With state legislative sessions in full swing, a significant number of states are considering bills that would dedicate portions of public revenue to programs that support infants, toddlers, children, and youth. While pandemic-era federal relief funding bolstered opportunities for kids in many states, much of that funding has been spent, and the future of many federally funded programs and services is uncertain. The pieces of legislation below propose sustained investments in kids by dedicating specific sources of new or existing revenue to early childhood and youth mental health. 

These bills still have legislative hurdles to clear before becoming law, and several of the policies within them are still being debated by child and youth advocates. However, the proposal of long-term investments in opportunities for kids in statehouses across the country mirrors the public’s desire to see increased government funding for child and youth services like child care and after-school programs. This list is not exhaustive, so please reach out to Bruno Showers, state policy manager, at [email protected] if your state is considering legislation that would dedicate a specific source of funding to opportunities for infants, toddlers, children, or youth outside of the K-12 school day.

Legislation We’re Watching

Arizona HB 2778

In 2006, voters in Arizona approved a tobacco tax and dedicated the funding to early childhood via the creation of First Things First for Arizona’s Children. Facing declining revenue from tobacco products, the legislature is currently considering a bill to expand tobacco taxes to include other forms of nicotine to “close the vaping loophole.” New revenue generated by HB 2778 would support First Things First. 

Connecticut SB 1369

SB 1369 or An Act Concerning Child Care Support for Connecticut’s Workforce, would establish a Workforce Child Care Program funded through a new 1.5% payroll tax. The fund would cap the cost of child care at 7% of household income and would provide salary enhancements and workforce incentives for providers, as well as funding for facilities improvements.

Connecticut HB 5153

This legislation would establish a capital gains surcharge and dedicate the revenue generated to the pre-existing Early Childhood Education Fund. The surcharge would be applied as a 2% tax on the profit from selling or exchanging capital assets, such as stocks or real estate, and would only apply to those whose income qualifies them for the highest marginal income tax rate in Connecticut.

Kentucky HB 381

The Kentucky legislature is considering a bill that would create a new specialty “Child Care Assistance Partnership” license plate. Revenue from the initial and renewal license plate fees would benefit the Employee Child Care Assistance Partnership Fund, which supports the state’s employer/employee/state child care cost-sharing program.

Maryland HB 0414

Maryland House Bill 0414 would establish a Mental Health Care Fund for Children and Youth, funded through a new tax on digital social media services. This new tax would apply only to social media services with more than 1 million active monthly users and that generate more than $500 million annually in global gross revenue (adjusted annually for inflation). It is estimated to generate approximately $30 million annually in its initial years.

Maryland HB 1469

The “For Our Kids Act” would impose a $0.02 per ounce tax on sugary beverages sold or produced in Maryland. Of the revenue generated, the first $189 million would be allocated to a new Healthy School Meals for All Fund, and the next $50 million to the Child Care Scholarship Program within the Maryland State Department of Education. The remainder of revenue generated would be allocated to the state general fund.

Massachusetts SD 948

“An Act to support educational opportunity for all” in Massachusetts would create a 2.5% excise tax on private higher education institution endowments that exceed $1 billion. The revenue generated by this tax would fund an Educational Opportunity for All Trust Fund that will be used to subsidize the cost of higher education, early education, and child care for “low-income and middle-class families.” Given the size of existing endowments at private higher education institutions in Massachusetts, this tax could generate well over $1 billion in new revenue.

Massachusetts SD 2004

This legislation would impose an excise tax on the sale of digital advertising services, and dedicate 85% of the revenue to a new Pre-K and After School Program Trust Fund, and the other 15% of the revenue to a new Local Newspaper Trust Fund. This 5% tax would be levied only on companies or corporations with more than $25 million in annual revenue from digital advertising services within Massachusetts.

Nebraska LB 442

Legislative Bill 442 in Nebraska would establish a payroll tax of 0.52% (split between 0.13% employee paid and 0.39% employer paid) to fund child care subsidies. Children ages 0-4 in families with incomes between 130% and 400% of the federal poverty level would be eligible for subsidies on a sliding scale. 

New Mexico SB 167

In 2022, the New Mexico legislature passed House Bill 83 which established the New Mexico Early Childhood Education and Care Fund. That same year, voters passed a 2020 ballot initiative to allocate additional funds from the Land Grant Permanent Fund to the Early Childhood Education and Care Fund. SB 167 would rename the Early Childhood Education and Care Fund to the Early Childhood Trust Fund, expand the allowable uses of this funding to include prenatal programs and services, and increase yearly withdrawals from the fund from $250 million to $500 million in the short-term. SB 167 would only take effect if voters approved a new constitutional amendment to create and codify the Early Childhood Trust Fund. 

Tennessee HB 218 – SB 270

The “Universal Pre-K Act” would impose a tax on digital advertising in order to fund voluntary universal free pre-K for all 4-year-old children in Tennessee. This “data transaction privilege tax” would be imposed at a rate of 9.5% on the “gross revenues derived from data transactions from digital advertising services nationwide,” and would only apply to persons with an assessable base of at least $50 million.

Tennessee SB 802 – HB 841

This legislation would dedicate excess revenue from the state lottery to a new Promising Futures Early Learning Fund. The fund would receive an estimated $22.5 million annually to provide scholarships for “high-quality early learning programs” to working families that earn less than 150% of the state median income. 

Washington HB 1593

HB 1593 would create the Children’s Social Equity Land Trust, a permanent land trust that would acquire and sustainably manage forest land to generate new revenue for the Childcare Desert Grant Program. The Washington State Department of Natural Resources already manages millions of acres of land trusts, generating revenue for beneficiaries including K-12 schools and the University of Washington. HB 1593 would authorize “acquisition of lands to hold in trust for families in need of child care access in certain areas.”

Olivia Allen is co-founder and vice president of strategy and advocacy and Bruno Showers is state policy manager at Children’s Funding Project.

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