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Panel recommends extending tax credits for working poor

Despite “no” votes by Sen. Ron Gould and Rep.-elect Jack Harper, a panel of lawmakers recommended extending tax credits that benefit the working poor and charities.

Harper, a conservative Republican from Surprise, said he won’t try to block the measures, which offer business tax credits for employing Temporary Assistance for Needy Family (TANF) recipients and dollar-for-dollar credits on contributions to qualifying charitable organizations.

“I have no bone to pick now,” Harper said, although he added that with a dollar-for-dollar match on charitable contributions, people aren’t really giving anything, and so it isn’t really charity.

Representatives of charitable organizations, however, said the tax credits are allowing their groups to provide clothing, food and medical assistance to vulnerable populations of the state.

“These funds are absolutely critical to our organization, especially during these difficult times,” said Steve Zabilski, executive director of St. Vincent de Paul.

Under the law, individuals and married couples may donate up to $200 and $400, respectively, to charity groups and get a dollar-for-dollar tax credit. The number of people claiming the credit has increased – from fewer than 3,000 in 1998 to more than 45,000 in 2009. The corresponding cost to the general fund has also spiked to nearly $13 million in 2009.

The Joint Legislative Income Tax Credit Review Committee, including Harper, Gould and other members of the Senate and House from both parties, also unanimously recommended against extending four other tax incentives for film productions and for homeowners who install water conservation systems.

Although there was a push to extend the tax credits during the 2010 session for production costs and infrastructure projects for movies, the legislation failed.

“I think that arguments for the motion picture credits are weak,” said Rep. Tom Chabin, a Flagstaff Democrat.

Lawmakers also said too few people are taking advantage of the tax credits for installing a water conservation system.

“I just don’t think people were using (them),” said Sen.-elect Michele Reagan, a Scottsdale Republican.

The Legislature still has to approve the panel’s recommendations next session.

Tax credits that got the panel’s approval:
* Employing National Guard members.
* Employing of Temporary Assistance for Needy Family (TANF) recipients.
* Contributions to qualifying charitable organizations.

Tax credits the panel recommended discontinuing:
* Motion picture production costs.
* Motion picture infrastructure projects.
* Installing a water conservation system.
* Installing water conservation system plumbing stub outs.

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