Bill that would increase education tax credits passes House

Building on a bill that passed during the 2021 session, which significantly increased the amounts donators could claim as tax credits, House Bill 408 seeks to increase the limits accepted for both the Student Scholarship Organization Credit and the Innovative Educational Program Tax Credit from $2 million to $5 million. The bill also allows the cap to increase in the following years if 80% of these limits are met. Donations could be accepted by individuals, estates, trusts or corporations while the credit itself could carry over for three years.

The bill’s sponsor, House Majority Leader Sue Vinton, R-Billings, said it would meet the demand across the state for innovative education programs like work-based learning partnerships and support for disabled students along with the growing number of willing donors across the state.

If passed, HB 408 would also ensure that the majority of donations don’t go to select public school districts. Any district in the state could receive up to either 15% of its general fund budget or 20% of the total donations. If they were to exceed this, remaining funds would be transferred to school districts that receive advanced opportunity aid.

Similar stipulations would be applied for student scholarships in private schools, with the exception of the cap on schools accepting donations from the organizations.

The bill hasn’t been without opponents. During its second reading on the House floor Monday, multiple Democratic representatives criticized the bill as a tax break for wealthy individuals and corporations with personal interests. Specifically, the dollar-for-dollar tax credit capped at $200,000 was viewed as diverting potential tax dollars towards private schools instead of public schools. The lack of a cap for private schools accepting donations, their ability to operate outside of state accreditation and education standards and the potential for student discrimination were also listed as potential outcomes of the bill.

On the House floor, Rep. Jim Hamilton, D-Bozeman, called HB 408 “outrageous tax policy” and argued the lack of a cap for student scholarship organizations could potentially benefit donors’ children directly if they were to attend a particular private school while the tax credits have the potential to get exploited by any corporation in or outside of Montana.

“This is my nomination for the worst bill ever or, at least, this session” he said.

Since the passage of HB 279 in 2021, the caps for both tax credits were quickly met with 10 public school districts approving donations from 20 people and three businesses in under six minutes and 55 people and nine businesses getting approved by seven student scholarship organizations in two weeks last year.

Opponents added that the bill wouldn’t address public school needs that are currently being felt across the district and that further increasing tax incentives for donors would do nothing to address the problem.

Republican representatives in favor of the bill argued it was presumptive to think its intention is to only benefit wealthy donors and private schools and that, if utilized effectively, the donations for public schools could address some of the issues mentioned by its detractors.

Rep. Courtenay Sprunger, R-Kalispell, said a superintendent from her local public school district advocated for donations upon the passage of HB 279 and that it resulted in new parties investing in all its schools.

“It was a great opportunity for our public schools to be invested as well and maybe bring in some people in who hadn’t thought about it before,” said Sprunger.

In her closing statements, Vinton assured the bill’s critics that “the sky is not falling” and referenced other bills passed during the session that address issues like teacher salaries and that the purpose of this bill was to focus on expanding students’ education opportunities.

“This bill is about kids. It’s about our students in both private schools and in public schools,” she said. “And that is why we should all be supporting this bill.”