HELENA – The Montana House Saturday narrowly endorsed the session’s major school choice bill, which would create state income tax credits for donations to groups that fund scholarships for kids attending private schools.
But instead of advancing the bill to a final vote next week, the House sent it back to another committee, to examine the measure’s fiscal impact on the state budget.
The re-referral to the House Appropriations Committee sets up another hearing and committee vote on Senate Bill 81, which would allow up to $2.5 million a year in state income tax credits for donations to nonprofit groups called “student scholarship organizations.”
SB81, sponsored by Sen. Dave Lewis, R-Helena, is a hallmark bill for the advocates of school choice, which is the use of public money or tax credits to help parents send their children to schools outside the regular public school system, such as private or charter schools.
The House voted 53-47 on Saturday to endorse SB81, which has already been approved by the Senate.
All of the chamber’s 39 Democrats and eight Republicans voted against it.
The bill also would create up to $2.5 million in annual state income tax credits for donations to an “educational improvement organization,” described as a group that gives grants to public schools for “innovative educational programs.”
Individuals could take income tax credits equal to 40 percent of their donations to scholarship or education-improvement groups, while corporations could take a 20 percent deduction.
Rep. Cary Smith, R-Billings, said the bill increases educational opportunity for kids and encourages the use of private money to help innovative programs in public schools.
Eighteen percent of kids in Montana aren’t graduating from high school, and SB81 will help children who “learn at different rates, with different needs” attend the private schools of their choice, he said.
He also said the scholarships would help low-income families more than high-income families, which already can afford to send their kids to private schools, if they so choose.
Opponents said there are many reasons to vote against SB81: It cuts tax funds that could be available to finance public schools; it could reduce the number of students in smaller schools, further hurting their budget; it creates a new tax credit – just a few days after the House supported a bill eliminating a slew of income tax credits.
“I guess you’ll have to figure out if you want tax credits or you don’t,” said Rep. Tom Jacobson, D-Great Falls.
Democrats also said the bill violates the state constitution, which forbids the use of state money on private, religious schools.
Smith said the unconstitutional argument is wrong, because granting a tax credit is not the same as spending state money, which is what the constitutional ban applies to.
“The money is not public funds until the taxes are paid to the state,” he said. “This is not the appropriation of anything; this is a donation that we’re talking about.”