Tax credit proposed for scholarship donations
Members of the Revenue Committee heard testimony March 4 on a bill that would encourage donations to a private school scholarship program.
LB26, introduced by Omaha Sen. Bob Krist, would provide a nonrefundable income tax credit for contributions to a qualified scholarship-granting organization that provides scholarships to attend private schools. Krist said it is time to expand learning opportunities for Nebraska families.
“This would give more of Nebraska’s low- and middle-income families the ability to choose the educational institution that is best for their children,” he said. “And by doing so, [Nebraska] would join 43 other states and Washington, D.C. that offer the possibility of school choice for their children.”
To qualify for a scholarship, a student must be a Nebraska resident and have a household gross income at least two times the income standard used to qualify for reduced-price meals.
The income tax credit would be 60 percent of the total contribution made by an individual, estate, trust or corporation. The credit could not exceed the taxpayer’s income liability, however any amount over the limitation could be carried forward for up to five years.
The aggregate amount of tax credits could not exceed $10 million in 2016. Starting in 2017, the limit would be the same as the previous year. However, if the aggregate amount of tax credits in the previous year is at least 90 percent of the limit, the limit in the current year would increase by 25 percent.
Scott Ernstmeyer, executive director of Lincoln Lutheran Schools, spoke in favor of the bill, saying that school funding is just as much of a challenge for private schools as it is for public schools.
“In the last few years we have seen a huge increase in costs, but the church has been unable to keep up,” he said. “We have an opportunity to serve students in local communities, alleviate some of the strains on public schools and ease some of the financial burden that has been shifted to our parents.”
Roger Breed, executive director of the Greater Nebraska Schools Association, opposed the bill. He said the state’s obligation is very clearly to the funding of public schools.
“For a variety of reasons, some families choose to send their children to schools other than public schools. Historically, even with all of these choices, 90 percent of school-aged children attend their public schools,” Breed said. “[LB26] would in essence take funds that have been collected to fulfill a public obligation and be used, instead, to fund private entities.”
The committee took no immediate action on the bill.
