Child care proposal approved by Legislature, but capital gains tax to fund it still in negotiations

OLYMPIA – A broad legislative proposal that aims to address child care shortages and prices across the state passed the Legislature on Thursday.

The House and Senate concurred with changes made in a conference committee, sending the proposal to Gov. Jay Inslee’s desk for his signature.

The bill creates a new funding account for child care and early learning. It also expands eligibility and decreases co-payments for the state’s subsidy programs. It increases rates, training and supports for providers, too.

Sponsor Sen. Claire Wilson, D-Auburn, said last month that the bill looks to combat the child care crisis from two sides: families’ and providers’. It improves access for families but assists providers, who lack benefits, good pay and proper supports.

“This is landmark legislation,” Wilson said.

Supporters say the legislation was desperately needed to help an industry that was hurting before the COVID-19 pandemic and is now hurting even more. Opponents of the bill agree, but worried the bill is putting too many regulations on already overburdened providers.

Rep. Tom Dent of Moses Lake, ranking Republican on the House Children, Youth and Families Committee, said overregulating child care could drive up the cost for providers and families.

“If we back up on regulatory requirements, they’d be able to operate more efficiently,” Dent told The Spokesman-Review last month.

Another sticking point: the funding mechanism to pay for the changes outlined in the bill. In the short term, federal stimulus funds will help the state pay for child care priorities. In the long-term, however, Democrats have proposed using revenue from a capital gains tax. The proposal passed the state House of Representatives on Wednesday but is now stuck in negotiations between the two chambers.

It would impose a 7% tax on the sale of capital gains exceeding $250,000 with exceptions for homes, real estate, small business, livestock and others. The tax would bring in about $550 million each year for the state to pay for child care priorities.

The bill passed in the House on Wednesday with an added phrase that would make the funds “necessary for the support of the state government and its existing public institutions.” The phrase could prevent voters from bringing a referendum on the bill to the ballot.

The Senate on Thursday refused to accept that language put on by the House. The proposal now heads to a conference committee, where the two chambers will have to reach an agreement. If they do and the full body accepts the changes, it will head to the governor’s desk for his signature.