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New Hope Act Would Create Permanent Adoption Tax Credit
Shortly after the start of the new Congress, Senator Larry Craig (R-ID) and Mary Landrieu (D-LA) introduced S. 148, legislation to expand and make permanent the current adoption tax credit. The bill is called the "Hope for Children Act." Under the legislation the current tax credit for adoptions would be expanded to cover families making up to $150,000 an increase from the current law which limits credits to families making $75,000 per year. The legislation also proposes to expand the maximum credit from the current limit of $5000 for non-special needs and $6000 for special needs adoption to a credit of $10,000 for either adoption. The credit for non-special needs adoption expenses would be limited to qualified expenses. The legislation would make the credit permanent. Under current law the $5000 credit for non-special needs adoptions is set to expire at the end of this year. When Senator Larry Craig introduced the measure on January 23, 2001 there were three additional cosponsors. As of April 6, the number of cosponsors had increased to fifteen. It is unclear at this point whether or not the credit would be included in the major tax proposal currently being debated by Congress. The House has adopted three measures (H.R. 3, H.R. 6 and H.R. 8) that reduce tax rates across-the-board, increase the children's tax credit and expands deductions for married couples, and repeal the estate tax. The Senate is scheduled to take up its tax proposals in late May.
President Sends 2002 Budget to Capitol Hill
On April 9, President Bush sent to Congress his complete budget proposal for federal fiscal year 2002. The proposed budget serves as the starting point for Congress as they determine the size of the tax cut and how programs will be funded for the federal fiscal year that starts October 1 of this year. Most significant in the child welfare field is the President's proposed increase for the Safe and Stable Families program. The President is asking for an increase of $200 million. Currently the program is funded at $305 million. Adoption promotion and support is one of four categories of services that is funded under the Safe and Stables Families program and under current regulations states must spend no less than 20 percent of their funds on each of the four categories. The Safe and Stable Families program is due for reauthorization this year and the budget proposal would indicate strong support for continuing the program at a higher level of funding. Other child welfare programs did not fair as well under the administration's budget.
The Social Services Block Grant would be reduced by another $25 million to $1.7 billion and the ability of states to move ten percent of their Temporary Assistance for Needy Families (TANF) block grant would be reduced to 4.25 percent. The most recent data from HHS indicates that 30 states spent $20 million in SSBG funds for adoptions and adoption support in 1998. Before adoption of the welfare act in 1996, SSBG was funded at $2.8 billion.
The budget does project an increase in IV-E Adoption Assistance funding. This entitlement fund is expected to increase by approximately $230 million to $1.426 billion. The budget also funds Adoption Incentive Payments at $43 million and the Adoption Opportunities Program at $27 million. Both funded at the same level as the current year. The administration is recommending a cut in funding for the Child Abuse Prevention and Treatment Act (CAPTA) under the discretionary grants line reducing the total from $33 million to $18 million. The state grants are maintained at the same level as this year at $21 million.
To find out more about the FY2002 budget, click here.
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