Oregon lawmakers mull tax credit to address rural child care shortage

By Antonio Sierra (OPB)
March 31, 2023 9:24 p.m.

High costs and lack of options felt deeply in Eastern Oregon

Small Wonders owner Allison Morton teaching a kindergarten class on November 2, 2021. A proposal before the Oregon Legislature would create a tax credit for child care providers in rural areas.

Small Wonders owner Allison Morton teaching a kindergarten class on November 2, 2021. A proposal before the Oregon Legislature would create a tax credit for child care providers in rural areas.

Elizabeth Miller / OPB

Child care workers in rural Oregon could see thousands of dollars more in their tax returns as soon as next year.


House Bill 2623 would create a new tax credit for rural child care workers in an attempt to stimulate an industry that’s struggling to attract and keep its workers and providers. The tax credits range from $3,000 to $5,000; the credit value rises the further the eligible child care worker lives from a city of 30,000 or more.

The bill’s chief sponsors include two Eastern Oregon Oregon legislators: state Rep. Bobby Levy, R-Echo, and state Sen. Bill Hansell, R-Athena. At a February hearing, Levy told the House Committee on Early Childhood and Human Services the state was “plagued by a dearth of skilled labor.”

“An income tax credit is not a perfect fix to solve the child care access crisis in Oregon, but it’s an excellent start for recruitment and retention,” she said.

The child care sector lost more than 100,000 workers across the country since the beginning of the coronavirus pandemic. Child care workers are leaving their employers for higher pay in other fields, and despite high tuition costs, child care facilities struggle to stay open as they deal with low profit margins.

The bill’s third sponsor, state Rep. James Hieb, R-Canby, said the search for child care is especially challenging in rural Oregon. He said he has friends in places like Joseph and John Day who drive “dozens of miles daily” to get to their child care provider.


“For a lot of these people it becomes cost prohibitive and they can’t justify going to work,” he said.

Brittney Jackson is well versed in rural child care, having worked in the industry for more than 20 years before becoming the director of the Pendleton Children’s Center, a nonprofit child care center that opened last November to help address the area’s shortage.

Jackson said the challenges of working in child care — high costs, high stress, low pay and profit margins — have always been prevalent, but they’re now starting to get attention.

She said the proposed child care tax credit would be a step in the right direction, but there are more far-reaching policies that could make a bigger impact: making all child care services tax exempt, allowing parents to write off all of their child care expenses on their taxes or waiving tuition for college students seeking associate’s degrees in early childhood education.

Jackson said the current system isn’t serving anyone well.

“It’s stressful for parents, it’s hard on providers but it’s an absolute detriment to children,” she said.

Erin Bartsch works as the operations coordinator for the Blue Mountain Early Learning Hub, an organization that provides training and support services for early child care providers across Umatilla, Morrow and Union counties.

Working with these providers, she’s heard about many of the cost, staffing and facility challenges providers are facing. These might be felt more severely in some of the region’s smallest communities, like North Powder and Elgin, she said.

If passed by the Legislature, Bartsch doesn’t anticipate “a mad rush” in new child care providers in the region, but it may make the difference for providers and workers making ends meet. She said the state could go further by forgiving student debt for early child care workers or providing funding for local support of students who traditionally struggle to stay in daycare or preschool, such as young children with behavior or special needs.

Following the hearing, the early childhood committee approved the bill at a March 27 works session and referred it to the Legislature’s Joint Committee on Tax Expenditures.