HB2146 - 451R - House Bill Summary

House of Representatives

HB 2146

education tax credits; repeal

Sponsors: Rep. May

X	Committee on Ways and Means
	Caucus and COW	This bill as introduced contains *a PROP 108 clause.*
	As Passed the House	This bill as introduced contains *a PROP 108 clause.*

HB 2146 repeals the tax credits for donations to private school tuition organizations (STO) and donations to public schools for extracurricular activities. This bill has a proposed strike-everything amendment relating to accountability measures for STO’s and reporting requirements for both public schools and STO’s.

History

In 1997 the Legislature enacted an individual income tax credit for fees paid to a public school for extracurricular activities and an individual income tax credit for voluntary contributions to a school tuition organization (Laws 1997, Ch. 48). The credit took effect beginning in tax year 1998. Originally, the public school fees credit was limited to $200 and the STO credit was limited to $500. In 2000, the Legislature increased these amounts for those individuals who file as “married filing joint” on their income tax returns. Beginning with the 2001 tax year, married filing joint will be allowed a credit for public school donations up to $250 and up to $625 for donations to a STO.

Provisions

· Repeals the individual income tax credits for public school donations for extracurricular activities.

· Repeals the individual income tax credits for donations to a STO’s.

· Contains a Prop 108 clause that requires a two-thirds vote for enactment.

· Makes conforming changes.

Provisions for the strike-everything amendment

· Provides requirements for STO’s on how tuition grants or scholarships must be awarded to students. Specifically requires any STO that receives donations that are eligible for state tax

credits to:

1. Award 50% of their scholarships or grants to students who are transferring from a public school at the time of their initial award of the scholarship.

2. Award 50% of their scholarships or grants to low-income students who would qualify for a free or reduced lunch if they were attending a public school.

3. Allow students to use the scholarship or grant for any private school of their choice.

4. Limit scholarships or grants to no more than 90% of the state base support level for public school students.

· A person who claims the credit for a donation to a STO can not designate that their donation is for the benefit of any specific student.

· Provides reporting requirements for both public schools and STO’s that receive donations that are eligible for tax credits. Public schools and STO’s must report the total amount of donations to DOR on or before March 1 each year. Failure to report will result in the forfeiture of 50% of their donations. If money is forfeited to DOR, the money will be deposited in the state general fund.

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· 44th Legislature