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One of two education tax credit bills still alive in House

CHARLESTON, W.Va. — The House Finance Committee spent just over two hours hashing over HB 168, the so-called Equal Opportunity Education Scholarship program, and barely passed it, with two Republican members crossing over.

Eric Householder

Shortly after, chairman Eric Householder, R-Berkeley, took up another tax credit bill, HB 167, but apparently sensing party discord, cut off discussion and adjourned the meeting. Bills aren’t really dead until the final gavel falls, but Householder said later that Finance won’t meet again, so it’s mostly dead.

Also failing were bills to reestablish the sales tax holiday, HB 171, and to establish an annual cost of living allowance for retired teachers and support staff, HB 173. Neither of those even got on the agenda.

HB 168 creates a tax credit for any taxpayer who makes a contribution to an eligible scholarship-granting organization. The credit would equal 50 percent of the total amount of the contributions made during a taxable year, up to $1,000 for single individuals; $2,000 for married individuals filing jointly; or $100,000 for any legal business entity. The scholarships would chiefly benefit private school students. Total annual credits are capped at $5 million.

It also creates tax credits for any taxpayer who contributes to an eligible education improvement grant organization or an eligible public school district or foundation. The credit limits are the same, with a separate $5 million aggregate cap for donations in these three areas. No school district would receive more than $100,000.

Doug Skaff

Delegate Doug Skaff, D-Kanawha, noted during questioning that the total $10 million that could be credited would come out of the General Fund and not be available to use elsewhere.

Minority Chair Mick Bates, D-Raleigh, had some problems with unclear definitions of business entities, among other things, and moved to table the bill; that failed in a voice vote.

Scott Jensen, with the school-choice advocacy group American Federation for Children had brought the model bill to the attention of GOP legislators and fielded some questions about the bill.

Eighteen states have similar laws, he said, including neighboring Virginia and Pennsylvania. Florida has the largest program, benefiting more than 100,000 students. West Virginia’s bill was built on the Oklahoma model.

Almost all of the programs expanded over time, he said, as demand for the credits exceeded the caps. He said no states saw any ill effects to their general budgets from the credits.

Daniel Linville

In states that accept donations from businesses and individuals, he said, the vast majority of donations come from individuals.

The West Virginia Center on Budget and Policy opposes the bill and policy analyst Sean O’Leary said the bill offers incentives to leave the public school system and will have a negative impact on the state school aid formula as the money follows the students to private schools.

When asked, he pointed out that families earning up to 300% of federal poverty level can qualify for scholarships. With a state median income of $54,000, it could apply to more than half the state’s population, perhaps as much as 80 percent.

Delegate Larry Rowe, D-Kanawha, had several objections to the bill. One, he asserted that all $10 million in tax credits will go to private schools. As the bill was intended, that’s half true: up to $5 million in credits are for donations to private schools.

The other half is based on a provision that excludes donations to public schools within a 10-mile radius of an eligible private school – which would rule out many schools in Charleston and Morgantown.

However, Jensen said that language was carried over from the Oklahoma bill, where they were trying to help rural public schools, and should be amended out – which is likely to happen on Wednesday.

Delegate Daniel Linville, R-Cabell, supported it, saying, “All we’re doing is incentivizing people to invest in education.”

With GOP Delegates Bill Anderson and Steve Westfall voting no, the roll-call vote reached 11-11, requiring Householder to break the tie to pass it.

Steve Westfall

HB 168 came to the House floor and was read a first time. It will be on second reading and open for amendment on Wednesday.

Some bill opponents pointed out in hallway talk and Twitter posts that the American Federation for Children has ties to U.S. Education Secretary Betsy DeVos, who is backing in Congress the Education Freedom Scholarships bill, which has parallels to HB 168. AFC says on its website, “Education Freedom Scholarships, funded through individual and business contributions to nonprofit Scholarship Granting Organizations, would provide children across the nation with access to schools of their families’ choice and customized educational options tailored to their children’s individual needs.”

With only 30 minutes of meeting time left, the committee took up HB 167, which offers homeschool and private school families tax credits of up to $3,000 per student.

Westfall’s questioning showed concerns that the credit could be carried over and could apply after the student graduates from high school. Others objected that it didn’t apply to public school supply expenses.

Deputy Revenue Secretary Mark Muchow told the members that there are 11.400 students in private schools and another 11,000 in home schools. That means the impact on the state budget could reach $69 million, though $30 million was more realistic given the income levels and tax liabilities of the eligible families. “It would be a pretty pricey program.”


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