Great opinion piece from the Billings Gazette.
Montana’s New School Tax Credit Policy Test
Gazette opinion – November 16, 2016
What would you call a school funding program that is first-come, first-served? Does not guarantee equity between public school districts? Offers the same dollar amount of state aid to 7,000 private school students as it does for all 145,000 Montana public school students? Is authorized to grow 10 percent per year in cost? Adds layers of complexity and expense to the Department of Revenue and the Office of Public Instruction?
Lawmakers called it Senate Bill 410.
The bill became law this spring and takes effect on Jan. 1. By that time, the Department of Revenue plans to have a special website set up, just for the tax credits authorized by SB410. According to DOR, people who want to get the tax credit of up to $150 for donating to public or private schools would go to the website and get a tax credit number to include on their state tax return.
Donating is more complicated than writing a check to your favorite school. Instead, the law says the state will reimburse that donation with a tax credit only if the contribution is funneled through the Office of Public Instruction for public schools, or through some sort of scholarship organization for private schools.
The law makes up to $6 million in state funds available to reimburse such donations during 2016: $3 million for public schools, $3 million for private schools. Because there’s a spending cap, those who apply first will get the credit; anyone who applies after the limit has been reached won’t.
If the full $3 million is used one year, the limit will increase by 10 percent for the next year until the law sunsets on Dec. 31, 2021.
The sponsor of SB410, Sen. Llew Jones, R-Conrad, previously worked on good education legislation. He has said his intent with this tax credit is to improve education in Montana. We take him at his word.
But we strongly disagree with this method. At a Senate hearing in March, Jones envisioned local school trustees marshaling supporters to claim tax credits early for their district or region. (Credits don’t go to individual public schools and must be spent on “innovative” programs not already offered.)
On the private side, the law attaches no strings to the use of its scholarships and doesn’t require private schools to be accredited. It does rule out directing tax credit money to “home schools.”
From the beginning, SB410 posed a constitutional conflict. Most private schools in Montana are religious schools. The state constitution prohibits directing state money to religious schools. So the Department of Revenue proposed a rule barring tax credits for contributions channeled to religious schools. Proponents of SB410 — from Montana and out-of-state interest groups — have already threatened to sue if that rule becomes final. The comment period ends Tuesday.
Opponents of SB410 will sue if tax credits are funneled to religious schools. This constitutional question is destined to be settled by the Montana Supreme Court.
Apart from that important question of law, SB410 is poor policy. The legislative majority that approved SB410 appropriated nothing to help public schools maintain or upgrade the facilities that need hundreds of millions of dollars of work statewide. Schools were turned down even in requests for aid to replace leaking roofs and inefficient heating systems.
Montanans who support private, tax-exempt schools can do so without SB410 and receive a tax deduction. By contributing directly to the school, the donor can direct how the money will be used, instead of involving the distribution entity required in SB410. Regular charitable deductions don’t require going to a DOR website to reserve a tax credit number.
“This is a very complicated system for providing public money to public schools,” Madalyn Quinlan, OPI chief of staff, said at the Senate hearing on SB410. “Poorer areas, poor counties are likely to be on the losing end.”
We agree. The law also increases the size of government, necessitating the hiring of two full-time state employees just to implement it. SB410 is neither fair nor efficient — and it’s at odds with the Montana Constitution.
Article 10, Section 6:
“The legislature, counties, cities, towns, school districts, and public corporations shall not make any direct or indirect appropriation or payment from any public fund or monies, or any grant of lands or other property for any sectarian purpose or to aid any church, school, academy, seminary, college, university, or other literary or scientific institution, controlled in whole or in part by any church, sect, or denomination.”