NEWS: Arizona Governor Vetoes Scholarship Tax Credit Increase

From The Arizona Daily Star:

PHOENIX – Saying it “unbalances the budget,” Gov. Jan Brewer on Tuesday vetoed a bid to sharply increase the amount of money individuals and corporations could redirect from paying the state to go instead to help students attend private and parochial schools.

Existing law gives individuals a dollar-for-dollar credit on their state income tax, up to $500, for contributions to organizations that provide scholarships to pay the tuition and fees of students at alternatives to public schools, and double that for couples. Last year the credits totaled $43.2 million.

This legislation would have increased the maximum credits to $750 and $1,000, respectively.

Brewer said the move comes just as the state carefully balanced its budget for the coming fiscal year, making “difficult and far-reaching decisions” she said will promote the state’s long term financial health. “Undoing that effort and immediately placing fiscal year 2012 into a deficit is inappropriate.”

But the governor said that was only part of the problem.

Another provision of the bill would have repealed the $15 million total cap on how much all corporations in Arizona can together take in tax credits to help these students. “Aggregate caps on tax credits are critical to the state’s ability to budget,” Brewer said.

The governor also found fault with changes that let mining companies avoid paying severance taxes. She said that could have a particularly harsh impact on Graham and Greenlee counties, which are heavily dependent on these taxes.

Finally, Brewer balked at creating an entirely new credit for liquor, beer and wine wholesalers.

Overall, the Department of Revenue figured the legislation would have reduced state income tax collections by $25 million, with another $29 million lost to all levels of government from the severance tax provision.

Proponents of the tax credits have consistently argued they save money for the state.

They say it provides opportunities for students who otherwise would be unable to afford the tuition and fees at private schools. They said the amount of money lost in taxes is less than what the state would pay in aid to public schools for the same number of students.

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