Austin Becomes First Texas City to Advance a 100% Property Tax Abatement for Eligible Child Care Providers

After the successful passage of Texas Proposition 2, the Austin City Council has advanced a 100% property tax exemption for eligible childcare operators beginning in 2024.
 
In a historic step for working families, Texas voters approved Proposition 2, a constitutional amendment enabling municipalities and counties to provide a property tax abatement for qualifying childcare centers, on Tuesday. Wasting no time, today the Austin City Council approved Council Member Alison Alter’s resolution, which will ensure a 100 percent abatement for those centers beginning in the 2024 tax year, providing substantial relief to providers who are already operating on thin margins.
 
The resolution, co-sponsored by Council Members Fuentes, Velásquez, (Ryan) Alter, Vela, Pool, and Qadri, also directs the Interim City Manager to identify similar relief options for home-based childcare centers, which are primarily women-owned and are not eligible for tax relief under the state legislation. These efforts are supported by Early Matters Greater Austin, United Way for Greater Austin’s Success by 6 Coalition, Go Austin/Vamos Austin, the Austin LGBT Chamber of Commerce, the Greater Austin Asian Chamber of Commerce, the Greater Austin Chapter and the Central South Region of the Texas Restaurant Association, and other partners.
 
“As federal funds expire, we are on the precipice of what experts call ‘a child care cliff,’” said Council Member Alison Alter, citing a Texas Association for the Education of Young Children survey revealing that ‘without more funding, up to 44% of child care centers in Texas could close their doors’. “Our economy can’t function without affordable childcare,” Alter added. “This property tax exemption will provide financial relief to providers so they can continue serving Austin’s working families.”
 
“With reduced property taxes, childcare centers can lower costs for families, expand availability to working parents, increase wages, and improve the quality of education provided,” said Cathy McHorse, Vice President of the Success By 6 coalition of United Way for Greater Austin.
 
“We’ve seen our home-based and family childcare folks get left out of the narrative time and time again,” said Michelle Mejía, Early Childhood and Family Health Organizer at Go Austin/Vamos Austin. “We applaud our childcare champions at the city level for moving swiftly and responding to the dire needs of our early childcare community.”
 
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 directs the City Manager to bring forth the necessary 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.