Senate Health and Welfare delivered a memo on Thursday to the chairs of the Senate’s budget and tax committees that recommends leaving the tax credit that benefits low income workers in tact. The governor proposed shifting $17 million from EITC to the child care subsidy program in his inaugural speech; earlier this week, that number was revised downward to $12 million.
The memo also lists the Health and Welfare Committee’s recommendations on a number of other budget items in the human services realm, which include a “time out” on welfare limits.
The committee’s EITC request shouldn’t be a hard sell in Senate Finance, where committee chair Sen. Tim Ashe, D-Chittenden, has made it no secret that he thinks it’s a foolish place to draw on funds.
Senate Appropriations Committee will be mulling over the memo at the same time that it sifts through the details of a newly revised child care proposal from the Shumlin administration put out earlier this week.
The Health and Welfare’s position comes as no surprise. While improving child care and boosting payments to providers is a goal few oppose, after Shumlin proposed his plan in January, many in the Democratic governor’s own party, joined progressives in roundly criticized the idea of boosting child care by cutting the state’s match of federal funds for the EITC. The tax credit is generally considered a very effective anti-poverty tool, and Shumlin’s plan has foundered in the Legislature.
On Monday, Secretary of Administration Jeb Spaulding offered the committee an olive branch of sorts, announcing that Gov. Shumlin was willing to trim $5 million off his $17 million child care proposal, which would preserve the EITC for families with three or more dependents.
But there’s still a multi-million dollar gulf between the administration’s proposal and plans favored by both the Senate Health and Welfare Committee and the House.
The budget that passed in the House allocates $3.3 million, none of it from the EITC, to shore up the state’s child care program. The money would update the federal poverty level and ratchet up the subsidy that the state pays for families at 200 percent of the federal poverty line, from 50 percent to 100 percent. Families above 200 percent would not be eligible for any subsidy.
In its memo, the Health and Welfare Committee members support the downsized plan passed by the House, but they also ask the Senate to top it off with another $1.7 million, for a total of $5 million. That would allow state to increase provider rates by 3 percent.
Sen. Sally Fox, D-Chittenden, says the 3 percent raise is consistent with what’s been allocated for other providers in the Agency of Human Services budget. But it’s a far cry from Shumlin’s original proposal, which called for a 40 percent rate increase.
Fox said that, “ideally,” the committee would like to raise both the provider rates and the federal poverty line to the 2013 levels, but the members have resigned themselves to the fiscal reality that “the need exceeds the resources.”
On Wednesday, Appropriations chair Jane Kitchel, D-Caledonia, sought a clearer understanding of how the administration’s revised proposal divvies up the $12 million from EITC, which will, in turn, give the committee members a clearer picture of how they might carve out certain components.
Shumlin’s compromise proposal consists of the same basic parts as the original. It updates the federal poverty level from 2010 to the 2013 level, which would make more families eligible to receive a child care subsidy. And it reconstructs a subsidy “cliff,” paying out a larger percentage of the subsidy to families at the higher end of the eligible income bracket. These parts fall in step with both the original proposal and the House proposal.
Most of the $5 million reduction Shumlin proposed impacts the third part of the plan, which increases the market rate for providers. The governor originally proposed to raise that rate 40 percent, which would have increased the overall subsidy level that the state pays to providers on behalf of the families. Now the administration is proposing to raise those rates by 40 percent only for children age five and under. There would be no rate increased for children six and older.
The Commissioner of the Department of Children and Families (DCF), David Yacovone, summarized this policy doctoring decision: “If you don’t have enough to do a therapeutic dose to all children, target it to those who need it most.”
Fox, who led the memo-writing process for Health and Welfare and also sits on the Appropriations Committee, said the memo didn’t change after the Shumlin administration revealed its revised budget plans, which came out after the committee had drafted its recommendations.
“We’re still grappling with the same issues,” Fox said.
