Estimated Two-year Net Impact to General Revenue Related Funds for HB3191, As Introduced: a negative impact of ($25,887,660) through the biennium ending August 31, 2027.

As the amount of funding which the Legislature would appropriate to the Child Care Contribution Partnership Program is unknown, the fiscal impact to the state for this component of the bill cannot be determined.

Additionally, the bill will have a direct impact of a revenue loss to the Property Tax Relief Fund of ($50,000,000) for the 2026-27 biennium. Any loss to the Property Tax Relief Fund must be made up with an equal amount of General Revenue to fund the Foundation School Program.

The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill.

Fiscal Year	Probable Net Positive/(Negative) Impact to General Revenue Related Funds
2026	($12,963,090)
2027	($12,924,570)
2028	($13,750,000)
2029	($13,750,000)
2030	($13,750,000)

Fiscal Year	Probable Savings/(Cost) from General Revenue Fund 1	Probable Revenue Gain/(Loss) from New General Revenue Dedicated - Program Fund	Probable Savings/(Cost) from New General Revenue Dedicated - Program Fund	Probable Revenue Gain/(Loss) from Property Tax Relief Fund 304
2026	($12,963,090)	$12,963,090	($12,963,090)	($25,000,000)
2027	($12,924,570)	$12,924,570	($12,924,570)	($25,000,000)
2028	($13,750,000)	$13,750,000	($13,750,000)	($25,000,000)
2029	($13,750,000)	$13,750,000	($13,750,000)	($25,000,000)
2030	($13,750,000)	$13,750,000	($13,750,000)	($25,000,000)

Fiscal Year	Change in Number of State Employees from FY 2025
2026	3.5
2027	3.5
2028	0.0
2029	0.0
2030	0.0

The bill would amend the Labor Code to establish and administer a child care partnership program that incentivizes eligible employers to contribute to employee child care costs, resources for child-care for employers and a child-care innovation pilot program.

The bill would require TWC to maintain a link on its website to a webpage containing comprehensive and current information to help employers assist their employees who are parents with accessing child care. The required information includes details on child care assistance, best practices for assisting these employees, available state and federal tax credits, dependent care savings accounts, free tools or templates, policies and benefits an employer may adopt to assist employees, and other resources TWC considers relevant.

The bill would establish a new General Revenue-Dedicated account, the Program Fund, to be administered by TWC and would consist of money appropriated by the legislature, interest earned, gifts, donations, grants and proceeds of civil fees collected under the bill.

The bill would establish a Employer Child-Care Contribution Partnership (ECCCP) program and would require participating employers to provide at least $1,200 per year to or on behalf of an eligible employee for child care costs for each eligible child and that employer contributions must be matched by the state fund on a sliding scale based on the employee's median household income. TWC would be required to dedicate an amount of 25 percent from the Program Fund to employers with fewer than 50 employees to the greatest extent possible. The state match cannot exceed $3,600 per child per year and the total amount of state match cannot exceed $25.0 million a state fiscal biennium.

The bill would provide for a civil penalty, up to $500 per violation, if any person intentionally provides false information to the commission in order to receive benefits under the ECCCP.

The bill would require TWC to publish and submit to the Legislature a report by December 15 of each even-numbered year detailing the effectiveness of the ECCCP and another report by January 1, 2026, detailing the plan for implementing the bill by the commission

The bill would establish the Child Care Innovation Pilot Program (CCIPP), requiring TWC to administer a pilot program to increase the supply of quality, affordable child care in designated regions, using Local Workforce Development Boards (Boards). The pilot program would require the Boards to develop a strategic plan addressing child care needs, enter into performance agreements with TWC setting measurable goals and reporting requirements; and award grants to eligible child care providers through a competitive selection process. At least 83% of appropriated funds to the CCIPP will be allocated for grants, a maximum of 15% will be used for program administration; and up to 2% can go to research and evaluation costs.

The bill would require TWC to publish and submit to the Governor, Lieutenant Governor, the Speaker of the House, and members of each legislative standing committee with primary jurisdiction over economic development a report by December 1, 2028, detailing the outcomes, challenges, and opportunities of the CCIPP.

The bill would create a franchise tax credit for up to $3,600 per child for child-care contributions paid by taxable entities. The total amount of credits that may be awarded may not exceed $25.0 million per year. The total amount of credit claimed by a taxable entity may not exceed the amount of franchise tax due for the report after applying all other applicable credits. Unused credit may be carryforward for not more than five consecutive reports. The credits may be sold or assigned to other taxable entities.

The bill would take effect September 1, 2025.

Under the bill's provisions, funds within the new General Revenue-Dedicated Program Fund can be used to cover administrative expenses to TWC associated with the bill's implementation. This estimate assumes the fund would be capitalized with General Revenue Funds appropriated to the new account each year as a credit to cover the costs of administering the bill's provisions.

This estimate assumes a maximum annual amount of $12.5 million will be used for the state match provision of the ECCPP. Based on the analysis from TWC, the agency would require an additional 3.2 Program Specialist VI positions ($80,421 with $22,856 in benefits each fiscal year per position), a 0.1 Director I ($10,298 with $2,927 in benefits) and a 0.2 Manager III ($17,174 with $4,881 in benefits) for the first two years for program startup of the ECCPP that includes developing and establishing the program, developing the procurement requirements for the administrative assistance organization (AAO), procuring the AAO and working in conjunction with the AAO to finalize procedures for program administration. Starting in fiscal year 2028, under the bill's provision TWC would utilize an AAO to fully implement the Employer Child Care Matching Program at a cost of $1,250,000 per year. The AAO will be responsible for administering the program, including processing applications, development and maintenance of information systems, and outreach to employers.

The number of grants provided and the award amounts provided for the CCIPP would be subject to Legislative appropriation discretion. As the amount which the Legislature would appropriate in funding for this purpose is unknown, this component of the fiscal impact cannot be determined. For illustrative purposes and based on information provided by the TWC, if the Legislature were to appropriate $100,000,000 in fiscal year 2026-2029 in General Revenue funding for the CCIPP, TWC estimates the agency can provide $83,053,100 in grants to 145 providers and would utilize $16,946,900 for administration and research under the bill's provision that 83% of appropriated funds to the CCIPP can be allocated for grants, a maximum of 15% can be used for program administration, and up to 2% can be used for research and evaluation costs.

The bill would cap the child-care franchise tax credit authorized by this bill at $25.0 million per year. This analysis assumes the maximum amount would be taken, resulting in a loss to the Property Tax Relief Fund of $25.0 million per year.

Although a civil penalty could result in an increase in revenue, the fiscal impact cannot be determined as the number of individuals providing false information resulting in a civil penalty cannot be estimated; however, according to the Office of Court Administration no significant increase in case filings is anticipated.

Note: This legislation would do one or more of the following: create or recreate a dedicated account in the General Revenue Fund, create or recreate a special or trust fund either in, with, or outside the Treasury, or create a dedicated revenue source. The fund, account, or revenue dedication included in this bill would be subject to funds consolidation review by the current Legislature.

LEGISLATIVE BUDGET BOARD
Austin, Texas

FISCAL NOTE, 89TH LEGISLATIVE REGULAR SESSION


April 9, 2025

TO:	Honorable Angie Chen Button, Chair, House Committee on Trade, Workforce & Economic Development

FROM:	Jerry McGinty, Director, Legislative Budget Board

IN RE:	HB3191 by Button (Relating to strategies to increase the availability of and access to child care, including the creation of an employer child-care contribution partnership program, a child-care innovation pilot program, and a franchise tax credit for taxable entities that make certain employer child-care contributions; authorizing a civil penalty.), As Introduced