Build Back Better could cost Michigan taxpayers $3 billion
(The Center Square) – U.S. lawmakers are discussing President Joe Biden’s Build Back Better (BBB) plan that, if enacted into law, would force state taxpayers to pay for child care programs that cost about $3 billion annually.
The White House summarized the nearly 2,500-page bill here. The Biden administration says the Michigan family’s average child care for a toddler costs $10,374. The brief says the program would provide child care access to about 570,000 children ages 0-5 years old per year from families earning under 2.5 times the state median income and ensure these families pay no more than 7% of their income on high-quality child care.
However, American Enterprise Institute Senior Fellow Angela Rachidi wrote that the enacted legislation would drive up state costs by sending more government assistance to more families and increasing child care costs through wage mandates and quality requirements.
Rachidi wrote that the bill requires states to pay 5% of the new childcare benefit costs and administrative expenses. Assuming a $60 billion annual program cost, states would need to foot an additional $3 billion per year to cover their share, Rachidi wrote.
From 2016–2019, states spent $1.2 billion annually in matching funds to administer the current federal childcare subsidy program — also known as the Child Care Development Block Grant (CCDBG) or the Child Care Development Fund (CCDF). Rachidi wrote that the BBB plan appears to stack program requirements on top of already obligated state spending, which would double or triple some state spending.
The table below analyzes state-by-state required contribution to childcare alone under the plan, compared to their current obligations.
The graph reports Michigan’s average annual CCDF state-matching funds from 2016-2019 were nearly $18 million. But under the BBB plan, the state’s costs would grow in 2025 to $42 million; in 2026 to over $50 million; and in 2027 to over $57 million.
Michigan Department of Technology, Management and Budget (DTMB) spokesman Kurt Weiss told The Center Square that he doesn’t know the specifics of the BBB plan but said Michigan has prioritized child care.
“I don’t have a lot of details on the Build Back Better plan, but if it were to become reality we would then look at all future year obligations and fold it into our budget planning process and it would be included in our long-term planning,” Weiss wrote. “For reference, our fiscal year runs October 1 to September 30, and we enact our budgets on an annual basis, but the State Budget Office looks at long-term budget items to help ensure we have structural balance in the budget for the longer term.”
The BBB plan only authorizes the new childcare program through 2027. Rachidi wrote that if Congress extends the program, it will have to continue hiking taxes or continue deficit spending.
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