HCS HB 345 -- TAX CREDITS FOR DONATIONS TO EDUCATIONAL CHARITIES

SPONSOR:  Cooper, 120 (Cunningham, 86)

COMMITTEE ACTION:  Voted "do pass" by the Committee on Tax Policy
by a vote of 9 to 8.

This substitute authorizes an income tax, corporation franchise
tax, or express company tax credit of up to 50% of any
contribution of $200 or more to a certified nonprofit educational
assistance organization.

The cumulative amount of tax credits statewide are capped at $5
million per year.  Tax credits taken cannot exceed the taxpayer's
liability but may be carried forward up to four years.  Any
contribution already claimed on the taxpayer's federal income tax
return must be added back in the computation of Missouri income
taxes.

The Department of Economic Development will administer the tax
credit program.  The department will select designated nonprofit
oversight organizations to assist in the administration of the
tax credit program and in the selection of certified nonprofit
educational assistance organizations that meet the criteria
provided in the substitute.

The substitute also requires the eligible pupil count in the
computation of state aid to school districts to be adjusted so
that no school district receives aid for any student that
transfers as the result of using the proceeds of an educational
scholarship.  The department will determine the savings resulting
from the reduction in the eligible pupil aid in relationship to
the amount of tax credits issued and distribute the savings to
public school districts in proportion to the reduction in state
aid lost as the result of student transfers.

The tax credit program will be considered non-governmental
funding and will not be construed to be a public appropriation or
the providing of public assistance to any school.

FISCAL NOTE:  Estimated Net Cost to General Revenue Fund of
$109,529 to Unknown in FY 2004, $65,198 to Unknown in FY 2005,
and $66,889 to Unknown in FY 2006.  For FY 2004, a loss of income
to the General Revenue Fund of up to $5 million could result if
taxpayers take advantage of the new program by making donations
from August 28, 2003, through December 31, 2003.  The fiscal
impact of the tax credits could be divided between the General
Revenue Fund and the County Foreign Insurance Fund (which
ultimately goes to local school districts) if some of the tax
credits are utilized against insurance premium taxes.

PROPONENTS:  Supporters say that the bill will allow students to
transfer to private schools from problem public school districts
and obtain a quality education.  The bill is also designed to be
revenue neutral and not affect state funds.  Every child deserves
the best education available, and the bill will allow the child
and the parents of the child to select the best educational
opportunity available to accomplish this.

Testifying for the bill were Representative Cunningham (86);
Missouri Economic Development Council District 5; Lord's Light
Scholarship Program; Johanna Roy; Marty Angell; Citizens for
Educational Freedom; Missouri Catholic Conference; and
Missourians for Private Education.

OPPONENTS:  Those who oppose the bill say that it lacks
accountability and fairness.  It may not be appropriate for the
Department of Economic Development to handle the program.  Public
schools could lose additional funding during a time when funding
is already being cut.

Testifying against the bill were Missouri National Education
Association; and American Federation of Teachers.

Bill Tucker, Deputy Director of Research

Missouri House of Representatives
Last Updated July 25, 2003 at 10:11 am