the results of the RAND report and migration trends do indicate a path forward.  

With all industries in Vermont struggling to fill staff positions at all wage levels there is no clear answer to where the 2,500 childcare workers that are required will come from even with large pay increases. Additionally, the Vermont Chamber pointed to national migration data to demonstrate that increased investments in social safety nets alone are not a proven workforce recruitment tool. The area of the proposal that showed the best opportunity to address the availability of childcare, making public pre-kindergarten available to 4-year-olds, was turned into yet another costly childcare study. The Vermont Chamber testified in support of using the remainder of the session to dig into opportunities to create a public pre-kindergarten for 4-year-olds rather than delay this potential solution.