PHOENIX — Legislative Democrats want to cap how much corporations can divert of their state taxes to send children to private and parochial schools so more money ends up going to public schools.
And they want to do it now while it’s just $51.6 million — and not $662 million it would hit in 2030.
The proposal unveiled Tuesday also uses a $325 million surplus from last budget year plus an anticipated $250 million proponents say the state will have left over each year for the foreseeable future even after meeting other obligations. All totaled it would pump an additional $4 billion into public schools over the next decade without touching the $460 million now in the state’s “rainy day” fund.
That compares with a plan by Gov. Doug Ducey to dig into the principal of the state land trust to raise $2.2 billion for schools over the same period. And unlike what the Democrats are proposing, what Ducey wants would self-destruct after 10 years, taking away the additional aid.
Despite that, gubernatorial press aide Daniel Scarpinato blasted the Democrat plan. He called it “irresponsible” to promise additional funding to schools based on such long-term projections.
And he was particularly harsh in his criticism of the idea of limiting how much corporations can get in tax credits for those scholarships to private and parochial schools.
“That hurts kids,” he said. “Why would we want to limit the ability for parents to be able to send their kids to good schools if they can’t afford it?”
“We’re not taking it away,” responded House Minority Leader Eric Meyer. He said corporations would continue to be able to put $51.6 million into these scholarship accounts year after year and then reduce their state income tax liability on a dollar-for-dollar basis.
What it would do is scrap the current law, which increases that $51.6 million cap by 20 percent a year, forever. Democrats figure that cap — money that would otherwise go into the state general fund where it could be used for public education — would double by 2020 and hit $662 million by 2030.
Meyer acknowledged that Democrats, by virtue of being a minority in the Legislature, cannot get the plan enacted by themselves. But there may be a chance to pick up some Republican support.
Rep. Heather Carter, R-Cave Creek, put forward a similar proposal last session during budget debates. And while it was defeated, Carter said Tuesday she remains committed to pushing the idea.
“This 20 percent is not sustainable.”
And Rep. Kate Brophy McGee, R-Phoenix, said legislators need to look at all these tax credits that are “diverting more and more dollars away before they ever hit the general fund.”
Those tax credits for private and parochial schools can add up.
The most recent figures from legislative budget analysts show $55.4 million was claimed by individuals who are allowed to divert up to $535 in income taxes owed — double for couples — for such scholarships. Another $19.6 million went to children who switched from public to private schools.
There are no state-mandated income limits for families to qualify, though some organizations provide scholarships based solely on need.
Then there are those corporate tax credits.
By law, the proceeds from those donations are earmarked for what the Legislature determines are students from low-income families. But the income cutoff is $83,000 a year for a family of four.
Underlying the debate is the fact a Maricopa County Superior Court judge has ruled the state has ignored a 2000 voter-approved law to boost state aid to schools annually to account for inflation. The Democrats’ plan provides enough to fund the more than $330 million for the current school year and keep the state on pace with remaining in compliance going forward.
By contrast, Ducey hopes to get voter approval to tap the land trust fund to add another $325 million a year for five years, dropping to half that for the second five years before disappearing entirely. Scarpinato said that plan is preferable because it takes money the state already has rather than relying on future revenues which may or may not happen.
“They’re making promises they can’t keep,” he said. “They would either have to renege on this or raise taxes by a massive amount.”
That’s also the assessment of Senate President Andy Biggs who said the concept is based on the hope revenues will grow by at least $250 million a year.
“Nothing new or creative here,” he said. “Just project that we are going to grow at a brisk pace and, voila, there’s money for K-12 funding.”
Meyer, however, defended that $250 million estimate of available dollars out of what is currently a $9.1 billion budget.
“We don’t have a crystal ball,” he said. “But if our economy catches up with the rest of the country’s economy, we feel like this is a good estimate.”
Meyer conceded, though, that if the revenues don’t appear it may be necessary to make cuts elsewhere in state spending, saying that K-12 education has to be a top priority.
He said the Democrats program has one thing going for it neither in the governor’s plan nor an alternative being crafted by Republican leaders: simplicity. Unlike the alternatives, he said it can be enacted immediately — in special session as early as next week if the governor calls it — and the money could be flowing to the schools shortly thereafter.
The plan by GOP leaders also seeks to tap the trust fund proceeds, but not to same extent as Ducey. Instead, it uses some current funds, $100 million versus the $250 million Democrats say is available. It also would require separate voter approval to take tobacco tax revenues now earmarked for early childhood development programs and instead and divert them to K-12 funding.
Such an election likely could not take place before next spring.
