Bigger tax credit for school donations zips through Senate

Boldman: ‘This is a tax break for the very wealthy’

By: - April 26, 2021 6:58 pm

Illustration by Getty Images

Montana taxpayers and corporations wanting to make a $200,000 donation for a 100 percent tax credit are closer to being in the clear with the advancement Monday of a “school choice” bill.

House Bill 279, which pushes up the cap on a tax credit for donations to schools from $150 to $200,000, passed 29-21 in the Senate. As amended, the bill heads back to the House, where it earlier passed 62-37.

In introducing the bill, Sen. Dan Salomon, R-Ronan, said the legislation comes out of a Montana case that went to the U.S. Supreme Court, Espinoza v. Department of Revenue.

The state had disallowed a tax credit to go to religious education because the Montana Constitution prohibits public support for religious institutions. But last summer, the U.S. Supreme Court sided with the Espinoza family, which argued the program discriminated against them based on their religion.

Following that decision, Rep. Seth Berglee, R-Joliet, sponsored the bill this session to increase the cap on donations for private school scholarships and for innovative public school programs. Gov. Greg Gianforte’s policy director has advocated for the bill, which is also backed by the Montana Family Foundation.

Salomon said the the average scholarship granted in Montana to private students from a company that gives out those funds is $2,100 for K-8 and $3,200 for 9-12, and an estimated 22 percent of scholarships go to minority students.

Opponents have objected to the significant increase in the cap and the total amount it ends up cutting out of state revenue, up to $1 million for each program the first year and increasing to $2.88 million for each in the fourth year, or an estimated $16 million for both all four years.

Proponents have said it gives a small number of students who don’t fit into public schools an opportunity in private school and helps address Montana’s dropout rate.

Sen. Greg Hertz, R-Polson, said income tax revenue continues to grow in Montana, and legislators who are concerned about tax credits and the budget have an opportunity to trim credits with another bill. Generally, he said HB279 helps students who would like to go to a different school than public school but don’t have the means.

“This is not about dollars going to private schools,” Hertz said. “This is about dollars helping students.”

But Sen. Ellie Boldman, D-Missoula, pushed back against the idea the bill was about helping students. She said corporations, not just individuals, could make that $200,000 contribution, and she didn’t know too many fellow Montanans who could shell out $200,000.

“This is a tax break for the very wealthy,” Boldman said.

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Keila Szpaller
Keila Szpaller

Keila Szpaller is deputy editor of the Daily Montanan and covers education. Before joining States Newsroom Montana, she served as city editor of the Missoulian, the largest news outlet in western Montana.