Maryland Considers Tax Credit Bill

Published May 1, 2009

School choice supporters in Maryland have built broad support for tax credit legislation that offers benefits to students who leave and those who remain in the public education system.

A coalition of businesses, nonprofits, and religious organizations called the BOAST Alliance (Building Opportunities for All Students and Teachers) is promoting a corporate educational tax credit program.

The bill, known in the two legislative bodies as HB 1259 and SB 715, would provide a 75 percent tax credit on corporate donations to scholarship organizations supporting private school tuition or to educational enrichment programs—such as Boys and Girls Clubs and Junior Achievement—that benefit public school students.

The proposal is closely modeled on Pennsylvania’s Educational Improvement Tax Credit, which has raised more than $350 million for state-based scholarships since it was enacted in 2001. The proposed program would give first scholarship priority to low-income students eligible for the federal school lunch program.

“We want this to be about building up all of our state’s students and their teachers,” said Mary Sullivan, spokeswoman for the Maryland Catholic Conference, a BOAST Alliance partner.

Improving Chances

To alleviate concerns caused by the state’s current budget shortage, the legislation authorizes no funding for the program in 2009 but leaves the door open for Maryland lawmakers to do so in future years.

At press time, committees in both houses had heard testimony for the proposal, but neither the House nor the Senate had taken action. A similar version of the bill passed the state Senate in 2008, the first success in three consecutive annual attempts.

“That in itself is a monumental achievement, given the makeup of the state legislature,” said Christopher Summers, president of the Maryland Institute for Public Policy. “We hope this time it goes a little bit further.”

Sullivan agrees the opportunity is ripe. “The bill probably has its best chances of passage in both houses this year,” she said.

Arguing Necessity

But others continue to oppose the legislation, contending it will not bring promised reform.

“The problems which voucher or scholarship programs seek to address are not solved by moving children from public to private schools,” Maryland Parent-Teacher Association Vice President Laura Carr told the state House Ways and Means Committee at a March 10 hearing.

Carr argued the educational enrichment portion of the tax credit is unnecessary because many of the eligible programs already receive funding through the state education department.

Sullivan notes each student leaving the public school system will save money for the state’s education operations because the receiving school’s tuition must be less than state per-pupil costs.

“The support and partnerships we’re looking for are very modest in comparison [with the savings in state spending],” Sullivan said.

Catholic Challenges

Catholic schools in Maryland currently educate 57,000 students, more than half of them in the Baltimore Diocese. But the diocese lost 5 percent of its total enrollment last year, and two southern Maryland schools plan to close their doors in 2009. Costs to maintain school facilities are on the rise.

“The only way to pay for that is really through tuition, and keeping our academic credentials up,” said Sullivan.

But the PTA said the tax credit proposal is the wrong medicine.

“While we have sympathy for the plight of the private schools, which are facing the same economic challenges as the rest of us, we do not feel that this program is the appropriate method to address their needs,” Carr said.

Shifting Opinion

Summers said even though the phrase “school choice” can prove to be “toxic” at the state legislature, popular opinion in Maryland is slowly shifting toward the policy.

“We’re starting to see more individuals receptive to our ideas than we were five years ago,” Summers said. In addition, he notes, current fiscal shortages and Pennsylvania’s success with the tax credit have created new opportunities for expansion.

“Fiscal deficits get people coming to the table listening to you, where before they wouldn’t give you the time of day,” said Summers.

Ben DeGrow ([email protected]) is a policy analyst for the Independence Institute, a free-market think tank in Golden, Colorado.