A House panel refused Monday to limit who can get scholarships for private schools that are paid for with money that otherwise would go to the state.
On a party-line vote, Republicans who control the Ways and Means Committee said they see no reason to limit these scholarships to families that meet certain income criteria. Rep. Rick Murphy, R-Glendale, said the Legislature should not be deciding who benefits and who does not.
And the panel also refused to preclude parents who send their children to these schools from getting their friends and relatives to make donations to scholarship organizations with a "recommendation" that the cash to go to a specific child. More to the point, the organizations that get the cash are free to honor that recommendation.
Both issues are significant because it isn't a simple matter of people giving away their own money.
Under the law first approved in 1997, donors get a dollar-for-dollar credit on their state income taxes for what they provide to the scholarship organizations. That means every dollar that goes to sending a youngster to a private school is one less dollar going into the state treasury.
There are a lot of dollars involved: In the most recent tax year, Arizonans diverted more than $55 million.
While defeating the two changes offered by Rep. Tom Chabin, D-Flagstaff, the panel actually agreed to expand the law to allow donors to get an even larger credit. Under HB 2664 individuals would be permitted to reduce their state taxes by $750 each year, up from $500; the figure for couples filing jointly is double.
Chabin said all these changes will do is take money away from public schools and increase the size of the state deficit. But Murphy said there is "plenty of data" to show that the reverse is true.
He said that $55 million diverted in tax credits is far less than what it costs to educate a child in public schools. Murphy said that if scholarships help students move from a public school to a private school, that actually saves money for the state.
Chabin, however, said that assumes all of the youngsters in those private and parochial schools would otherwise be in public schools.
"Very wealthy people who would send their children to private schools, no matter what, are getting the benefit of tax credits," he said. Chabin said the law - and in particular the lack of any cap on the income of recipient families - simply allows them to defray some of what they would pay in Arizona taxes.
That also goes to the issue of the "recommendations."