Bill would fix ‘inequity in educational opportunity,’ said sponsor — but opponents push back

Donors from Big Sky, one of the more affluent communities in Montana, claimed nearly $1.6 million in available public school tax credits in two years to support their local school.

That’s more than half of the total $3 million in credits that have been available for the whole state.

On the other end of the spectrum, a Chinook Elementary donor received just $500, according to the Montana Department of Revenue.

“I believe this creates an inequity of educational opportunity among schools within the state and again, raises the question of fairness,” said Rep. Mark Thane, D-Missoula.

Thursday at a House Taxation committee meeting, Thane said he wanted schools across Montana to be able share the wealth more widely, and he presented House Bill 23, which would amend an existing tax credit program.

The program offers a dollar-for-dollar tax credit for individual and business donors who want to contribute to either public or private education.

Just one proponent testified, and many parents and representatives of private schools spoke out against it.

In 2021, the Montana Legislature increased the limit on single donations for the tax credit from $150 to $200,000, a controversial move but one “school choice” advocates praised. Among other arguments, they said trying to collect enough money for scholarships at $150 a pop was too heavy a lift.

At the time, the legislature also increased the overall cap for total contributions. The cap reached $2 million per program this year, and it will go to $2.4 million next year.

Last year, it was $1 million, and donors from Big Sky School received nearly 70 percent of the total credits.

Thursday, Thane said he didn’t want to debate the program or change the total cap with his bill.

However, he said he wanted to lower the limit on individual contributions to $2,000 — from the current $200,000 — so that more people can participate from more areas of the state.

Right now, for instance, a handful of people who can afford to make a five- or six-figure contribution can jump into the Department of Revenue’s donation portal when it opens and quickly consume the credit for the year. (Living in a place with a great internet connection helps.)

“I believe reducing the credit will enhance participation by individuals across the state,” Thane said.

This year on the public side, $46,000 in credits remain out of the $2 million. None remain on the private side.

But parents and representatives of private schools and a scholarship organization said a better solution to help more children was to raise the overall cap.

They also didn’t want a lower limit on single donations because it could mean less money for students wanting scholarships.

Private scholarship organizations hit the ceiling on contributions both last year and this year, $1 million last year and $2 million this year.

Jen Marble, a mother of four from Billings, stood at the podium with her son Logan, 11, to oppose the bill.

Marble said Logan is a smart, loving, high-functioning autistic boy, but he didn’t fit into the public school “box.”

The only way he could attend private school, though, was with a scholarship, and she fears he and other “superheroes” won’t get the chances they deserve if the bill passes.

Logan received a $3,000 scholarship, and that wasn’t even enough, she said.

“Do you want that on your heart today?” Marble said.

The committee did not take immediate action on the bill, and just one person testified in support.

Erik Burke, with the Montana Federation of Public Employees, said his organization opposed the dramatic increase in the individual contribution last session — a 133,233% increase.

He said the program basically creates a race where wealthy people and businesses compete to direct their dollars to a school program of their choice when the donation portal opens – “This is not a tax incentive. It’s a land rush.”

In exchange, they get a tax credit — but they don’t share the tax burden for roads, public safety and other costs, he said.

“They are directing their taxes to go to other needs unlike any other tax credit that we have in the state of Montana right now,” Burke said.

He said the program creates distortions in the entire tax system, and HB 23 tries to address the problem.

ACE Scholarships and the Montana Family Foundation were a couple of the organizations that opposed the bill.

Jeff Laszloffy, with the Montana Family Foundation, said after being litigated for six years, the program in its current design is relatively new.

The landmark Espinoza v. Montana Department of Revenue case went all the way to the U.S. Supreme Court. In the 5-4 decision in 2020, the high court found a ban on state aid to religious schools didn’t comply with the U.S. Constitution’s protection of the free exercise of religion.

“We ask that you leave the program as it is so that it can prove itself, as it has in so many other states,” Laszloffy said.