The Nebraska Legislature is expected to debate LB 295 soon, a bill to help low-income and working-class children receive a private education if it fits their needs, co-sponsor Sen. Lou Ann Linehan said Monday.
The bill would create an income tax credit for contributions to nonprofit scholarship organizations who would turn their revenue into need-based K-12 scholarships for children.
The bill is somewhat similar to the often-proposed and seldom-passed ‘school voucher’ measures, which allows parents to receive a property tax rebate if they send their children to a private school.
Property taxes support public schools but not private.
Linehan, whose district includes the west side of Omaha, said there have been erroneous claims that LB 295 would cost the state more than $10 million in foregone income taxes by the second year of enactment.
She said in reality, the Nebraska Legislature’s Revenue Committee added an amendment (AM 1418) to cap the total annual available tax credit in the state at $2 million in the first year. The cap may increase by 20% in a later year, and only if at least 95% of the credits are used in the prior year, she said.
The total tax credit from the scholarships may never exceed $10 million, assuming the program would someday grow that large, she said.
“The amount of foregone income tax revenue will be far less than many are erroneously claiming,” Linehan said.
Linehan said studies show LB 295 would save the state money, by helping more kids attend private schools, thus lessening the costs of public education.
She said Sen. Jim Smith — the sponsor of the bill — is offering an additional amendment to lower the tax-credit-per-donation from 100% to 75%.
Smith would also prohibit tax-credit eligible scholarship donations until 2020.
His amendment (AM 2071) would have the effect of allowing more private donations to flow to nonprofit scholarship organizations before reaching the $2 million tax credit cap, thus helping save the state even more money, Linehan said.
It also ensures that no one can claim a scholarship tax credit against their income taxes until the year 2021, so there would be no budget impact on the state’s current fiscal status, Linehan said.
“These are good amendments,” she said. ”They eliminate any chance of LB 295 costing the state tens of millions of dollars every year, and they ensure that even more low-income kids can get an education that meets their unique needs.”