FOR IMMEDIATE RELEASE
MARCH 20, 2012
Education Tax Credit (School Voucher) Plan Not Revenue Neutral. Actual Cost Indeterminable
SB 372 and HB 1607 establishing a business tax credit funded private school voucher program will be front and center in the Legislature over the next 10 days. There are many problems with this unpopular proposal, but the biggest problem is the cost to the state.
The proposed plan would not be revenue neutral. The actual cost cannot be determined because the plan would put the State's checkbook in the hands of private non-profit groups.
The Department of Education calculations show that the cost of the plan to the state budget would increase yearly in the first three years. In those first years, the cost of the new, smaller proposal would be $2.6 million but it increases each year and would continue to increase each year of the plan. Extending DOE calculations out for 10 years, if the voucher plan grew at the rate provided for in the legislation, the plan could cost the state of New Hampshire as much as $126 million over the first 10 years. Actually, the cost will probably be less than that. However, it is not possible to project the actual cost to the state of New Hampshire over time because the plan puts the state's finances in the hands of private scholarship organizations.
If a public school child gets one of the tax credit funded scholarships, the school would be docked an average of $4,100 in state aid. That would off-set the tax credit and reduce the cost recognized in the state budget. But if the student receiving a scholarship is already in private school, the state would get no repayment. And each year, more scholarships will go to private school students. Eventually, all scholarships could go to private school children if the scholarship organizations chose to do that.
That would probably not happen. But the important word there is "probably." The Legislature would have no way to know, year to year, how many public school and private school scholarships the scholarship organizations would choose to give.
After the first year, the program would not be revenue neutral under any circumstance but how deep a hole it would dig would be up to the scholarship organizations. The Legislature would never know in advance.