Panel OKs extension of school tax credits

No way of knowing if programs help state save money
2012-12-07T00:00:00Z Panel OKs extension of school tax creditsHoward Fischer Capitol Media Services Arizona Daily Star
December 07, 2012 12:00 am  • 

PHOENIX - A legislative panel voted Thursday to continue giving significant tax credits to those who help students attend private and parochial schools.

The move by the Joint Legislative Income Tax Credit Review Committee comes even though proponents concede there is no way of knowing whether the individual and corporate credits, which totaled more than $60 million last year, actually have a positive impact on state finances. Rep. J.D. Mesnard, R-Chandler, said he believes that it really does save taxpayer money.

But Mesnard, who pushed the recommendation, said even if that were not the case, he believes it is "good public policy" to help parents choose the schools of their choice, and it is irrelevant if that education includes religious training.

Thursday's vote is simply a recommendation to the full Legislature, which convenes next month. It would take a vote of both the House and Senate to ignore the recommendation and trim or eliminate the credit; lack of legislative action keeps the credit in place.

A 1997 law allows Arizonans to get a dollar-for-dollar credit on what they owe the state in income taxes for money they donate to organizations that provide the scholarships for private and parochial schools.

Individuals have been able to divert up to $500 a year, and couples double that. But beginning this year, that amount is going to be adjusted for inflation.

Last year Arizonans diverted nearly $49 million to the scholarship organizations. A separate law giving dollar-for-dollar credits to corporations cost another nearly $11.1 million in revenue, in 2009, the most recent year's figure available for that category.

Rep. Tom Chabin, D-Flagstaff, said allowing the credits makes no sense.

"Our public schools are suffering due to underfunding," he said. Chabin said the state should not allow money to be siphoned off of revenues to help support private and parochial schools.

But Mesnard said there's a case to be made that it saves money.

Theoretically, at least some of the students attending private schools would otherwise be in public schools. And the state pays an average of $5,300 a year to local districts for each student in attendance.

Proving that savings, however, is something else.

Steve Schimpp, a legislative budget staffer, said about 23,800 students in private and parochial schools are getting some type of scholarship. He computes it would take 8,150 children to migrate from public to private schools to make the tax credit at least revenue neutral.

But Schimpp said there is no way to tell if the state hit that break-even point, since there is no requirement in law to ask parents whether their children would be in public schools absent the help.

Mesnard said, though, that it is wrong to look at the issue solely as one of dollars and cents. He said the credits help parents make decisions that are in the best interests of their children by making the tuition cost less of a factor.

"The fact that we're empowering them to make decisions for their families is good," he said. "The fact that they may make religious ones is immaterial to us."

Sen. Ron Gould, R-Lake Havasu City, said he donates to these scholarship organizations - and takes the tax credits - because he believes it does help parents who otherwise could not afford private education.

The law allows donors to "recommend" the funds go to a specific child, but that is not binding on the scholarship organization. In Gould's case, he said the donations were made for two children, one who has a single mother and the other the child of a truck driver.

"I know these folks personally, and I know that without those tax credits those children would not be attending private school," he said.

Scottsdale Rabbi Ariel Shoshan told lawmakers that he both donates to scholarship organizations and, as the father of six children in four different schools, his family is a beneficiary.

"Our children are getting an education we believe in," he said.

After the meeting, Shoshan said he sees nothing wrong with diverted tax dollars being used to send a child where the curriculum includes religious training.

"It's a way for the community to pay for each child's education, just as it does for all of our neighbors," he said.

In separate action, the committee voted to recommend continuation of a separate tax credit available to those who donate to extracurricular programs at public schools. That credit of $200 per individual and $400 per couple totaled $48.4 million last year.

The panel also said the state should continue credits for low-income families, commercial installation of solar devices and donations to the Military Family Relief Fund, which aids the families of deployed soldiers and sailors.

But the panel is recommending that four other credits up for review be killed:

• Installing solar water stub-outs and electric-vehicle recharging stations.

• Developers donating land for public schools.

• Adding employees in a business located in a military reuse zone.

• Building a facility that manufactures environmental technology.

Tax Credit Review

Tax credit being reviewed Reduction in state revenues

Family income $5,817,731

Commercial & industrial solar devices $351,904

Military family relief fund $996,695

Private/parochial school tuition organizations $60,093,705

Public school extracurricular activities $48,443,537

Total of all credits (reviewed and otherwise):

• Individual taxpayers - $215,137,570

• Corporate taxpayers - $86,793,306, plus $309,038,913 carried forward as offset for future years

Source: Arizona Department of Revenue

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