Following the success of Proposition 2 at the state ballot box, City Council has sprung to action enacting property tax relief for child care facilities across the city.

The proposition, which saw 76 percent approval among Travis County voters, amends the state constitution to allow for between 50 percent and 100 percent property tax exemptions for eligible child care centers across Texas. In a unanimous vote last Thursday, Council moved to provide the maximum abatement, with plans to explore expanding the benefits to home-based providers not included in the proposition language.

“We know that our economy can’t function at full productivity without affordable and accessible child care centers. Child care workers make all of the other work in Austin possible,” said Council Member Alison Alter, who sponsored the resolution. “As federal funds expire, including our own ARPA funds, we are on the precipice of what experts call a ‘child care cliff.’ I’m hoping this action will provide some financial stability and support.”

To be eligible, child care centers must be enrolled in the Texas Workforce Commission’s Rising Star Program and maintain 20 percent enrollment of children subsidized by state funding. City staff estimate that nearly 100 providers in Austin could meet that criteria.

The move comes at a critical juncture for child care centers as $3.5 billion in pandemic-era relief grants begin to dry up across the state of Texas. In a survey conducted by the Texas Association for the Education of Young Children in September, 26 percent of child care centers said they would likely close within the next year without additional relief, with another 43 percent uncertain of how they’d stay afloat.

“These child care programs operate on razor-thin margins of a less than 1 percent profit margin, so every dollar counts,” said Cathy McHorse, vice president of Austin’s Success by 6 Coalition. “Working families cannot afford to pay more, the state reimbursement fees are insufficient to cover costs and many programs cannot afford to pay staff a living wage. But they are the critical workforce behind our workforce.”

Council is set to formalize the new ordinance in the coming months, just in time for the 2024 tax year. In the meantime, interim City Manager Jesús Garza will explore relief options for licensed home-based providers left out of the statewide amendment. Locally funded assistance programs and public-private partnerships, like the Chapter 380 incentive program, are both on the table.

“These home-based programs are an essential part of our (child care) ecosystem, especially for families who are seeking nontraditional-hour care, families of infants and toddlers and for families that desire care that reflects their own culture and language,” McHorse said. “Yet these small-business owners experience many barriers to traditional business and child care support. We’re fortunate to have a City Council that recognizes access to quality equitable child care is essential for a thriving economy.”