Fort Worth city officials are considering a property tax exemption for certain child care facilities that could go into effect as soon as two weeks. If approved, it would provide a form of financial relief for businesses struggling to make ends meet while caring for the city’s youngest residents.
City council members discussed the impacts and parameters of providing the tax exemption, which would be no less than 50% but no more than 100% of a property’s taxable value, during a work session on Tuesday. The council will formally consider the proposal at its May 14 meeting. If approved, 54 child care programs in the city — out of about 338 total — would be eligible to utilize the exemption, according to city staff.
“When we talk about those (54 facilities), we’re talking about $29.2 million on the roll, which estimates revenue loss — at 100% exemption — of about $200,000 to the general fund tax revenue,” said Christianne Simmons, chief transformation officer of the Fort Worth Lab, which oversees comprehensive planning, capital programming, budgeting, performance management and data analytics.
If council members were to approve a 50% or 75% exemption, the revenue loss would be about $98,000 or about $147,500, respectively, Simmons said. The tax relief or rent relief to the average child care provider would be about $1,800 or $2,700 at the same percentages. At a 100% exemption, a provider would see more than $3,600 in financial relief.
The city’s general fund budget for the 2023 fiscal year is $915.3 million.
“I’m glad we discussed this. I’m for 100%,” said City Council Member Jared Williams.
The discussion comes forward after almost 65% of Texas voters approved Proposition 2 in November, which gave local governments the option to provide the property tax exemption. Eligible child care providers must be part of Texas Rising Star, the state’s quality rating and improvement system for early childhood programs. A facility’s enrollment is also required to have at least 20% of children receiving subsidized services through the Texas Workforce Commission.
Counties and cities in the San Antonio, Dallas, Austin and Houston areas have adopted the exemption in recent months, according to the Texas Tribune. Mayor Mattie Parker voiced support of implementing a local policy when Proposition 2 passed and has been a vocal advocate for improving the early childhood sector.
On Tuesday, she noted how the exemption would act as an incentive for child care providers to join the Texas Rising Star program, improving the quality of existing local programs.
“There’s a presumption of when the law was passed that rather than just giving a carte blanche (blank check) to every child care facility (through) a property tax exemption, you’re putting additional incentive in place for them to enter into (Texas Rising Star) and contract appropriately to work through from two stars to four stars,” Parker said, referring to the rating system that goes up to four stars. “Maybe we work on that collectively. It may not happen overnight, of course, but you want as many of your child care providers to be high quality as possible.”
Other council members asked staff questions regarding the checks and balances of the tax exemption being properly used. If a property owner is leasing to a child care facility, they must provide proof to the appraisal district that the tax savings will be passed along to the tenant through a monthly or annual rent credit, city staff said.
“If we’re giving that exemption, what protection do we have to ensure two things: One, that it continues to operate as a child care facility — a qualifying child care facility… and then two, that they are actually passing that savings on to their tenant?” asked Council Member Elizabeth Beck.
City staff said they are discussing ways to coordinate with the tax assessor-collector to double check the eligibility of owners and renters receiving the exemption.