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House still tinkering with tuition tax-credit bill

Fewer people could qualify for a tuition tax credit, and public schools could benefit from private school scholarship donations under proposals to sweeten an education omnibus bill in the Utah House.

"At this point, it's a matter of algebra," House sponsoring Rep. Steve Urquhart, R-St. George, said Friday of the bill. "We need to find out what variables equal 38 votes," the number needed to pass the bill in the 75-member body.

SB154 aims to focus schools on a "competency-based education," or what students know, instead of how many classes they've taken. It also would revamp public school governance, including letting businesses help choose state school board nominees and cutting red tape for community professionals who want to teach.

The bill also includes a tuition tax credit.

It would give up to $2,132 to low-income private-school parents and those switching from public to private schools. It also would give a dollar-for-dollar tax credit for private-school scholarship fund donations, which must be spent in a year or go back to public schools. Businesses could donate up to 20 percent of their income tax liability to such funds, mainly set up to help low-income families who don't qualify for the full $2,132 credit.

The bill now includes a $97 million price tag, in the form of an income tax increase.

A House committee's attempt to slash the funding to $27 million, to come from increasing vehicle registration and title fees, was refused by the full House this week.

The money, however, isn't the bee in the House's bonnet. It's tuition tax credits, Urquhart said.

So he and SB154's Senate sponsor, Tom Hatch, R-Panguitch, are pitching ways to make the bill more palatable.

Urquhart is drafting a new bill that would limit who could use the credit toward tuition to lower- to middle-income kids. The bill would be funded by a $27 million fee increase.

The income ceilings would be tethered to federal free- and reduced-price school lunch income guidelines.

"We're running numbers to see where the program works," Urquhart said. "I'd love to limit it to low-income, but we need to have a big enough pool of kids" taking the credit, or public schools would take a financial hit.

Under one proposal, those benefiting from the credit could make twice the federal income guidelines, Urquhart said.

Right now, a family of four can earn up to $33,500 a year for their children to qualify for reduced-price school lunch, according to Federal Register numbers supplied by the State Office of Education. To receive free lunch, a family of the same size can earn up to about $23,500.

So, under the one proposal, the income ceiling for a family of four would be between $47,000 and $67,000 a year.

Such limits on the tax credit would dispel the argument that the bill benefits the rich, said Sen. Chris Buttars, the original tuition tax credits bill sponsor.

Hatch, however, would use limits as a last resort. He would prefer diverting 20 percent of private school scholarship fund donations to public schools. Beneficiaries would be the school districts where the student using the credit lives.

Either way, though, "we need to (pass this bill) this year," Hatch said. "There are options we're looking at."

Gov. Mike Leavitt, however, holds the bill's trump card.

Leavitt has said a budget crunch time is bad for talking tuition tax credits, and instead prefers public charter schools to give parents greater school choice. Friday, he said he won't waver even if the bill targets lower-income students.

Though he has promised to veto SB154 if it contained an income tax increase, Leavitt said Friday he's "still thinking through" the idea of juggling a $27 million fee increase to fund the bill.

The new bill, and a House floor debate, is expected as early as Monday.