SB 0421

AN ACT establishing a child day care program credit against the business profits tax and the business enterprise tax.

SPONSORS: Sen. Larsen, Dist 15; Sen. D'Allesandro, Dist 20; Sen. Trombly, Dist 7; Sen. Hollingworth, Dist 23; Sen. Brown, Dist 17; Sen. Cohen, Dist 24; Rep. Gile, Merr 16; Rep. Estabrook, Straf 8; Rep. Wallner, Merr 24; Rep. Keans, Straf 6

This bill establishes a child day care program credit against the business profits tax and the business enterprise tax.

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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

Be it Enacted by the Senate and House of Representatives in General Court convened:

1 New Paragraph; Business Profits Tax; Child Day Care Program Credit. Amend RSA 77-A:5 by inserting after paragraph XI the following new paragraph:

2 New Section; Business Enterprise Tax; Child Day Care Program Credit. Amend RSA 77-E by inserting after section 3 the following new section:

77-E:3-a Child Day Care Program Credit. The child day care program credit, as determined under RSA 170-E:51, shall be allowed against the tax due under this chapter.

3 New Subdivision; Child Day Care Program Business Profits Tax and Business Enterprise Tax Credit. Amend RSA 170-E by inserting after section 50 the following new subdivision:

I. A taxpayer under RSA 77-A and/or RSA 77-E shall be allowed a child day care program tax credit under either RSA 77-A:5, XII or RSA 77-E:3-a in the amount of the following percentages of expenses incurred for child day care programs:

(a) A 50 percent credit for start-up costs for an on-site child day care facility, licensed under the provisions of this chapter, to be used primarily by the children of the taxpayer's employees. Start-up costs include planning, site preparation, construction, renovation, or acquisition of facilities for purposes of establishing or expanding on-site or near-site facilities to be used for child day care; purchasing and installing equipment for permanent use within or immediately adjacent to the facility, to the extent such equipment is necessary in the use of such facility for the purposes of child day care; and materials to be used primarily for the child day care facility.

(b) A 50 percent credit for the net costs of maintaining an on-site child day care facility, including staff salaries and benefits, equipment, supplies and materials.

(c) A 30 percent credit for support payments made to off-site child day care facilities where, in exchange for such support payment, the facility agrees to serve an agreed-upon number of children of the taxpayer's employees for a time period covered by the support payment. The eligible expense per child shall not exceed $2,500 of assistance per tax year.

(d) A 40 percent credit for expenses incurred to comply with national accrediting standards, which would not have been incurred to comply with state licensing standards.

(e) A 40 percent credit for payments made to directly assist child day care providers and provider networks to pay for training or continuing education to improve the quality of child day care services.

(f) A 30 percent credit for expenses relating to providing coupons for employees to obtain child day care, including the costs to the taxpayer of administering such coupon program and serving as an information and referral resource. The eligible expense per child shall not exceed $2,500 per child per tax year.

II. The total amount of the credit shall not exceed 5 percent of the taxpayer's total tax liability per tax year, with a 2-year carry-forward allowed in the immediately succeeding tax years. If a facility ceases to operate as a child day care facility or such other form of support as described in paragraph I ceases after the first year, the carry-forward shall not be allowed.

III. There shall be no distinction made for the purposes of this tax credit between for-profit and not-for-profit child day care programs and facilities.

IV. The commissioner, in consultation with the commissioner of revenue administration and the commissioner of resources and economic development, the New Hampshire Child Care Advisory Council, and the Governor's Business Commission on Child Care, shall develop marketing strategies to educate and attract businesses to access tax credits available pursuant to this section. The commissioner shall work with the above agencies and organizations, as necessary, to evaluate annually the utilization level of this tax credit.

The Department of Revenue indicates that this bill will decrease state general fund revenue by $1.2 million in FY 2001, by $1.7 million in FY 2002, and by $2.0 million in FY 2003. The Department of Health and Human Services indicates that this bill will increase state expenditures by $88,798 in FY 2001, by $78,483 in FY 2002, by $80,842 in FY 2003, and by $83,090 in FY 2004. There is no fiscal impact on county and local revenues or expenditures.

The Department of Revenue Administration states that the fiscal impact of this bill was calculated based on historical data the Department has on file for similar tax credits allowed.

The Department of Health and Human Services states that in order to fulfill the responsibilities of this bill, the Department will hire a full-time Program Specialist IV and one-half-time Secretary to develop marketing strategies that will educate and attract businesses to access the tax credits identified in this bill, as well as evaluate the utilization of this tax credit annually. The Department will also incur related administrative costs for computer equipment, office equipment, copy expense, postage, printing, telephone, supplies, and mileage.