What is happening right now in the legislature.

Law Created

On March 29, 2006, Gov. Napolitano allowed the corporate scholarship tax credit to become law without her signature. Three previous versions of the bill had been vetoed.

When effective, 90 days after the end of the legislative session, this law will allow Arizona to join Florida and Pennsylvania as states with a corporate scholarship tax credit. Arizona remains the only state with an individual scholarship tax credit.

The bill allows $5 million per year in donations to be offset against corporate state income taxes. The bill applies to "switchers" only, is means tested with the maximum family income for a scholarship recipient set at 185% of the federal reduced price lunch standard, and contains various other operational provisions applicable to the school tuition organization, the Arizona Department of Revenue, the scholarship recipient, and the private school.

Related to school choice, currently there is a special education voucher bill, HB 2676 (Rep. Knaperek), a foster children voucher bill, SB 1164 (Rep. Murphy), and a withholding for educational credits bill, SB 1151 (Sen. Martin) progressing through the legislative process as April arrives.

However, without a doubt, the corporate scholarship tax credit bill (2006) joins the marriage penalty elimination (2005), the original individual scholarship tax credit (1997), and the charter school law (1994) as landmarks for school choice. Indeed, Arizona has come a long way but there is still much to be done if every child is to be able to maximize their academic potential by being able to attend the school of their parent's choice.

Legislature Running Full Speed

With the legislature running full speed and proposals rising and falling almost daily, it is a challenge to accurately discuss the status of school choice and the scholarship tax credit at any given moment.

It is fair to say that notwithstanding the fact that a corporate scholarship tax credit for students of families of modest means and directed at students switching from a public school to a private school has been vetoed three times in the past twelve months, it remains a priority of the legislature.  Improving student academic achievement by expanding school choice is simply too good of an idea to be kept down.

The effort to create an added opportunity for English Language Learners (ELL) to have an ­­­­avenue to access quality private schools, twice vetoed, has been sacrificed for now.  However, helping educationally needy students through expanded school choice will continue to be pursued by Arizona policy makers

It remains foreseeable that an improved version of the corporate scholarship tax credit will be advanced before the legislature adjourns this year.  In the meantime, the elimination of the marriage penalty from the educational tax credits last year will pay increased dividends for both public and private school students in the years ahead.   

Letter from Steve Yarbrough

Until May 20 this article was going to discuss SB 1527, the corporate scholarship tax credit. Unfortunately, contrary to the agreement made between legislative leaders and the Governor whereby she received her budget preferences and she agreed to sign this bill, the Governor reneged and vetoed the bill citing specious reasons. This dishonorable conduct certainly will make future cooperation between the legislative branch and the executive branch more challenging at best.

The good news is that SB 1529 was signed. This law will eliminate the marriage penalty embedded in the scholarship tax credit, the public school extra-curricular activities tax credit, and the working poor tax credit. For married couples filing jointly the scholarship tax credit will increase to $825 in 2005 and $1000 in 2006. The other two will go to $300 and $400 each year respectively.

This legislation was priority one for the group of legislators committed to increased school choice. It will ultimately help more students attend the school of their parent’s choice.

It is foreseeable that scholarship tax credit donations may increase approximately 10% each of the next two years. Obviously at the higher levels fewer donors have both the liability and the means to make the increased contributions, but a healthy increase should still result.

The public school extra-curricular activities tax credit will receive the lion’s share of the increase generated by the elimination of these three marriage penalties.

Clearly the effort to increase academic achievement for all Arizona students by expanding real school choice is growing stronger and the elimination of the marriage penalty will move Arizona forward in that regard.

The Ultimate Winn Win Scenario

By Tim Keller

School choice advocates received great news in March when Arizona’s Federal District Court dismissed Winn v. Hibbs, the ACLU’s frivolous legal challenge to Arizona’s pioneering Scholarship Tuition Tax Credit.

In granting the Institute for Justice Arizona Chapter’s motion to dismiss, the district court not only struck a blow for the rule of law, but handed the thousands of parents and children who rely on scholarships a well-deserved victory.

Not surprisingly, the ACLU and its allies, whose interests lie not with improving our children’s education but in protecting the public education monopoly, are pressing on with further worthless appeals. The Institute for Justice will continue to defend the program and look forward to the day when we can be about the business of true education reform.

Yes, Arizona leads the nation in school choice, but we can and must do more because our children deserve nothing less.

Legislative Update by Steve Yarbrough

Until May 20 this article was going to discuss SB 1527, the corporate scholarship tax credit. Unfortunately, contrary to the agreement made between legislative leaders and the Governor whereby she received her budget preferences and she agreed to sign this bill, the Governor reneged and vetoed the bill citing specious reasons. This dishonorable conduct certainly will make future cooperation between the legislative branch and the executive branch more challenging at best.

The good news is that SB 1529 was signed. This law will eliminate the marriage penalty embedded in the scholarship tax credit, the public school extra curricular activities tax credit and the working poor tax credit. For married couples filing jointly the scholarship tax credit will increase to $825 in 2005 and $1000 in 2006. The other two will go to $300 and $400 each year respectively. This legislation was priority one for the group of legislators committed to increased school choice. It will ultimately help mor3e students attend the school of their parent's choice.