Gov. Wolf vetoes bill to expand tax credits for private, parochial school scholarships

Where do EITC donations come from? (Graphic by Elizabeth Hardison)

Gov. Tom Wolf on Tuesday vetoed a bill that would nearly double the size of a tax credit program for private and parochial school scholarships.

Wolf told the Capital-Star last week he planned to veto the bill, introduced by House Speaker Mike Turzai, R-Allegheny.

“Education is the cornerstone of democracy, and it is my job as the leader of this commonwealth to ensure fairness and accountability in our classrooms,” Wolf said in a statement. “House Bill 800 would pour funding into a program that lacks these two critical aspects. We have an accountable public education system in place that is underfunded. I have and I will continue to fight to fully fund Pennsylvania’s public schools.”

Pennsylvania’s Educational Improvement Tax Credit program provides up to $110 million per year in tax credits to businesses that donate to K-12 scholarship funds. Under the current program guidelines, a family that makes $100,608 per year can receive an EITC scholarship for their child.

As the Capital-Star previously reported, it’s possible that some expansion of the tax credit program could be included in this year’s budget.

In a statement, Turzai called the idea that public schools are neglected “disingenuous.”

“What we have neglected to provide is adequate support for those families who are looking for an alternative choice,” Turzai said.

“House Bill 800 was a statement of our conviction that parents, grandparents and other guardians know best what the right learning environment is for each of their children,” Turzai continued. “I am immensely disappointed that the governor has left those parents empty-handed through this veto.”

Read Wolf’s full veto message below:

TO THE HONORABLE HOUSE OF REPRESENTATIVES OF THE COMMONWEALTH OF PENNSYLVANIA:

Pursuant to Article IV, Section 15 of the Pennsylvania Constitution, I am returning herewith, without my approval, House Bill 800, Printer’s Number 1676.

The General Assembly and I are working very hard to adequately fund public education in this Commonwealth.  The goal is to have an accountable system in place, and it is my belief that our current system is not funded sufficiently.

This legislation prompts a serious question: why would the Commonwealth allow for the expansion of the Education Investment Tax Credit (EITC) that supports private institutions while our current public-school system remains underfunded?  We have public schools that are structurally deteriorating, contaminated by lead, and staffed by teachers who are not appropriately paid and overstretched in their responsibilities.  Tackling these challenges, and others, should be our collective priority.

The EITC lacks proper accountability and oversight, and little is known about the educational outcomes of students participating in the program due to a reporting loophole in the current law. Even less is known about the scholarship organizations that retain up to twenty percent of each dollar that is supposed to pass through them and are subsidized heavily by taxpayers. Additionally, House Bill 800 seeks to increase the maximum annual household income limit to $95,000, further deserting the program’s original core principle.

I am also deeply concerned by the drastic escalation of the cost of this tax credit program.  Initially, the annual cost of the tax credit program will be enlarged by $100 million.  Clearly, this is a considerable amount of revenue. Then, there are the automatic increases to the total amount of the program.  According to the Department of Revenue, the amount of General Fund revenue that will be lost over the next five years on account of this bill is over $650 million.  This is a staggering sum in a relatively short period of time without a single dedicated revenue source.

Simply stated, the EITC program envisioned by House Bill 800 strays from the original stated intent of the program – to lift people out of poverty – and fails to provide any additional accountability or oversight for the tax dollars being expended.

For the reasons set forth above, I must withhold my signature from House Bill 800, Printer’s Number 1676.

Sincerely,

Tom Wolf

Governor

Previous reporting by Capital-Star reporter Elizabeth Hardison is included in this story.

Associate Editor Sarah Anne Hughes covers the governor and Pennsylvania's agencies. Before joining the Capital-Star, she was the state capitol reporter for Billy Penn and The Incline, and a 2018 corps member for Report for America. She was previously managing editor of Washington City Paper, editor-in-chief of DCist, and a national blogger for The Washington Post.

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