Austin City Council makes history by eliminating property taxes for childcare providers

Austin is making history by becoming the first city in Texas to adopt a 100% property tax exemption for eligible childcare providers. The passage is being called a “game changer.”
(Photo: CBS Austin)

CBS Austin
by Paige Hubbard
Thu, November 9th 2023, 10:07 PM GMT-7

AUSTIN, Texas — Austin is making history by becoming the first city in Texas to adopt a 100% property tax exemption for eligible childcare providers. The passage is being called a “game changer.”

CBS Austin spoke with District 10 Austin City Council Member Alison Alter who championed this initiative. She says when parents drop their children off at any sort of childcare facility, they should have confidence that their child will be safe and receive top-notch care in their absence.

This measure will ensure qualified Austin childcare providers will be able to do just that by easing hefty property tax costs.

“Our childcare providers are thrilled to have this opportunity,” said Alter.

Pasty Harnage has been in the childcare industry for 20 years.

“I love children. Their minds are like little sponges,” she said.

She’s owned Bright Beginnings Childcare Center in north Austin for 10 years and says her passion for children motivated her to start her own business.

“We operate on very thin margins. It can be very challenging because the cost of living is higher now. We’ve struggled to maintain enrollment and high-quality staff mainly because of the lower budget,” she said.

To keep her business afloat, Harnage must pay thousands of dollars each year in property taxes. That could change with the help of a resolution passed by District 10 Austin City Council Member Alison Alter.

The measure approved during Thursday’s city council meeting gives a 100% tax break to qualifying childcare centers starting in 2024.

“If they own the childcare center, they won't pay the taxes. If they're leasing the childcare center, there are ways for the landlord to get the abatement and pass it on to the childcare providers that are provided for in the state law,” said Alter.

Alter's resolution is made possible by Proposition 2 which Texas voters approved on Tuesday night. It gives property tax exemptions to childcare facilities. Alter says her resolution goes beyond that by also opening relief to home-based and family providers as well.

“We know from surveys that almost 44% of Texas childcare centers could close if we don’t provide more funding and stabilize. There is a whole lot of federal funding that’s going to be going away in the next year. We need to find ways to provide them financial support, so they can continue to serve our community,” Alter.

Harnage says the relief will allow her to put more money towards bonuses, supplies, and keeping high-quality staff, which in the long run she says will benefit children’s development and success.

“In the childcare industry, we tend to be overlooked as far as funding from state federal, and local entities. So this gives us a seat at the table and helps us to finally get a chance to fund some of the resources that we desperately need,” said Harnage.

According to a memo sent out by Council Member Alison Alter’s office, to qualify, a child care facility must 1) be licensed, 2) the owner/operator must participate in the Texas Workforce Commission’s Rising Star Program, and 3) at least 20 percent of children enrolled must be subsidized by state child care funds.

The resolution is also directing the City Manager to bring forth an ordinance to finalize the tax exemptions on January 18–the first Council meeting of 2024.

The exemption will be applied to the 2024 tax year.