Projo Politics Blog

PROVIDENCE, R.I. -- Governor Carcieri is marking what is known as "Catholic School Day'' at the State House by promising to revoke a two-day-old budget proposal that threatens a state tax credit that rewards businesses that donate scholarship money to private and parochial schools.

The credit of up to $100,000 per business was adopted by state lawmakers in 2006, at Carcieri's urging, after an aggressive campaign by the Roman Catholic Diocese of Providence.

The problem: the tax overhaul that Republican Carcieri proposed on Tuesday would wipe out all but four of the many existing tax credits that can now be used to reduce personal income tax liability in Rhode Island, including this school-choice scholarship credit.

A more widely used tax credit, for mortgage interest, is also targeted for elimination. For personal income taxpayers, these tax credits would be replaced by a new standard deduction that, when coupled with proposed new tax rates, would cut taxes for an estimated 309,878 Rhode Island tax filers. The proposal would raise taxes by an average of $1,261 for another 110,179 filers, according to the governor's tax advisory panel.

But a group calling itself the Rhode Island Scholarship Alliance -- and its sister organization, Rhode Island Scholarship Advocates -- mounted a campaign in recent days to save the school-choice tax credit. It included this email blast from its lobbying firm, Advocacy Solutions, after the governor's tax advisory panel first came out with its recommendations earlier this month.

"Tell Governor Carcieri to Save the Rhode Island Scholarship Tax Credit! In its two years of existence, the Rhode Island Scholarship Tax Credit has been a tremendous success, providing $2 million in scholarships to more than 300 economically disadvantaged children so that they can afford tuition at a school of their choice. ... Thanks to the generosity of local businesses like Bank of America, Citizens, Amica, and others, hundreds of needy families now have a real choice in where they can afford to send their children to school.

"Unfortunately, Governor Carcieri's Strategic Tax Policy Workgroup is recommending the elimination of the Rhode Island Scholarship Tax Credit. This recommendation is extremely shortsighted. ... This will end up costing Rhode Island taxpayers more than the $1 million cost of the existing tax credit program.''

Lobbyist Frank McMahon said the governor's office seemed unaware that the budget he proposed would end the credit for businesses organized in such a way that their owners pay personal, instead of corporate income taxes. In an interview today, he said the governor's policy director Tim Costa assured him in the last two days that the move was inadvertent and would be corrected.

In a series of emails over the last two days, Carcieri spokeswoman Amy Kempe confirmed that the administration is drafting an amendment to the 2010 budget proposal unveiled on Tuesday to ensure that companies do not lose this deduction.

Asked why he was making an exception for this tax credit, she said: "The Governor is very supportive of this tax credit as it does help nonpublic schools.''

 Tags  budget business private and parochial schools Rhode Island scholarships school choice tax credit

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