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Corporations get a pass as state ducks tax credit review

BY BETH LEWIS and KAREN MCLAUGHLIN GSN Guest Columnists

For the sixth time in seven years, Arizonans have been denied accountability for hundreds of millions of dollars in tax credits. And this time, that means a decade with no transparency for corporate donations that bankroll private school vouchers.

State law requires the Joint Individual Income Tax Credit Review Committee to review each of the 54 state tax credits on a rotating schedule which results in each tax credit coming up for review every five years. That committee has met only once as required since 2015.

The committee is charged with evaluating the credits and determining whether they are delivering on the promised benefit to the state and submit a report to the full legislature by December 15 on whether each of the tax credits reviewed should be retained, repealed, or amended. One of the tax credits they failed to review in 2021 was the Corporate Student Tuition Organization (Corporate STO) Tax Credit.

Because the committee also did not meet in 2016, the previous time corporate STO tax credits were scheduled to be reviewed, that means a decade has passed without properly reviewing these tax credits.

Tax credits are dollar-for-dollar reductions in tax liability. School Tuition Organizations are private companies that any individual can set up to process tax credits for private school “scholarships” (aka, vouchers).

For the Corporate STO, businesses can receive a statewide total of up to $142.1 million in tax credits, with that amount increasing every year, to provide tuition “scholarships” (vouchers) for private (including religious) schools.

There are some slight limitations on Corporate STO vouchers, but not many. The Low Income Corporate STO can fund vouchers for “low-income” students (a family of 4 making less than $107,000 per year qualifies) who are switching from public schools, members of military families, or enrolling in kindergarten.

The hundreds of millions of dollars taken in by STOs ultimately diverts from the State’s General Fund, which is the primary source of funding for our public schools.

While most state spending on education is closely scrutinized and negotiated each year through the budget process, the Corporate STO tax credit, like most tax credits in Arizona, remains on the books indefinitely – with no review process, no sunset, and no measurement of whether they meet the return on investment that voucher proponents promise.

In 2021 alone, nearly $96 million in Low Income STO tax credits were used by corporations and insurers. And, given that the Review Committee did not meet this year, nor five years ago, this means that ten years of Corporate STO Tax Credits – more than $200 million – had zero accountability for legislators and the public.

And despite recommendations from JLBC (the Legislature’s own nonpartisan budget scorekeeper) to track the percentage of STOs retained for administrative costs and the amount of STO scholarship money spent per student, legislators choose to fly blind and allow these tax credits to continue – even as Arizona’s per pupil public education funding remains third lowest (48th) in the U.S.

It’s time for the Joint Individual Income Tax Credit Review Committee to follow the law and do its job. STO vouchers drain desperately needed resources away from Arizona’s chronically underfunded public schools. Vouchers have not been shown to improve academic outcomes for students, and taxpayers deserve transparency and accountability.

Tax credits reduced state revenues by $818 million in fiscal year 2020 and have been growing fast. The committee’s failure to meet means lawmakers have virtually no accountability or control over tax credits once they are in law, and taxpayers have no way of knowing if we are getting the promised return on investment. Beth Lewis is executive director of Save Our Schools and Karen McLaughlin is director of budget and tax policy for the Arizona Center of Economic Progress. Information: sosarizona. com and azeconcenter.org.

Infrastructure growth critical to Maricopa County

BY JACK SELLERS GSN Guest Writer

As we enter year three of the COVID-19 crisis, I can’t help but think about what we’ve lost.

The loss of life, the loss of livelihoods. Those have been devastating. And we must do everything we can to limit the health and financial impacts of the pandemic in the coming months.

But I also think about the loss of time.

Elected leaders and policy makers have focused so much on the here and now that longterm planning has been largely neglected.

There can be no more delays.

It’s time to get to work on assuring a prosperous future for our region.

So, what does that mean?

Above all, we need to invest in critical infrastructure and technology that will make us attractive to individuals and businesses for the next 20 years.

I’ve been saying for years that we must craft a regional transportation plan to replace Prop 400. It needs to assure regional equity and flexibility, and it needs to be something voters across the County can support.

I’m grateful we have a governor who understands the important role infrastructure plays in our economic future. I know there are leaders in cities and towns across Maricopa County who understand this, too.

But I also know what the political environment is like right now. I know that things that used to be non-partisan are now viewed through the lens of Republicans and Democrats, good and evil, winning and losing.

We cannot let politics derail progress. Investments in infrastructure and technology are just good basic government. They should be non-partisan.

Even Congress seems to be getting the message. The federal infrastructure bill passed by both chambers and signed by the President will be good for Maricopa County. I’m confident those dollars can be used to support worthwhile projects.

But to make the most out of taxpayer dollars, we need consensus about our goals. And we need to think through some key questions like: • What projects or investments are going to be needed to maintain or improve our high quality of life? • What framework will best enable the efficient movement of commerce and how do we ensure continuity as transit crosses city or county boundaries? • How will we account for and take advantage of the possibility of autonomous delivery and passenger drones? • What place does fixed rail have in our transportation future?

Crafting and getting voter approval for a new regional transportation plan is probably my biggest priority moving forward. But it’s not my only focus. Infrastructure means nothing without people.

Right now, we are the #1 ranked county for attracting skilled workers. If we want to retain that distinction, investing in our education system needs to be a priority. Again, politics shouldn’t play a role here. We don’t need to pit one type of school against another. Parents should have many good options about where to send their kids. Our universities and community colleges ought to have our full support in attracting the workforce of the future.

It’s no accident Maricopa County has been the fastest-growing county in the United States for the past several years. Leaders of the past made tough decisions and smart investments that paved the way for individuals, families, and businesses to thrive here.

Now it’s our turn.

Let’s get to work. Jack Sellers is a member of the Maricopa County Board of Supervisors and a former Chandler City Council member.