Arizona Gov. Reneges Again on Promise

Published March 1, 2006

For the second time in two years, Arizona Gov. Janet Napolitano (D) has vetoed a corporate scholarship tax credit program she had previously promised to sign. Napolitano made her January 18 veto announcement just days after the Republican-led legislature passed a revised version of the corporate scholarship tax credit bill.

Clint Bolick, president and general counsel for the Phoenix-based Alliance for School Choice, said he was disappointed Napolitano failed to follow through on her commitment. The tax credit program would have given low-income children across the state scholarships to attend the private schools of their parents’ choosing.

“The governor has broken a covenant with Arizona’s schoolchildren by vetoing a scholarship tax credit bill to expand educational opportunities after promising to sign it, not once but twice,” Bolick said.

Rocky History

Arizona state Rep. Steven B. Yarbrough (R-Chandler), the key sponsor of the corporate scholarship tax credit bill multiple times, explained the proposal has gone through several versions over the past few years. In 2003, it passed the Senate but not the House; in 2004 it passed the House but not the Senate.

Yarbrough noted the bill passed the legislature twice in 2005. Senate Republicans agreed to a deal with Napolitano: She would sign the corporate scholarship tax credit if they funded her full-day kindergarten program.

But after the Senate passed the budget funding the kindergarten program, Napolitano reneged on her end of the deal, saying the tax credit bill should have had a five-year expiration, or “sunset clause.” She said at the time that if the legislature passed the tax credit program again with the sunset clause included, she’d sign it into law. The most recent version, passed by the legislature on January 11, included the clause.

“Until we have a comprehensive agreement about next year’s budget, it is premature to consider individual budget-related legislation on a piecemeal basis,” Napolitano wrote in a January 18 veto letter to House Speaker Jim Weiers (R-Phoenix).

Funding Organizations

Yarbrough said the corporate tax credit bill would have provided a total of $5 million in annual tax credits for corporations donating to a school tuition organization (STO). STOs are nonprofit organizations that distribute scholarships to eligible students. Currently, STOs are largely funded by individuals, who since 1998 have enjoyed tax credits through Arizona’s Tuition Tax Credit Program.

“The STOs would receive donations and award scholarships to individual students,” Yarbrough said. “The maximum award would be $4,200 for K-8 and $5,500 for 9-12. The students would have to be switchers from public school or first-time students.”

Additionally, families would be means-tested to ensure their income did not exceed 185 percent of the school reduced-price lunch eligibility cutoff level, and private schools would have to agree to certain provisions, such as fingerprinting their employees and publishing the results of national norm-referenced tests.

High Hopes

Yarbrough hopes school choice advocates in the legislature will introduce a stronger version of the corporate scholarship tax credit bill in 2006.

“My band of school choice folks, which includes a narrow majority in both the Arizona House and the Senate, will definitely advance another version of the corporate scholarship tax credit bill this session,” Yarbrough said. “Hopefully it will be a better version than the budget version and more like the first version we passed in 2005.”

Corporate scholarship tax credits already have provided educational opportunities for thousands of disadvantaged students in Florida and Pennsylvania, Bolick said. He believes they have unique benefits, especially for states.

Significant Benefits

“They are less regulated than school vouchers, they can constitute a cost savings to the state, and because they do not involve appropriations of public funds, they can be insulated from constitutional challenges under state constitution Blaine amendments,” Bolick explained. Blaine amendments are provisions found in most state constitutions proscribing direct government aid to schools with religious affiliations.

But states aren’t the only entities that benefit from tax credit programs.

“The benefit to businesses would have been the opportunity to direct their state income tax liability to an STO for these scholarships,” Yarbrough added. “The benefit to parents and students would have been the potential for receiving a scholarship towards the cost of tuition at the private school of the parent’s choice.”

Evident Need, Support

Support for school choice in Arizona appears to be strong. A survey conducted by the Milton and Rose D. Friedman Foundation in 2005 revealed 91.4 percent of Arizonans supported one or more of the five school choice proposals pending at that time in the legislature.

School choice advocates like Bolick believe educational options are particularly necessary in a state where children are not achieving academically.

“As many as two-thirds of Latino and black schoolchildren, and nearly one-third of white students, score below basic literacy levels,” Bolick said of Arizona’s schools.

While Yarbrough said Napolitano’s political commitment to the teacher union ultimately prohibited her support, even after legislators added a sunset clause, he is committed to the legislation for Arizona’s schoolchildren.

“I hope we continue to fight for this additional tool to expand school choice in Arizona to the benefit of students and taxpayers alike,” Yarbrough said.


Kate McGreevy ([email protected]) is a freelance education writer living in New Mexico. She formerly worked with the Cesar Chavez Public Charter Schools for Public Policy in Washington, DC.


For more information …

For more information, visit the Alliance for School Choice’s Web site at http://www.allianceforschoolchoice.org.

Rep. Steven Yarbrough can be contacted via his Web site at http://www.azleg.state.az.us/MembersPage.asp?Member_ID=60.