Skip to content

Voucher Champs Take Note: Illinois’ $75M Tax Credit Offset Funding Does Not Exist.

September 2, 2017

On August 31, 2017, Illinois Governor Bruce Rauner signed into law a bill that includes a $75-million provision for “tax credit scholarships,” in this case, the notable tax credit of 75 cents on the dollar for money donated by individuals or companies to enable low-income students to attend private schools. Tax credit scholarships are a back-door means of enacting school vouchers since the donor is the middleman sending the money to the school and, in return, receiving a tax credit from the state. This arrangement allows the state to avoid directly delivering the money to the private schools.

However, the state must still account for the loss of future revenue brought about by the credit.

On September 01, 2017, Chicago Tribune reporter, Kristen McQueary, published an opinion piece rebuking those opposed to the tax credit. She apparently assumes that since the program now exists on the books, it will automatically be successful. Her criticism includes the following:

The only way to explain headstrong resistance to Illinois’ new school choice program is this: Most people who oppose it don’t understand it.

They haven’t done the research on scholarship tax credits, or only selectively.

On August 13, 2015, McQueary caught some heat for “envying” Hurricane Katrina and “wishing for a storm in Chicago.” She quickly produced this explanation/apology on August 14, 2017. Here’s an excerpt:

When I wrote a column Thursday about Hurricane Katrina, and how I wished Chicago could face a similar storm — to be jolted in a new direction — I offended the entire city of New Orleans and beyond. I used the hurricane as a metaphor for the urgent and dramatic change needed in Chicago: at City Hall, at the Chicago City Council, at Chicago Public Schools. Our school system is about to go bankrupt, and the city’s pension costs and other massive debts have squeezed out money for basic services. …

Chicago needs urgent, revolutionary change. We can’t keep borrowing our way into bankruptcy.

Before McQueary knocks voucher opponents for not doing their research (none of which she provides in her op-ed, by the way), she should realize that Rauner’s backdoor voucher program is not yet offset-funded. From the August 30, 2017, Bellevue News-Democrat:

State leaders want to offer $75 million in tax credits for those donors, but they don’t currently have that money in the budget. Gov. Bruce Rauner said Wednesday they’ll need reforms to find a funding source. …

During his stop at Mater Dei Catholic High School in Breese, Rauner said the state doesn’t currently have $75 million for tax credits.

“Here’s our biggest challenge: We still have an unbalanced budget,” Rauner said. “We’re still growing our unpaid bills. We are still in deficit even after a massive tax hike, which I vetoed because we haven’t really shrunk the bureaucracy. It takes legislative assistance to shrink the bureaucracy. So far, the General Assembly hasn’t supported me in those changes, so we’re just gonna keep working and try to do it.

“We can find the money if we prioritize education and not some of the other, more wasteful spending.”

Sooo. Rauner is going to “find the money” for that $75M tax credit program, an aim that is foolish on its face since the agreement is one which, to use McQueary’s own words, promises a “generous income tax break from the state” despite that same state “still growing our unpaid bills” according to Rauner.

Offering a tax credit involves foregoing revenue, and Illinois must account for that $75-million future revenue loss.

It seems a stretch to believe that Rauner’s “we can find the money” is anything close to a reality given Illinois’ phenomenal fiscal crisis. From CNN Money on June 29, 2017:

Illinois is on the verge of becoming America’s first state with a junk credit rating. …

After decades of historic mismanagement, Illinois is now grappling with $15 billion of unpaid bills and an unthinkable quarter-trillion dollars owed to public employees when they retire.

The budget crisis has forced Illinois to jack up property taxes so high that people are leaving in droves. Illinois may soon have to take the unprecedented step of cutting off sales of lottery tickets because the state won’t be able to pay winners. …

… the fiscal problems go back at least to the 1980s and involve politicians from both parties. …

Hampton said Illinois treated the pension fund as a “financial cushion” that could be relied on to provide fiscal relief. He also pointed to a tendency to delay paying bills and chronically underestimate spending needs.

Giving away $75 million in nonexistent state revenue in a state that could well be the first to earn a junk credit rating is fiscal lunacy.

Note to McQueary:

Perhaps the fact that money to offset $75M in future tax credits did not exist at signing might account for at least a smidge of that “headstrong resistance to Illinois’ new school choice program.”

A $75M tax credit is a state expense, a $75M loss of future revenue. A fiscally-responsible state government would have an answer for where that $75M offset in funding would come from. That is not the case here.

Just a done-some-research thought.

shrug

____________________________________________________________________________________________

Want to read about the history of charter schools and vouchers?

School Choice: The End of Public Education? 

school choice cover  (Click image to enlarge)

Schneider is a southern Louisiana native, career teacher, trained researcher, and author of two other books: A Chronicle of Echoes: Who’s Who In the Implosion of American Public Education and Common Core Dilemma: Who Owns Our Schools?. You should buy these books. They’re great. No, really.

both books

Don’t care to buy from Amazon? Purchase my books from Powell’s City of Books instead.

2 Comments
  1. speduktr permalink

    Thanks, Mercedes, for your cogent rebuttal. I’m sure Rauner will find some public education money to fund his wet dream. After all, it’s all for education, right?

  2. Laura H. Chapman permalink

    Not in Illinois, but raiding and underfunding pensions of public employees in order to give dubious tax breaks to business is widespread.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: