The City of San Antonio on Thursday approved property tax exemptions for child care facilities, expecting to help alleviate financial burdens on child care providers and working families.
The city follows Bexar County, which unanimously approved its child care tax exemption on March 12. According to county documents, there will be a $770,705 total revenue loss to the county.
San Antonio area facilities that operate as child care centers and offer subsidized child care spots can apply for 100% exemption of property taxes with the Bexar Appraisal District.
The development comes after Bexar County voters in November passed Proposition 2, which qualified some child care centers in the San Antonio region for at least a 50% exemption of property taxes under Senate Bill 1145, passed by the Texas Legislature last session.
San Antonio and Bexar County join Dallas, Austin and Denton in being among the first cities to implement the tax break.
Texas Rising Star-certified child care centers with at least 20% subsidized enrollment qualify for the cuts, making 176 San Antonio-area centers eligible to apply.
Child care center owners who rent facilities they operate will also benefit from the property tax cuts, thanks to a provision that requires landlords who file the tax exemption credit to reimburse the child care tenant what they otherwise would have paid in property taxes in monthly or annual payments. Landlords are required to prove how much they’re reducing rent when applying for the exemption.
San Antonio’s move to implement the property tax break started as a council consideration request that District 9 Councilman John Courage filed. In March, the city announced it would cancel that council consideration request to expedite the process so that child care owners get exemptions this year.
“Child care facilities still serving our communities have very thin margins due to wages, rent increases, supplies and taxes. And families end up being priced out of child care,” Courage said at a March 6 press conference.
“By alleviating financial burdens on child care facilities, we can create a more inclusive economy where parents are empowered to remain in the workforce, thereby fostering a stable and thriving community,” Clay-Flores told the San Antonio Report in a statement.
Reduced costs for child care centers would mean more child care facilities staying open, as the industry has been hit by uncertain financial times, Courage said.
“Total child care costs have risen a staggering 32% since 2019,” Nirenberg said. “Total child care costs are a significant part of the household cost burden for so many families.”
Despite the tax relief, child care costs most likely won’t be addressed by the cuts, local child care facility owners told the San Antonio Report. Instead, they will use the savings to help fund operations at centers, such as increasing capacity in some cases, adding employee benefits and increasing payroll, or paying for supplies.
“We’re working to address that, and this child care tax exemption is a great way to do that,” Mayor Ron Nirenberg said about cutting child care costs for working families.
Mariana Peña-Flores, owner of A-2-Z Learning Centers, provides child care at two locations: one she rents on the West Side and another she owns on the Northwest Side.
Across her two centers, a 100% exemption means a $5,000 tax break for her 2,700-square-foot location on Darson Marie Drive in West San Antonio. The center on Culebra Road will get a $11,300 tax credit that the landlord will have to reimburse monthly or annually if they accept the tax exemption.
“I don’t know if there will be lower child care costs,” Peña-Flores, adding that Texas ranks among the lowest in child care costs. Instead, it would mean that the cost of care doesn’t need to increase, she said.
But others still need to increase costs to stay afloat, like two Books & Bibs Child Care And Learning Academy centers on San Antonio’s East Side and Northeast Side, which will see a $10 increase starting June, owner Stephanie Gray said.
In San Antonio, where more than 27% of children under 5 live in poverty, the cost of child care is nearly always an issue for parents who want to work.
Mark Larson, executive director of EarlyMatters San Antonio, said 60% of approximately 135,000 local children under 5 have working parents and need child care.
“Filling the Frost Bank Center over four times with children under 5 that have both parents in the workforce — that’s how many people need access to high quality, early learning,” Larson said.
At the A-2-Z Learning Center on Darson Marie Drive, Peña-Flores said 85% of parents who use her facility accept government subsidy programs for child care.
“Taking away that property tax from us allows us to invest not only in our facilities and in our staff, but in their children as well,” Peña-Flores said. “We bring food banks to our facilities, we bring dental care to our facilities, we have resources where we offer information for utility assistance.”
“It’s really going to help us,” Peña-Flores said after the city announced at a press conference that it would seek the 100% property tax exemption. Other child care owners standing next to her added, “We’ve been paying it for years.”
“For years,” Peña-Flores agreed.
Peña-Flores wants to increase capacity at the 14,000-square-foot center on Culebra Road, which is currently underutilized, but she needs to invest in bathrooms to meet state bathroom requirements for the number of children over 2 years old.
She said she believed the efforts to implement property tax exemptions for child care centers is “a push in the right direction since churches and schools don’t pay property taxes,” she said, and it helps people realize that “child care facilities [are] learning institutions, rather than a palace to take your kids for babysitting.”
“This is going to help. But still, our whole thing is that we need this to last. We need this support. A lot of people assume with child care, it’s a business where you actually make a lot of money,” she said. “Unfortunately, it’s [not the case]. We make ends meet, but we make ends meet because, like schoolteachers, we invest in our children. … We’re not making money.”
If your child care center is not yet Texas Rising Star-certified, learn more about getting certified online to become eligible for the tax credit.
