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Az’s school tax credit program in danger?

Citizen Staff Writer



School tax credits, which have enabled students to attend President Obama’s inauguration, visit an Arabian horse farm, sing at Carnegie Hall, get tutoring and go to private schools parents couldn’t otherwise afford, may be on the chopping block.

The threat comes as state legislators try to reconcile an anticipated budget deficit of $3 billion for next fiscal year.

Legislators normally wouldn’t consider touching tax credits, knowing it could be political suicide to suspend something that gives taxpayers a way to earmark where their tax dollars go.

Arizona House Minority Whip Chad Campbell, D-Phoenix, said all tax credits, including those to schools, should be reviewed: “What’s the point of having these tax credits in place for schools when at the same time you’re taking money from the schools anyway?”

But Senate Appropriations Committee Chairman Russell Pearce, R-Mesa, said he supports school tax credits, which more taxpayers take advantage of each year.

Last year, Arizona returned more than $95 million in tax credits to those who made donations to public and private schools.

In the last 10 years, Arizona public schools have garnered more than $263 million for extracurricular activities and fees; private schools have received $293 million for tuition assistance.

The program, which wasn’t part of the state House or Senate’s initial budget-cutting plans, allows tax credits – not deductions – of up to $200 per person or $400 per married couple for donations to public schools.

For those donating to private school tuition, the limits are $500 per person and $1,000 per couple.

Donations are considered dollar-for-dollar tax credits from the state and can also be deducted as charitable contributions for federal taxes.

Area public school educators are split on whether tax credits should be suspended next year. Private school officials are united against suspending the program, saying it would affect their diversity. (See related story, Page 3A)

“The Legislature made their bed; let them lie in it,” said Sahuarita Unified School District Superintendent Jay St. John.

He said axing tax credits “violates the original philosophy behind the idea” of letting taxpayers “direct a minute part of their taxes to a specific governmental cost or program.”

Flowing Wells Unified School District Superintendent Nic Clement is torn. He said tax credits allowed 32 district middle school students to attend President Obama’s inauguration.

But “I don’t believe you can say all budget options are on the table without putting tax credits on the list,” he said. “They are directly related to the revenue stream and should be in the discussion, and the advantages and disadvantages debated by both the Senate and House.”

Dan Contorno, Marana Unified’s chief financial officer, agreed, but wanted a promise from lawmakers if the program is cut. “Given the economic hardship across the country and within Arizona, the elimination of the school tax credit program should be for the purpose of offsetting any proposed cuts to K-12 education,” he said.

Another option to consider “in lieu of elimination of the program is to allow districts more spending options for this revenue,” Contorno said, noting the strict guidelines for use of the funds.

Tax credit dollars cannot be used for regular classroom activities during school hours.

Mary Kamerzell superintendent at Catalina Foothills Unified School District, favors “at least suspending” the tax credits for public and private schools.

“The alternative for diversion of a taxpayer’s personal income tax obligation to Arizona schools was made in a very different economic environment,” she said.”

Monique Soria, spokeswoman for the Sunnyside Unified School District, which has a much greater concentration of students from low-income families than Catalina Foothills, said there definitely would be a hardship on parents and schools.

“We know there have to be cuts,” she said. “But we hope it’s not the first thing on the list because it benefits parents and children so much.”

Tom Rogers, superintendent at Tanque Verde Unified School District, said cutting tax credits may be the lesser evil.

“I would hate to see tax credits be suspended, but it would have less effect on classroom instruction than other proposed cuts.

“Field trips would likely come to an end and all of our extracurricular programs would suffer, as we currently expend little of the maintenance and operations budget for these activities, relying heavily on tax credit donations,” Rogers said.

Tucson Unified School District Superintendent Elizabeth Celania-Fagen concurred.

“We can’t afford to lose anything (but) maybe it should be considered because it is inequitable. It’s inequitable within the system (with taxpayers in wealthier school districts donating more to their schools) and between systems (public and private),” she said.

Vail Unified School District Superintendent Calvin Baker said, “With the severity of the state’s budget crisis, every option should be on the table. Getting rid of tax credits has some merit because tax credits certainly do contribute to the gap between revenues and expenditures. And tax credits contribute to inequities between ‘wealthy’ and ‘poor’ schools.”

But Baker doubted the idea will move forward because it’s popular with entities that form a “diverse and powerful lobbying group.”

“Private school parents and supporters love the benefit it gives private schools,” he said, “and public school parents love it because it gives them a tax credit for the increasing large student sports and activity fees.”

Coaches and others love tax credits because they make fundraising so much easier,” Baker said. “Spend Saturday supervising a car wash . . . or convince one parent to give the activity their tax credit – pretty easy choice.”

The Arizona Republic contributed to this article.

School tax credit program may be chopped as legislators face $3 billion budget deficit

Taxpayer participation in tax credit program

AZ donors to: 2007 1998

Public schools 204,000 74,000

Private schools 76,000 4,200

Source: Arizona Department of Revenue

Private-school tax-credit contributions

These school-tuition organizations were the top five recipients of private-school tax-credit donations in Arizona in fiscal 2007. Tuition organizations are nonprofit groups, some of which support more than one school. To get this dollar-for-dollar tax credit from the state, an individual donor can give as much as $500 and a married couple can give up to $1,000. These donations also can be deducted from federal taxes as charitable contributions.

Arizona Christian School Tuition Organization: $11.4 million

Catholic Tuition Organization of the Diocese of Phoenix: $10.7 million

Arizona Scholarship Fund: $5.4 million

Catholic Tuition Organization of the Diocese of Tucson: $4.7 million

Institute for Better Education: $3.8 million

Public-school tax-credit contributions

These school districts were the top five recipients of school tax-credit donations in Arizona in fiscal 2007, according to the Arizona Department of Revenue. The donations support extracurricular activities, field trips and character-building programs. To get this dollar-for-dollar tax credit from the state, an individual donor can give as much as $200 and a married couple can give up to $400. The donations also can be deducted from federal taxes as charitable contributions.

Mesa Public Schools: $5.4 million

Tucson Unified: $3 million

Scottsdale Unified: $2.4 million

Gilbert Unified: $2.2 million

Paradise Valley Unified: $2 million

Source: The Arizona Republic

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