Arizona Gov. Vetoes Tax Credit Expansion, OKs Disabled Student Vouchers

Published May 15, 2011

Arizona Gov. Jan Brewer (R) twice vetoed a bill to expand Arizona’s education tax credit program in the waning weeks of the state legislature’s spring session. Brewer said the legislation “fails to accomplish the stated intent of being revenue positive.”

Brewer’s veto followed a decision by the U.S. Supreme Court upholding the state’s 13-year-old scholarship program funded by the tax credit. Justice Anthony Kennedy, writing for the Court, noted the program does not directly funnel state dollars to religious schools.

State finances, not religion, were Brewer’s main consideration in rejecting the bill, she said. Arizona faces a $1.1 billion budget shortfall for the fiscal year beginning July 1. Republican lawmakers proposed expanding the tax credit for individuals from $500 to $750 and for couples filing jointly from $1,000 to $1,500.

The governor said the plan would “unbalance the budget.”

“I support the expansion of school choice opportunities and look forward to working with the education community and the legislature to identify avenues to expand school choice while maintaining sound tax policy,” Brewer wrote in her veto statement for the second version, Senate Bill 1186.

Donations Down
Arizona’s tax credit scholarship program allows individuals and corporations to deduct from state tax returns their donations to qualified school tuition organizations. Because of the weak economy, these donations have declined sharply in recent years, said Clint Bolick, litigation director at Arizona’s Goldwater Institute.

In its second iteration, the legislation would have allowed increased contributions only to means-tested tuition organizations funding students transferring from public to private schools, “and in that instance it would be positive for revenue, and certainly the state’s analysis found that it was far less costly. [Brewer] nonetheless vetoed it on the same rationale,” Bolick said.

Vouchers for Special Needs
A new Arizona law passed during the same session would grant vouchers to parents of the state’s 17,000 disabled children, allowing them to attend a private or public school of their parents’ choice.

Bolick and his team helped lay the intellectual and policy foundations for the voucher bill, which sets up what they call education savings accounts for each participating student. Once parents opt in, the state will contribute funds to private accounts equal to 90 percent of what a public school would receive. The contribution will range from $4,500 for students with mild disabilities to $27,000 for students with severe disabilities such as autism.

“If we were starting a K-12 system from scratch today, given the huge improvements in technology, it would probably resemble education savings accounts rather than the bricks and mortar system we have now,” Bolick said.

The new law requires the state to perform random audits of the savings accounts to ensure parents are spending the money on the education-related items allowed, including private tuition, online courses, home tutoring, or college classes for high school students. Families can also choose to save the money and use it to pay for college once students graduate. Leftover money in the accounts would roll over each year.

Court Challenge Possible

Legislators say they drafted the voucher law to withstand a constitutional challenge similar to one voiding an earlier, similar law. But Adam Schaeffer, an education policy analyst at the libertarian Cato Institute, says he worries the state Supreme Court could strike it down anyway.

“It seems unlikely to me the justices will look at this [law] and say, ‘Yes, this satisfies our concerns in the [decision] we handed down,” he said.

Schaeffer also criticized the law for using state dollars for these vouchers rather than allowing parents to use their own money through a special tax credit, increasing the credit already available, or encouraging private donations.

“You can ensure education without a direct education entitlement from the government, through the private sector and through credits,” he said. “It’s better to have people drawing on their own money first before they turn for help to the government.”

Bolick strongly disagreed with Schaeffer’s assessment. “The whole purpose of these choice programs is to expand the range of options, not to make private options more like public schools,” he said.

Joy Pullmann ([email protected]) is managing editor of School Reform News.