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STO supporters won big, won twice this week

The Republican-led Legislature has approved a measure to increase the amount of tax credits that individuals can claim in exchange for contributions to groups that distribute private school scholarships.

The bill’s approval yesterday came on the heels of a significant legal victory for supporters of Arizona’s school tuition tax credits. The U.S. Supreme Court on Monday upheld the tax credits program on the grounds that those who challenged it did not have standing to sue.

The Senate approved the measure, HB2581, along party lines in a 21-7 vote. The House passed it last month, 39-21, with Rep. Heather Carter of Phoenix the only Republican to vote against it.

As approved, the bill increases by 50 percent the maximum allowable tax credit individuals can get for school tuition organization (STO) contributions — to $750 from the current $500 for singles, and to $1,500 from $1,000 for married couples.

In addition, the bill also allows businesses that pay a severance tax or luxury tax on liquor products to claim a tax credit for scholarship contributions for low income and disabled students. 

Critics said it is a bad idea to expand the tax credit program when the state is in the middle of an economic recession.

Opponents also disputed assertions that the scholarships will go to financially-challenged students.

“These scholarships are not bringing students to private schools that would not have otherwise been able to afford to do so,” said Senate Minority Leader David Schapira. “This bill just means that the rich kids pay even less.”

But Sen. Ron Gould, R-Lake Havasu City, said he personally knows of students who are not from wealthy families and who rely on the STO scholarships to attend private schools.

Gould said he likes the idea of being able to contribute more for private tuition scholarships.

“That would allow me to donate more money because I don’t want to send money down here,” he said. “I don’t think that we always (make) the best decision with the money that gets here and I’d rather decide where my money goes myself.”

A fiscal note prepared by the Legislature’s budget research arm estimated that the bill would cost the state about $17.2 million in fiscal year 2012. 

That loss, however, may be offset if about 3,300 public school students migrated to private schools, the fiscal analysis said.

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