Scholarship Tax Credit Bill Struggling in New Mexico

Published May 1, 2009

Despite recent unanimous approval by the New Mexico Senate’s education committee, a bill to provide tax credits for individuals and companies donating to scholarship programs may have difficulty getting to the full legislative body for a vote.

SB 355, the Nonpublic School Scholarship Tax Credit, sponsored by state Sen. Pete Campos (D-Las Vegas), would provide tax credits of up to $500 for individuals and $1,000 for married couples filing jointly, as well as up to $50,000 for corporations that donate to qualified scholarship programs.

The scholarships, to be distributed by recognized nonprofit organizations, could be used at any qualified elementary or secondary school in the state and could cover all or part of the tuition at the qualifying school. The total amount of scholarships distributed would be determined by the scholarship-granting organization.

To be eligible for the scholarships, the bill requires students be in households with incomes low enough to qualify for a reduced-price lunch through the federal school lunch program.

Passage in Doubt

The bill passed the education committee on a 6-0 vote in early March—more easily than expected—but was subsequently referred to the legislative committee, where passage will not be as easy, according to Daniel Ulibarri, executive director of Educate New Mexico, a nonprofit organization that supported the bill.

A sunset clause would limit the tax credit in SB 355 to taxable years between January 1, 2010 and January 1, 2014.

According to the New Mexico Public Education Department Web site, approximately 16,900 students in the state are currently enrolled in accredited nonpublic schools. The Web site does not indicate how many have received a scholarship from a 501(c)3 charitable organization, how many would qualify for a reduced-price lunch through the federal school lunch program, or how many attend nonpublic schools that fill available spaces using a random selection process, as a provision in the bill requires.

Expanding Choice, Saving Money

The proposal is seen as a way to expand school choice in the state, according to the Rio Grande Foundation, an Albuquerque-based research institute.

“Several other states have enacted comparable programs and have seen high levels of giving while maintaining revenue neutrality in their states, thus providing more educational choice while offsetting taxpayer cost,” said Sarah McIntosh, an adjunct scholar with the foundation.

“Tuition tax credits provide increased educational opportunities for those who could not otherwise afford it,” McIntosh added. “Instead of costing the state money, a tuition tax credit program can be revenue-neutral and may eventually save the state money by decreasing the amount of funds it has to provide directly to public schools.

“Nine states have already enacted similar programs which have benefited students, families, and taxpayers. Perhaps New Mexico should do the same,” said McIntosh.

Phil Britt ([email protected]) writes from Illinois.

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New Mexico SB 355: