The playground at Learning Ladder Preschool and Childcare center, which closed in August 2024 after over 30 years in business. (Photo by Baylor Spears/Wisconsin Examiner)

The budget process hit another roadblock as Assembly and Senate Republicans appeared to split over budget negotiations with Gov. Tony Evers — leading to the cancellation of the budget committee’s meeting Thursday and disappointment from child care advocates who had traveled to the Capitol that day.

The June 30 deadline for the 2025-27 state budget is quickly approaching and lawmakers still have major portions of the bill to put together. The GOP-led Joint Finance Committee was scheduled to continue its work by voting on sections related to child care, the Wisconsin Elections Commission, the Department of Justice as well as the capital budget. As the start time of 1 p.m. approached, a cancellation notice was released. 

Legislative leaders then put out statements saying negotiations with Evers had resumed this week, but were going south again. Negotiations had previously broken down with Evers saying he had agreed to GOP tax cuts but Republicans wouldn’t make concessions on spending for education, child care and other parts of the budget. Republicans said Evers wanted to spend too much. 

Senate Majority Leader Devin LeMahieu (R-Oostburg) said in a statement about the cancellation Thursday that negotiations between legislative leaders and Evers had been “good faith” with each party seeking “to do what’s best for the state of Wisconsin” since they restarted this week.

“However, these discussions are heading in a direction that taxpayers cannot afford,” LeMahieu said. “Senate Republicans are ready to work with the State Assembly to pass a balanced budget that cuts taxes and responsibly invests in core priorities.” 

Assembly Speaker Robin Vos (R-Rochester) and Rep. Mark Born (R-Beaver Dam) also put out a statement describing conversations over the last couple of weeks as being in good faith, saying work on a budget that “cuts taxes, puts more money into K-12 schools to stave off higher property taxes, and funds childcare and the university system in exchange for meaningful reforms” has been productive. But said Senate Republicans were the party that left the negotiations. 

“We have chosen to work together so our tax reductions actually become law, schools continue to be funded, Medicaid patients continue to receive care, and road construction projects do not stop,” the Assembly lawmakers said. “This is the most conservative and the most responsible option… We hope Senate Republicans will come back to the table to finish fighting for these reforms and complete the budget on time.”

Evers’ spokesperson Britt Cudaback wrote in a post on social media about the meeting cancellation that “ultimately, the Senate needs to decide whether they were elected to govern and get things done or not.” 

Republicans have a narrow 18-15 majority in the Senate, meaning the caucus can only lose one vote if they want to pass a budget without Democratic support. Two Republicans — Sens. Steve Nass (R-Whitewater) and Chris Kapenga (R-Delafield) — have publicly expressed their concerns about the budget as it stands. Kapenga has said he would prefer for the state to not pass one at this point.

Nass said in a statement that Senate Republicans have been advocating for “tough but fair spending decisions” and the outline of the deal from the negotiations includes “too much spending, special interest pork and the creation of a structural deficit.” He said some legislators want to cut a “bad deal” for taxpayers.

Nass said there is “nothing preventing the Republican majority in the Legislature from passing a conservative state budget except for the lack of willingness at the highest levels in the Assembly.”

Democrats said that the breakdown in communication is the result of “extremists” in the Republican caucuses controlling how they have approached the budget talks. 

“Weeks ago, legislative Republicans walked away from negotiating with the governor in order to attempt to pass this budget through by again giving in to the desires of the most extreme members of their legislative caucuses, and instead they find themselves here again — unable or struggling to pass a budget and needing to talk with the governor about ways that they can finally do what Wisconsinites have been asking them to do all along,” Rep. Tip McGuire (D-Kenosha) said. 

When it comes to the potential for Democrats to vote for the budget, Sen. Kelda Roys (D-Madison) said Republicans need to talk to them. 

“Ultimately, what we really need is for Republicans to pick up the phone for the Senate Majority Leader [LeMahieu] to decide that he is not willing to risk his majority and his more vulnerable members to kowtow to the most extreme voices… so it’s really just his willingness to pick up the phone and accept the reality of the caucus that he’s built,” Roys said. 

If a new budget isn’t passed by the deadline, Wisconsin continues to operate under the current budget. 

Child care advocates frustrated 

Child care advocates had traveled to the state Capitol Thursday in anticipation of the meeting, including Brynne Schieffer and Erin LaBlanc of the Faith Lutheran Child Care Center located in Cameron, Wisconsin. They traveled three-and-a-half hours to Madison and said they jumped through “a lot of hoops” to make it there, including asking some of their families to keep their children home so the ratio of children to staff remained adequate. 

Schieffer said they wanted to be able to advocate for the inclusion of child care investments in the budget. They support Evers’ $480 million request to continue funding the Child Care Counts program, which used federal dollars from pandemic relief to support staff wages without increasing tuition costs to parents.

“The meeting not happening — it’s definitely disappointing,” Schieffer said. “Our elected representatives [are] not doing their job. Can’t they get along? We can come in and mediate. That’s what we do.”

Schieffer said the families were supportive because they understand the stakes.

“We came down not only for us, but for them, for the child care industry,” Schieffer said. 

One in four Wisconsin child care providers could close their doors if the state support for centers ends in June, according to a survey of child care providers commissioned by the state Department of Children and Families (DCF) and produced by the Institute for Research on Poverty at the University of Wisconsin-Madison.

Schieffer said that the center would need to raise its costs by $28 per child per week to make up for a lack of Child Care Counts funding. She said that if there is funding they plan to put that in the contracts that families have.

“We need direct funding. We need to be considered on the same level as our public schools,” Schieffer said. “The direct funding comes in and goes directly towards the operation of the center, operational budget including staff wages.”

Corrine Hendrickson, owner of Corrine’s Little Explorers and co-founder of Wisconsin Early Childhood Action Needed (WECAN) said she wanted to be available if lawmakers had any questions ahead of the meeting and because she thinks it’s important that they look at the people who are affected when they take action on the budget. She closed her center for the day to be at the Capitol and isn’t sure she’ll be able to do so again when the committee eventually takes up child care. 

“It’s incomprehensible to me that they, as elected officials, can just walk away and not do their job when all kinds of… people were here to witness this, and they just can decide 30 minutes before that they don’t actually have to do their jobs,” Hendrickson said. “It’s also frustrating because these conversations should have taken place already and should be a basic agreement before they decide to schedule the hearing.”

Child care providers said Republicans’ plans so far for child care aren’t sufficient for addressing the crisis. 

Assembly Republicans announced their plans on Wednesday for child care including allowing 16-and 17-year-olds to staff child care facilities as assistants and to count towards staff to child ratios, increasing the number of children that a family provider can have from 8 to 12 and creating a zero-interest loan for child care providers and a 15% tax credit for the business expenses at a child care facility. Vos had said they didn’t agree with the approach of providing money directly to centers.

Hendrickson said they are the same ideas that Republicans introduced last session.

“We came out vehemently against [those] and told them exactly why this wasn’t going to work,” Hendrickson said, adding that since then they have spoken with the lawmakers championing those proposals including Reps. Karen Hurd (R-Withee) and Joy Goeben (R-Hobart)

“It didn’t feel like they were listening. It felt like they were trying to convince us that they were correct,” Hendrickson said. 

“A grant is something that you don’t have to pay back, and so you can use it to get yourself started. Because our profit is so low, there’s no way that we can take on that loan when our home is our collateral. If I take on a loan and my home is collateral and I can’t pay it back then, that means I lose my house.”

Schieffer said there are problems with the changes Republicans want to make to ratios. She said increasing the number of children per staff member could impact the quality of care and that minors don’t have the work and education experience that other staff members have.

“I work in a center where every teacher holds a degree in early childhood,” Schieffer said. “To be able to put 16-year-olds and say they can do that job without the education piece, the experience piece, life experience, I feel like that it devalues what we do.” 

Democrats highlighted the strain on child care facilities — and potential closures — that could result from the end of funding for Child Care Counts and argued that the state should have some type of grant program for them at a press conference Thursday morning. 

Democratic members of the Joint Finance Committee and Sen. Melissa Ratcliff (D-Cottage Grove) met at the Learning Ladder Preschool and Childcare center in Cottage Grove. The facility closed in August 2024 after over 30 years in business. 

“There are no tricycles in the playground. There’s no uncontrollable laughter among children, and the sweet sound of toddler feet running across the classroom is not here,” Ratcliff said while standing in a room full of bins of children’s books left over after donations and sales. 

The owners wrote in a letter about the closure in August that the solution would have been “Child Care Counts” funding, fair access to 4k funding and care and consistent regulations across child care providers. 

“Unfortunately, our foundation has been slowly chipped away and we can no longer afford to remain open. After COVID, governmental grants and assistance programs helped prop us up for a while, but those programs have, or are about to end,” the Kudrna family wrote on Facebook at the time.

Democrats slammed Republicans for their rejections of funding for Child Care Counts.

“It is totally unacceptable that my Republican colleagues on the Joint Finance committee have, again and again, said to child care providers ‘your work doesn’t matter, it isn’t worth it,’” Roys said. “That’s what Republicans did when they stripped out the Child Care Counts funding that was keeping so many child care centers afloat and is helping bridge the gap between what parents can afford to pay and what providers need to keep the doors open in this time of high inflation and rising costs.”

Roys said lawmakers should be working on solutions that keep child care centers stable, not coming up with new proposals. Democrats on the committee said they had intended to introduce a proposal to provide grants to centers. 

“New theoretical ideas that Republicans want to propose are essentially wish-casting,” she said.  “We need to keep the centers that we have and the slots that we have open. We need to get more classrooms open, more early childhood educators to come back into the field.” 

“To try to start something from scratch is going to take way longer, it’s going to cost way more when we could just keep what we have stable,” Roys added.

Evers had also urged investment in child care on Thursday. In coordination with the Department of Children and Families, he released a survey that found that 90% of Wisconsin residents, including those without kids, said that finding affordable, high-quality child care in the state is a problem. Over 75% of respondents said they support an increase in state funding to help.

“This is an issue that impacts everyone in Wisconsin. It’s pretty simple, and as leaders, we have an obligation to the nearly 80% of Wisconsinites who want us to do something about it and expect their elected officials to show up, act in good faith and work together across the aisle to solve problems,” Evers said. “I’m urging Republican lawmakers to join me in supporting real, meaningful investments to bolster providers, cut waitlists and lower costs for working families.”

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Children at Mariposa Learning Center in Fitchburg. (2023 file photo by Erik Gunn/Wisconsin Examiner)

While providers, their supporters and Democratic lawmakers are pressing for a substantial continuing direct state investment in Wisconsin’s child care sector, Republicans in the Legislature are pursuing another route: expanding a child care tax credit for employers.

So far, child care providers and some small business owners aren’t interested.

The legislation circulated in draft form in early May. On Friday, May 30, it was formally introduced in the Assembly (AB 283) and the state Senate (SB 291).

“We really think it’s an important opportunity to reward employers for getting involved in child care,” Neil Kline, who says he encouraged GOP lawmakers to draft the tax credit legislation, told the Examiner.

Kline is executive director of Family Friendly Workplaces, a nonprofit based in Woodville that works with businesses in Burnett, Pierce, Polk and St. Croix counties. The organization certifies employers as family-friendly “to support their recruitment and retention efforts,” Kline said. To that end, one of its missions is focusing on workforce-related problems such as housing and child care access.

In early May Sen. Howard Marklein (R-Spring Green) and Rep. Karen Hurd (R-Withee) circulated the proposed bill seeking cosponsors.

The legislation was written “to encourage more businesses to invest in child care in their communities,” Marklein and Hurd wrote in their May 12 cosponsor memo. “These changes will increase the number of available child care slots and provide more options for families.”

Demanding direct support

The legislation has been introduced while child care providers and Democrats are continuing their campaigns to revive direct support for the child care sector.

During the COVID-19 pandemic the Evers administration used federal pandemic relief funds to pay child care providers monthly stipends through the Child Care Counts program. The $20 million a month that the state doled out helped providers stabilize child care, increasing workers’ pay while keeping care more affordable for families.

When Evers tried to use $360 million from the 2023-25 budget to continue Child Care Counts with state money, none of the Legislature’s Republican majority got behind the measure. The governor was later able to reallocate other federal dollars to fund Child Care Counts through June 2025, but at half the original amount: $10 million a month.

With lawmakers now writing the 2025-27 budget, Evers, child care providers and their advocates have been campaigning for $480 million to continue the program for the next two years. A survey commissioned by the state and conducted by the University of Wisconsin Institute for Research on Poverty forecast closures and tuition hikes if the state payments end.  

At their very first budget vote, however, Republicans on the Legislature’s Joint Finance Committee removed the proposal along with more than 600 other items Evers had included in his budget draft. The GOP outnumbers the Democrats 3 to 1 on the committee.

Democratic lawmakers responded by circulating a draft stand-alone bill to reinstate the Evers proposal.

“Child care providers are facing increasing cost to operate while still making poverty-level wages,” said Sen. Sarah Keyeski (D-Lodi) at a May 22 press conference to announce the Democrats’ bill. “This has made it extremely difficult to hire and retain quality staff. [Meanwhile] providers desperately want to avoid rising costs and rates on families already struggling to afford child care.”

Child care as business investment

As yet no Republican lawmakers have gotten behind the Child Care Counts proposal.

Instead, the bills that Marklein and Hurd have introduced would make changes to the Business Development Tax Credit, which is provided through the Wisconsin Economic Development Corporation (WEDC).

That tax credit is granted to reward a variety of business investments and reduces the state income tax that a business pays by the amount of the credit.

Currently, a business that spends money on starting a child care program for its employees can get up to 15% of that cost taken off its tax bill. The credit applies only to capital investments, however — building or remodeling the child care facility.

“Unfortunately, we have heard that the current program parameters limit the incentive for businesses to invest in child care programs,” Marklein and Hurd wrote in their co-sponsor memo. “While many businesses may want to provide child care as a benefit to employees, the current credit limitations reduce the incentive for this investment.”

In addition to capital expenditures, the draft bill would extend the tax credit to cover 15% of several other costs:

• An employer’s spending on child care program operations;
• Spending to reimburse employees for their child care expenses;
• Spending to buy or reserve openings for its employees at a child care center;
• Contributions an employer makes to an employee’s flexible spending account for dependent care.

The draft bill also allows the tax credit for “any other cost or expense incurred due to a benefit provided by an employer to facilitate the provision or utilization by employees of child care services.”

The tax credit would be refundable: Even if the credit totals more than the employer pays in taxes, the company would get its full value back from the Wisconsin Department of Revenue. 

It also would give a refund to nonprofit employers, which don’t pay taxes.

“While not a silver bullet, these changes are another step in the right direction to address the child care issue in Wisconsin,” Marklein and Hurd wrote in their memo.

Kline, the Family Friendly Workplaces director, said the proposal would help engage employers more directly in addressing child care shortages.

“We really think it lays the groundwork for ongoing, self-sustaining support of child care in Wisconsin,” he said. “The primary goal is to help introduce new money into the child care — really, the child care ecosystem — by rewarding employers to support the ongoing expenses of child care, because the reality is that the sector needs additional money in it.”

Kline said he understands that “the ongoing operational economics” is a central problem for the child care sector. “That’s why we are so focused on helping employers find avenues and be rewarded for helping defray the expenses that are related to child care and helping support that ongoing operational side of child care.”

Chilly reception

To date the existing child care employer tax credit hasn’t had any takers, according to the WEDC. In January, as part of an overall evaluation of the state’s business development tax credit, an outside consultant told WEDC that “due to the high operational costs of childcare centers, affordability would likely be better achieved through subsidy as opposed to a tax incentive.”

The proposal to expand the tax credit isn’t gaining traction with providers or small business owners.

Main Street Alliance, which organizes small business owners to advocate for state and national legislation, has already announced objections to the bill.

“These kinds of programs and tax credits are often advantageous for employers who can afford compliance and the procedural costs and have economies of scale,” said Shawn Phetteplace, MSA’s national campaign director. That leaves out the typical small business, said Phetteplace, who sent lawmakers a memo calling the proposal “deeply unserious.”

Evan Dannells, a chef and owner of two Madison restaurants, questioned how a relatively small business like his would benefit from the tax credit.

Of his eight full-time employees, one has two children. Most of the others are graduate students. Directly paying for the one employee’s child care, even if receiving a tax credit, doesn’t feel fair to the others who don’t have that expense, Dannells said.

“If you put the onus of taking care of child care on the employer, the employer won’t hire people with children,” he said.

Dannells considers the cost of child care a legitimate use of his tax dollars. “This is why government should be doing this,” he said. He observed that children are required to go to school when they reach the age of first grade. “Why can’t we take care of them from age 1 to 5?”

While the tax credit may make it easier for a particular company’s employees to afford child care thanks to the employer’s support, skeptics of the proposal say that assistance only helps some people — not the system as a whole.

“That doesn’t help keep the doors open,” said Heather Murray, who operates a child care center in Waunakee. “We’re hitting crisis mode and centers are shutting down now, and a quarter of them will be gone if [Child Care Counts] isn’t renewed. We need the investment to go directly to providers to make sure that the doors stay open.”

Child care as a public good

National child care analyst Eliot Haspel is also skeptical. Haspel is a fellow at Capita, a think tank that works in the area of family policy. In February 2024, the think tank New America published his report raising questions about the impact of various employer-sponsored child care benefits.

Haspel views child care as a public good that benefits society broadly. For that reason, he contends, it should serve families regardless of whether they work for an employer able to fund a child care benefit.

“Small business will never be able to offer a really robust child care workplace benefit,” Haspel says. That puts small businesses and small business employees at a disadvantage if supporting child care is primarily an employer’s responsibility, he argues.

The large number of low-wage workers and “gig workers” “also raises the specter of increasing inequalities,” he writes in the New America report.

Haspel says that tying child care to a job also locks people into a job — or strands them from needed care if they lose their job. It also disrupts children’s early education at a time when they need consistent and reliable connections with their caregivers, advocates say.

“It’s really bad for workers and it’s really bad for kids for your child care to be tied to your employment,” Sen. Kelda Roys said at the Democrats’ May 22 press conference.

Tying health insurance to employment has been “a disaster,” Roys said. Health care is “rationed based on the job that you have or the wealth that you have,” she added, “and we do not want to exacerbate the current problems in our child care system by tying it to people’s employment.”

In his New America report and in an interview, Haspel says the problem isn’t providing child care at the workplace.

“I’m not against the idea of onsite child care — that can make all the sense in the world,” he says. “You can have an onsite center as part of a publicly funded system” — one to which employers contribute as taxpayers.

Focusing on the employer, however, carries with it “an opportunity cost,” Haspel says. “The more we say child care should be solved primarily through employers, the harder it is to say we need a fully public system that is universal and reaches everyone.”

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Corrine Hendrickson, child care provider and advocate, waits to speak at a rally in front of the state Capitol Tuesday, May 13. (Photo by Erik Gunn/Wisconsin Examiner)

Republican lawmakers have filed a proposed bill expanding an existing state business development tax credit related to child care. Child care providers who want to see a permanent state investment in their work said the bill was an inadequate gesture.

The state’s current business tax credit for child care applies only to capital expenditures for an employee child care program. The proposed bill would expand that to include other costs, including operating a child care program for employees, reimbursing employees for child care costs and other costs related to child care benefits.

“These changes will increase the number of available child care slots and provide more options for families,” wrote Sen. Howard Marklein (R-Spring Green) and Rep. Karen Hurd (R-Withee) in a memo seeking cosponsors. “While not a silver bullet, these changes are another step in the right direction to address the child care issue in Wisconsin.”

Critics dismissed the measure as inadequate.

In a press release Rep. Randy Udell (D-Fitchburg) sent out after the Assembly’s floor session Tuesday, he noted that last week the Legislature’s Joint Finance Committee “shot down 612 budget items including $480 million in childcare funding, and they proposed a childcare tax credit in its place that would benefit corporations instead of childcare providers under threat of closure.”

Shawn Phetteplace, national campaigns director for Main Street Alliance, sent a memo to lawmakers Tuesday also dismissing the proposal.

“Providing a 15% refundable business tax credit for businesses providing child care benefits will not appreciably increase access to child care for Wisconsin workers,” Phetteplace wrote. “It will simply be another tax break for large corporations. A similar credit exists at the federal level, the 45F credit, which is widely regarded as not achieving the goal of increasing affordability and accessibility to childcare for employees.”

Corrine Hendrickson, co-founder of Wisconsin Early Childhood Action Needed (WECAN), said at a Capitol rally Tuesday she would like to meet with Marklein, who cochairs the finance committee, as well as Rep. Mark Born (R-Beaver Dam) the other cochair.

The business tax credit is refundable: The credit recipient receives the full value of the credit back from the state, even if it is more than what the recipient owes in taxes. Hendrickson criticized the lawmakers for “refusing to do the same for our hard-working families with the child and dependent tax credit.”

The state’s child and dependent care tax credit for families, which was expanded in legislation enacted in March 2024, is not refundable. That effectively makes the tax credit worth much more to people with higher incomes than to those with lower incomes, as the Wisconsin Examiner has previously reported.

“We are not going to accept anything more that will entrench the wealthy and well connected into our system of having success in life,” Hendrickson said.

Born issued a statement this week that declared Republicans were focusing on other alternatives to the proposal for $480 million in subsidies for child care providers.

“Legislative Republicans have consistently supported a targeted approach to helping families afford child care, build provider capacity, and support recruitment of child care professionals,” Born said. “Parents are best equipped to make decisions about the needs of their children and Legislative Republicans are committed to providing parents with options, helping families directly make child care more affordable.”

Born said the Legislature spends “almost $1 billion” for child care. 

Hendrickson said that virtually all that money is from the federal government and simply passes through the state budget. Only about $24.4 million comes from the state as a required match.

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