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House Republicans advance big increase in private-school tax credit

Max credit goes from $150 to $200,000
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Posted at 6:02 PM, Mar 26, 2021
and last updated 2021-03-26 20:39:50-04

HELENA — Republicans in the Montana House Friday advanced a bill that dramatically increases a state tax credit that finances scholarships for private schools – a credit that led to a landmark U.S. Supreme Court decision last year.

The House voted 64-36 to endorse House Bill 279, which increases the maximum allowable state income-tax credit for donations to “student scholarship organizations” from $150 per person to $200,000. These organizations help pay tuition for students attending private schools in Montana.

The bill also allows donors to take a tax credit for giving to a fund that supports “innovative educational programs” in a public school.

Supporters of the bill said it will help families of modest means send their kids to a private school, if they choose – and, provide some competition for public schools.

“I think it’s time that we rise to the challenge of getting better – as a public school and with our associated private schools,” said Rep. Linda Reksten, R-Polson. “Because we’re all trying to do the same thing. I’m going to support this bill, because it’s good for public education to have some competition.”

All 64 votes for the bill came from Republicans, while all 33 House Democrats and three Republicans voted against it.

Opponents of HB279 said the measure essentially takes money away from public schools and uses public funds to finance private religious schools, some of which have curriculums that denigrate other religions.

“Montanans have a right to send their kids to any private school they wish,” said Rep. Ed Stafman, D-Bozeman. “But they shouldn’t be able to require the rest of us to subsidize their religious choices and institutions.”

A financial analysis of the bill estimated the expanded tax credit will cost the state treasury about $10 million over the next two years, and nearly $15 million following next two years. The bill has an escalator clause that increases the total maximum tax credits for all donors, once 80 percent of that aggregate maximum is met.

The bill sets the initial aggregate limit at $3 million this year.

After Friday’s vote, the House sent the bill to the House Appropriations Committee, which will examine whether HB279 fits into the overall state budget. However, supporters said Republican Gov. Greg Gianforte – a longtime supporter of “school choice” programs – has set aside $3 million a year in his proposed budget to finance the bill.

HB279 expands a tax credit first enacted in 2015. But then-Gov. Steve Bullock’s administration issued a rule that said the tax credit could not be used to benefit religious schools.

A trio of Kalispell parents, aided by a national school-choice group, challenged the rule, taking the case all the way to the U.S. Supreme Court.

The Montana Supreme Court struck down the entire program, saying if the credit benefited religious schools, it violated Montana’s ban on using public funds for religious institutions.

But last year, in a 5-4 landmark decision, the high court reinstated the tax credit, saying Montana, or any state, could not prohibit students at religious schools from benefiting from a program that could be available to students at other schools.

Rep. Seth Berglee, R-Red Lodge, the sponsor of HB279, said the tax credit already has benefited minority families in Montana at a greater proportion, and that he believed most people using the program are not wealthy.

He also disputed the claim that the credit takes money away from public schools. If a child leaves public school to attend a private school, because of the program, the cost to public schools could decline, actually saving the state money, he said.