HB1679

SECTION 1. The legislature finds that Hawaii has one of the highest costs for child care in the nation. The annual tuition cost of many child care facilities in Hawaii exceeds the annual in-state tuition at the University of Hawaii at Manoa.

The legislature further finds that the cost of and requirement for insurance, the severe limitations on the number of children allowed in each facility, and the generally high cost of doing business in Hawaii all contribute to high child care costs that many families cannot afford. In many cases, the costs for child care for two children are as much as one full-time working parent would make in a year after taxes. Not surprisingly, in many families, one parent will leave the workforce to care for their children on a full-time basis, instead of enrolling the children in child care.

The purpose of this Act is to reduce the cost of operating a child care facility by alleviating some of the unduly burdensome regulations and providing an income tax incentive. Specifically, this Act:

(1) Provides a state tax credit for the county property taxes that are paid on a qualified group child care home similar to the real property tax exemption that is allowed for group child care centers;

(2) Allows individuals to care for up to three children without being subject to child care regulations;

(3) Increases the number of children allowed at certain child care facilities; and

(4) Reinstates the option, removed by Act 161, Session Laws of Hawaii 2017, for family child care homes to forego obtaining costly liability insurance.

SECTION 2. Chapter 235, Hawaii Revised Statutes, is amended by adding a new section to part I to be appropriately designated and to read as follows:

"§235- Tax credit for group child care home real property taxes. (a) Any taxpayer who files an individual income tax return for a taxable year may claim an income tax credit under this section against the Hawaii state individual net income tax.

(b) The tax credit shall be equal to the real property tax owed and paid by the taxpayer in the tax year for the portion of the real property used exclusively for a group child care home licensed pursuant to section 346-161.

(c) If the tax credit claimed by the taxpayer under this section exceeds the amount of the income tax payments due from the taxpayer, the excess of credit over payments due shall be refunded to the taxpayer; provided that the tax credit properly claimed by a taxpayer who has no income tax liability shall be paid to the taxpayer; and provided that no refunds or payments on account of the tax credit allowed by this section shall be made for amounts less than $1.

(d) The director of taxation shall prepare any forms that may be necessary to claim a credit under this section, may require proof of the claim for the tax credit, and may adopt rules pursuant to chapter 91 to administer the credit.

(e) All of the provisions relating to assessments and refunds under this chapter and under section 231-23(c)(1) shall apply to the tax credit under this section.

(f) Claims for the tax credit under this section, including any amended claims, shall be filed on or before the end of the twelfth month following the taxable year for which the credit may be claimed. Failure to comply with the foregoing provision shall constitute a waiver of the right to claim the credit."

SECTION 3. Section 346-151, Hawaii Revised Statutes, is amended by amending the definitions of "family child care home" and "group child care home" to read as follows:

""Family child care home" means a private residence, including a home, apartment, unit, or townhouse, as those terms are defined in section 502C-1, at which care may be provided for three to no more than [~~six~~] ten children who are unrelated to the caregiver by blood, marriage, or adoption, at any given time.

"Group child care home" means a facility, which may be an extended or modified private home, at which care is provided for seven to [~~twelve~~] sixteen children."

SECTION 4. Section 346-152, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) Nothing in this part shall be construed to include:

(1) A person caring for children related to the caregiver by blood, marriage, or adoption;

(2) A person, group of persons, or facility caring for a child less than six hours a week;

(3) A kindergarten, school, or child care program licensed or certified by the department of education or the United States Department of Defense and located on federal property;

(4) A program that provides exclusively for a specialized training or skill development for children, including but not limited to programs providing activities such as athletic sports, foreign language, the Hawaiian language, dance, drama, music, or martial arts;

(5) A multiservice organization or community association, duly incorporated under the laws of the State, that operates for the purpose of promoting recreation, health, safety, or social group functions for eligible pupils in public and private schools through seventeen years of age;

(6) Programs for children four years of age and older that operate for no more than two consecutive calendar weeks in a three-month period;

(7) A provider agency operating or managing a homeless facility or any other program for homeless persons authorized under part XVII;

(8) After-school, weekend, and summer recess programs conducted by the department of education pursuant to section 302A-408;

(9) Child care programs conducted by counties pursuant to section 302A-408; provided that each county adopts rules for its programs;

(10) Any person who enters a home in a child caring capacity and only cares for children who are of that household;

(11) A person caring for [~~two~~] three or fewer children unrelated to the caregiver by blood, marriage, or adoption; and

(12) A child care program licensed by the Hawaii council of private schools. A child care program claiming an exemption under this paragraph shall submit an application for the exemption on a form provided by the department and shall provide to the department evidence that the licensing standards of the Hawaii council of private schools meet or exceed the department's standards for a comparable program, including a monitoring component. Upon application of a child care program for the exemption under this paragraph, the department shall have the discretion to determine whether the licensing standards of the Hawaii council of private schools meet or exceed the department's standards."

SECTION 5. Section 346-157, Hawaii Revised Statutes, is amended to read as follows:

"§346-157 Liability insurance coverage[~~; requirement~~]. (a) For the purpose of this section, "liability insurance coverage" means a general casualty insurance policy issued to a provider insuring against legal liability for injury resulting from negligence to a child during the time the child is under the care of the child care provider.

(b) The department shall require all [~~providers~~] group child care centers and group child care homes to obtain and maintain liability insurance coverage in an amount determined by the department as a condition of licensure, temporary permission, or registration to operate a child care facility.

(c) The department, as a condition of continued licensure, temporary permission, or registration, shall require all [~~providers~~] family child care homes that have obtained and maintain liability insurance coverage and all group child care centers and group child care homes to disclose in writing to each parent or guardian:

(1) Applying to have a child cared for at the provider's facility, summary information including the insurer's name and contact information, coverage amounts, and effective dates for the provider's liability insurance coverage at the time of application; or

(2) Within seven working days of any change, cancellation, or termination of liability insurance coverage, that the coverage has been changed, canceled, or terminated while the parent's or guardian's child is cared for at the provider's facility.

(d) The department, as a condition of continued licensure, temporary permission, or registration, shall require all family child care homes that have not obtained and maintained liability insurance coverage to disclose in writing to each parent or guardian applying to have a child cared for at the family child care home that the family child care home has no liability insurance coverage at the time of application.

[~~(d)~~] (e) The department may suspend or revoke a license, temporary permit, or certificate of registration of a provider in accordance with section 346-164 or 346-175, if:

(1) The provider or any employee of the provider knowingly makes a false statement to any person concerning the provider's liability insurance coverage; or

(2) The provider does not comply with the insurance coverage and disclosure requirements of this section and rules adopted by the department pursuant to this section.

[~~(e)~~] (f) Proof of liability insurance coverage as required by this section shall be verified by the department on an annual basis."

SECTION 6. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 7. This Act shall take effect upon its approval.

INTRODUCED BY:	_____________________________
	By Request

HOUSE OF REPRESENTATIVES	H.B. NO.	1679
TWENTY-NINTH LEGISLATURE, 2018
STATE OF HAWAII