February 15, 2014
By Joey Bunch
Originally posted at The Denver Post
Featuring 9to5 Colorado Board Member De Jimenez, pictured here dropping her daughter off at school
Deanna Jimenez of Aurora sits at her kitchen table and leafs through envelopes each month, making humbling decisions.
“You always have to pick and choose which bills you can pay,” she said, speaking collectively of the estimated 55,000 working Colorado households that earn less than $25,000 a year. “The rest just have to wait.”
One bill is always first: $130 a week so that her 7-year-old daughter has someone to watch her while her mother works a low-paying job filing medical records.
Colorado has had a child-care tax credit aimed at families that earn less than $60,000 a year since 1996.
But because of a quirk in the law, the poorest working parents — whom the tax break was intended to help the most — get nothing.
Now a bill in the Colorado statehouse would allow Jimenez and other low-income working parents the chance to get a maximum income-tax refund of $500 a year for one child and a maximum of $1,000 a year for two or more.
A few hundred dollars would be critical to parents such as Jimenez.
In the financially lean months, she and her daughter eat Ramen noodle soup for dinner. In the good months, it’s ritzier macaroni and cheese.
“It would mean I can pay my debts every month,” said the 39-year-old single mother and sole provider. “It would mean I could start to get ahead of the bills and start to save some money.”
The fix appears to have support from Republicans and Democrats — at least no formal opposition has coalesced against it. The bill’s first stop is the House finance committee, which could consider it as soon as its next meeting, set for 1:30 p.m. Wednesday in the Legislative Services Building next door to the Capitol.
Eighteen years ago, legislators tied the state tax credit to the federal tax credit. To get money back from state income taxes, parents had to receive the federal tax credit. But to get the federal credit, a family has to pay in at least the amount they receive from the credit. In other words, they can’t take out more than they put in.
That means those who make less than $25,000 a year and who rarely owe federal income taxes get no benefit from either program. Households that earn between $25,000 and $60,000 get both.
For a family earning $43,000 a year, for example, the federal tax benefit is the maximum $1,200 deduction. The state kicks in another $120 — or 10 percent of the federal credit. Families who earn less than that get more, and those who earn more get less.
Rep. Brittany Pettersen, D-Lakewood, is pushing legislation to divorce the state and federal tax credits. That would let parents such as Jimenez get a state benefit.
“People ask me if this is just more welfare,” Pettersen said. “No, it’s the opposite. It’s about keeping working parents in their jobs and allow them to still afford the care they need for their children.”
It comes with a cost, however.
The state general fund would lose an estimated $3.4 million this fiscal year and $9 million the next, as more people claim the tax credit. It’s expected to grow to $15.2 million in the third year, then $20.1 million in fiscal 2016.
Expanded tax credits
That growth rate is based on other states that have expanded tax credits for child care, according to the fiscal note attached by statehouse researchers.
Colorado’s state budget is $20.5 billion, including $8.2 billion controlled by the legislature. By state government standards, $20 million is not an unusual expense.
Last year, for example, the legislature put $20 million in a statewide mental health crisis program to provide walk-in help centers and a 24-hour hotline. And the year before, lawmakers granted a $98.5 million property-tax break for senior citizens.
Child care is a costly hurdle for parents, especially in Colorado, the fifth-most expensive state.
An annual income of $25,000 equates to a job earning $12 an hour. Families in Colorado pay an average of $93 a week for day care for one child, or $4,836 a year, according to census data gleaned by the Colorado Center on Law & Policy, a nonpartisan nonprofit that researches issues related to poverty.
“Most people understand what a strain it is on a family to afford child care under the best circumstances,” said Claire Levy, who resigned her seat in the state House of Representatives last fall to become executive director of the center. “This change would take away a huge impediment to parents, particularly single mothers, to rejoining the workforce.”
Paying for pride
Yolanda Martin of Lakewood said she spends about $150 a week to get care for her three kids. She works full time at a large retailer because the family needs the group insurance, which would be too expensive for her husband to get through his job as a laborer.
“It’s like the harder we try, the farther behind we get,” she said. “If the government can find all these tax breaks for rich people and oil companies, you would think they would have something for poor people trying to do right for their families.”
Single mother Monica Rodriguez of Denver also has considered giving up her job at a movie theater to stay home with her 4-year-old son, even though weekly day care at her church costs $70, a quarter of her take-home pay.
“That’s almost as much as our rent,” Rodriguez said.
Giving up and going on welfare seems a poor option to her. She wants to be a good example for her son and work for what she gets, Rodriguez said.
“I want him to grow up knowing I did the best I could, and even if it’s hard, he can, too,” she said.
But a few hundred dollars in assistance from the state would boost their standard of living.
“It would mean he could have some of the nicer things and be as proud as the other children when he starts school,” Rodriguez said.