Should St. Paul cover low-income families’ child care costs? Proposed tax hike headed to 2024 ballot

St. Paul residents will get a chance to vote in November 2024 whether to enact a multi-million dollar property tax hike in hopes of eventually providing free child care from birth through age 5 to low-income families in the city.

City Council members voted 5-2 Wednesday afternoon to override an earlier veto by Mayor Melvin Carter, who raised concerns that the proposal would not generate anywhere near enough funding to serve all the children it promises to serve. So great were his concerns that Carter even hinted before the vote that his administration might not implement the proposal if enacted.

But Ward 2 council member Rebecca Noecker – who authored the resolution with her Ward 6 colleague Nelsie Yang – said Carter’s comments were “disingenuous” and troubling. She also questioned how, if the ballot measure passed, the mayor’s office could disregard the will of the voters. 

Supporters say bold action is required to ease the soaring costs of child care, which in Minnesota, often wipes out as much as half of a low-income family’s monthly income. Advocates and researchers also say that children who have access to “high-quality” child care often go on to have better outcomes in school.

Yang said that other cities’ experiments with similar policies have shown that child care initiatives “have a huge impact on preparing children for kindergarten and helping parents enter the workforce,” said Yang.

Noecker specifically listed Denver and New Orleans as examples of cities that have rolled out similar programs.

“This vote commits us to action and to robust public conversation about investing in our kids and families,” Noecker said. “And it’s time to move that conversation forward.”

If voters enact the proposal in 15 months, here’s how the proposal would work:

• Generate $20 million per year after a phase-in period: The proposal calls for a special levy of $2 million in the first year. That levy would increase by $2 million each subsequent year until reaching $20 million 10 years after enactment. The authors claim this levy equals a $16 tax increase each year for the median single-family home – so when fully-implemented, the levy would cost $160 per year.
• Low-income families would get priority: St. Paul would aim to “fully fund” the cost of child care for kids up to 5 years old for families with incomes below 185% of the federal poverty level (which is currently about $55,000 for a family of four). Families with higher-incomes would receive subsidies “on a sliding scale.” The authors don’t spell out precise details. The resolution also notes that funding may not be available for all income-eligible children. In that case, the city would prioritize applicants using other factors like “homelessness, foster care status, having parents under 21, etc.”
• Who would provide the care? The proposal would open the door to a wide variety of child care providers to receive the subsidies, so long as they’re located within St. Paul’s city limits. This would include Head Start programs and licensed child care centers as well as “legal non-licensed providers,” including the family, friend and neighbor caregivers – an especially common source of child care for Black, Latino and immigrant families.

Many details of the proposal have yet to be hammered out, and the resolution promises the City Council “will engage the community” and “determine further program specifics” through August 2024, when the question must finally be sent to the ballot.

Carter vetoed the proposal in the first place because of unresolved details like these.

Carter’s veto message notes the authors estimated that providing child care to all income-eligible children under age 2 would cost $39 million.

The proposal would only levy $20 million for a program that would, in theory, be open to children up to age 5.

Just before the vote Carter called reporters into his office where he’d stacked a child-sized white board on his desk and added up what he anticipated the actual cost of the program would be. He estimated the city would need to generate at least $80 million to provide enough subsidies to cover the costs of universal child care for all low-income children up to age 5. Another $20 million would pay for child care for children from families with incomes above 185% of the federal poverty level.

But that $100 million would only cover the costs of child care that families pay. The city would likely need to spend $10 million to hire new staff and administer the program. Carter also questioned why the program didn’t include funding that would allow child care providers to increase the number of slots, become licensed and pay caregivers competitive salaries – another multi-million dollar challenge, he suggested.

“When somebody goes to the ballot and reads this ballot question, they’re going to look and think that this means that the city is telling us that if we increase taxes by $20 million, we can make child care free for all children ages zero to five in our community,” Carter said. “We cannot take empty promises into the ballot box to our city.

Noecker said supporters have never claimed the proposal will serve “all” children, at least at first. Instead, they’ve proposed slowly ramping up funding. This gradual process will naturally create a pilot phase to the child care program – that would serve a small number of families initially – and allow the city to “take in money as we actually need it to grow the program.”

“There’s a real elegance in the funding mechanism here,” Noecker said.

Supporters hope that if voters enact the ballot measure, St. Paul would be expanding on victories for child care advocates at the state level: Minnesota lawmakers recently approved more than $300 million in spending on early childhood education programs, including $252 million in scholarships for children younger than 3 years old.

Yang and Noecker said their $39 million cost estimate factors in the state’s new early learning spending.

“We’re not going to be able to get all the funding we need through our levy here,” Yang added. “But this is why it’s so important for the state to really prioritize this. We also need them to be champions and to be dedicating money into early learning overall.”

This, the mayor also pointed out that current council members will leave office at the end of the year, and will saddle their successors on the council with the task of resolving these open questions in the coming months.

The child care subsidy proposal has made it this far without the support of St. Paul’s teachers union and the St. Paul Area Chamber of Commerce, both of whom raised concerns last month about the burden of potentially enacting both a sales tax hike and special property tax levy in the city. Progressive organizing powerhouse ISAIAH also said it would not support the campaign.

Others weighed in with supportive comments, including leaders of the St. Paul Children’s Collaborative and St. Paul Promise Neighborhood.

The mayor might have a natural partner for this initiative – in 2013, he left his seat on the St. Paul City Council to lead the state’s Office of Early Learning for two years. Despite his misgivings about a lack of details, Carter said he applauds the spirit behind the proposal.

Biden Administration officials and some Congressional Democrats had hoped to pass a major package of child care subsidies as part of the massive federal spending package known as the Inflation Reduction Act in 2022, but the proposal did not survive Republican opposition in the House of Representatives.

Editor’s note: This story was updated to include quotes from Noecker and Yang.