Governor Changes Mind, Signs Bill Offering Tax Credits for Child Care

Gov. George Deukmejian, after twice vetoing earlier versions of the same bill, signed legislation Monday that will give substantial tax breaks to companies that provide child care for employees.

At the same time, the governor vetoed legislation that would have given annual budget increases to a host of state-supported child care programs tied to the rate of inflation. That was vetoed because Deukmejian said it would tie his hands when putting together future state budgets.

The two measures were among dozens signed or vetoed by Deukmejian, who must act by Sept. 30 on about 1,200 bills sent to him by the Legislature in the last days of its session.

Most of bills vetoed by Deukmejian carried substantial price tags. The most expensive was a bill that would have required the California Transportation Commission to spend $15 million a year to construct sound walls along freeways.

One of the vetoes blocked a bill by Republican Assemblyman Bill Bradley of San Marcos that would have created a high school course on human relations and racial bias. “Although I strongly agree that we should all work to reduce racial and ethnic prejudice, I believe this can be accomplished in our schools by using the existing social science framework and instructional materials on a statewide basis,” Deukmejian said.

Bills approved ranged from making it harder to sue doctors who serve in hospital emergency rooms to creating pilot projects in three counties to implement sports camps for juvenile wards of California courts.

Another of the bills Deukmejian signed requires that all public elementary, junior high and senior high schools that offer sex education classes emphasize that abstinence from sex is the only 100% effective way to guard against AIDS, other sexually transmitted diseases and unwanted pregnancy.

The child care bill will make credits available to employers beginning with the 1989 tax year. The bill gives a 30% tax credit, up to $30,000 in forgiven taxes, to companies to help defray start-up costs for their own on-site child care centers or to contribute to facilities used primarily by their employees’ children.

Incentives to Contribute

The bill also provides a 50% credit to employers who contribute to qualified child care programs, up to $600 annually per child for full-time care and $300 per child for part-time care.

Deukmejian said his change of heart was because of a need to “identify new approaches” for dealing with problems such as child care in the light of a voter-approved limit on government spending.

“As the number of working mothers increases, the need for quality child care services has increased as well,” Deukmejian said.

The state already spends $500 million a year subsidizing child care and providing individual tax credits to parents who have children in child care programs. Those programs will not be affected.

State Board of Equalization member Conway Collis first proposed the program three years ago to state Sen. Gary K. Hart (D-Santa Barbara), who carried the legislation. It was approved unanimously by both the Assembly and Senate.

Originally, Collis and Hart had sought 50% credits to a maximum of $1,200 for full-time employees and $600 for part-time employees. But Collis said he is happy with the compromise.

“I can’t believe the governor signed it. I’m very surprised,” Collis said.

Collis said it is impossible to predict how many employers will be encouraged to provide new child care centers or help employees pay child care costs at existing off-site facilities.

“Employers have gotten past the argument that child care is the parents’ responsibility. The question is money. This is going to help them get over that hurdle,” Collis said. He said about 250 firms in California now sponsor child care programs, and he predicted the number will grow because of the bill.