In another blow to fiscal responsibility, four bills have successfully passed out of the House Ways and Means Committee in recent weeks, which would expand the private school tax-credit program if adopted. As noted by the Joint Legislative Budget Committee (JLBC) in respective fiscal notes provided to the committee, three of these bills would increase private school tax-credit contributions allowing an approximate loss of $60 million to Arizona’s general fund; and would require nearly 8,000 students to transfer from a public school to a private school in order for these programs to be, at best, budget neutral.
- HB 2496 would extend the contribution deadline for tax-credits to school tuition organizations (STOs) from December 31 to April 15.
- HB 2664 would increase the contribution maximums by 50%–from $500 to $750 for individual tax filers, and from $1,000 to $1,500 for those filing a joint return. The JLBC notes that ”the Arizona Department of Revenue currently estimates the current tax liability of $1,181 per individual tax return filed for 2010.”
- HB 2660 would triple the contribution maximums–from $500 to $1,500 for individual tax filers, and from $1,000 to $3,000 for those filing a joint return. Again, the JLBC notes that ”the Arizona Department of Revenue currently estimates the current tax liability of $1,181 per individual tax return filed for 2010.”
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The JLBC fiscal note provided to the committee for HB 2496 estimates the following impact to the state’s general fund (emphasis added):
The JLBC Staff estimates that the bill would decrease state General Fund revenues by approximately $(3.6) million in FY 2011. If the bill results in the diversion of students from public to private schools, there would be an offsetting state savings from lower state K-12 costs. Under the $(3.6) million estimate, approximately 670 students would have to be diverted from public schools in FY 2011 in order for the bill to have no net state fiscal impact for that year. A diversion of this magnitude seems plausible.
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House Ways & Means Committee vote detail for HB 2496 from 2/15/2010:
| Member Name | Vote | Member Name | Vote | Member Name | Vote |
| Andy Biggs | Y | Jack A. Brown | N | Tom Chabin | AB |
| Steve Farley | N | Michele Reagan | Y | Steven B. Yarbrough | AB |
| Debbie Lesko | Y | Rick Murphy | Y |
.*Note: Y=Yes, N=No, AB=Absent
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.The JLBC fiscal note provided to the committee on HB 2664 estimates the following impact to the state’s general fund (emphasis added):
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The bill is estimated to decrease state General Fund revenues by approximately $(15.9) million in FY 2011. If the bill results in the diversion of students from public to private schools, there would be an offsetting state savings from lower state K-12 costs. Under the $(15.9) million estimate, approximately 2,900 students would have to be diverted from public schools in FY 2011 in order for the bill to have no net state fiscal impact for that year.
The Department of Revenue (DOR) estimates that the bill would reduce state General Fund revenues by roughly $30 million. It also indicates that it would need an additional FTE Position in order to administer new regulations established by the bill.
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House Ways & Means Committee vote detail for HB 2664 from 2/8/2010:
| Member Name | Vote | Member Name | Vote | Member Name | Vote |
| Andy Biggs | Y | Jack A. Brown | N | Tom Chabin | N |
| Steve Farley | N | Michele Reagan | AB | Steven B. Yarbrough | Y |
| Debbie Lesko | Y | Rick Murphy | Y |
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The JLBC fiscal note provided to the committee on HB 2660 estimates the following impact to the state’s general fund (emphasis added):
The bill is estimated to decrease state General Fund revenues by approximately $(25.7) million in FY 2011. If the bill results in the diversion of students from public to private schools, there would be an offsetting state savings from lower state K-12 costs. Under the $(25.7) million estimate, approximately 4,750 students would have to be diverted from public schools in FY 2011 in order for the bill to have no net state fiscal impact for that year.
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House Ways & Means Committee vote detail for HB 2660 from 2/15/2010:
| Member Name | Vote | Member Name | Vote | Member Name | Vote |
| Andy Biggs | Y | Jack A. Brown | N | Tom Chabin | AB |
| Steve Farley | N | Michele Reagan | AB | Steven B. Yarbrough | AB |
| Debbie Lesko | Y | Rick Murphy | Y |
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The committee also passed HB 2663, which makes a number of changes to regulations for School Tuition Organizations (STOs) that accept corporate income tax-credits. This legislation is based on the recommendation from the Ad Hoc Committee on Private School Tuition Tax-Credit Review that met in the fall. Specifically, the Ad Hoc Committee was formed as a response to growing concerns after two Arizona newspapers ran an investigative series on the state’s private school tax-credit program: Rigged Privilege, by the East Valley Tribune and The Tuition Tax Credit: Tuition-aid benefits wealthy families, raises worry, by the Arizona Republic.
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While these changes are strictly regulatory in nature, the JLBC fiscal note provided to the committee on HB 2663 states that there will be an impact to the Arizona Department of Revenue (emphasis added):
The bill is not expected to change the level of STO donations. As a result, it would not be expected to affect the current level of STO tax credits.
The Department of Revenue (DOR) estimates that the bill would require an additional FTE Position to administer, which would cost them approximately $75,000.
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House Ways & Means Committee vote detail for HB 2663 from:
| Member Name | Vote | Member Name | Vote | Member Name | Vote |
| Andy Biggs | Y | Jack A. Brown | N | Tom Chabin | AB |
| Steve Farley | N | Michele Reagan | Y | Steven B. Yarbrough | AB |
| Debbie Lesko | Y | Rick Murphy | Y |
Tags: Andy Biggs, Arizona budget, Arizona budget deficit, arizona education, Arizona education budget, Arizona education funding, Arizona Legislature, Arizona private schools, Arizona schools, Arizona tax credit, Arizona tuition, AZ budget, Debbie Lesko, education, Jack Brown, k-12 education funding, Kirk Adams, Michele Reagan, Rick Murphy, School Tuition Organization, Steve Farley, Steve Yarbrough, Steven Yarbrough, Tom Chabin, tuition tax credit
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