Education Tax Credits Move Forward as Pennsylvania Budget Stalls


Pennsylvania Governor Tom Wolf seems to want to save two tax credit programs that are in jeopardy because of the endangered state budget stalemate. The programs provide $150 million in scholarship money to K-12 students statewide, reports Mary Niederberger of the Pittsburgh Post-Gazette.

The governor asked the state Department of Community and Economic Development (DCED) to send tentative approval letters to the companies that had applied for the Educational Improvement Tax Credit (EITC) and the Opportunity Scholarship Tax Credit (OSTC) programs.

The DCED has been slow to begin the process of approving the applications even though lawmakers are pressing for the approvals. The problem is that the caps on the programs are established in the annual tax code approved by the Legislature, but the tax code is not accepted until the final budget is adopted.

The deadline of December 31 is approaching, the governor has asked for the issuance of the conditional approvals, and the programs will be continued when the 2015 budget and tax code are approved.

Gov. Wolf’s choices are to sign the bill, let the bill pass without his signature, veto it, or sign it in an altered form. A spokesperson for the governor’s office said Wolf directed the tax credit programs to approve the applications using the 2014 caps, meaning $100 million for EITC and $50 million for OSTC.

Since 2001, the EITC has allowed schools to raise general scholarship money by way of business tax credit programs. Accepted in 2012, the OSTC has provided scholarships for students in the state’s lowest-performing attendance areas the ability to transfer to higher-performing schools whether they are private or public.

Officials from the schools that raise money for student scholarships are working on borrowed time to reach their regular donors to encourage them to write their checks before the end of the week. If the companies are to qualify for the tax credit program, they must date their checks in 2015.

Leah Kirstein of WPMT-TV quotes the head of a school :

”If they don’t come by December 31 then, those contributions are lost for 2015. That’d be devastating,” said Aaron Anderson, CEO and Head of Schools for Logos Academy in York.

“There’s a limit to how long this can go on and allowing schools to close, that to me is the height of irresponsibility,” he said.

But breaking news from Martha Woodall, reporting for The Philadelphia Inquirer, came through at 1:08 a.m., Dec. 29, that would make a difference for Pennsylvania students. Woodall said that a state budget had not been approved, but rather that the DCED had been directed to send out tax-credit approval letters allowing corporations to fulfill scholarships for many students in 2016-2017.

Ina Lipman, executive director of the Children’s Scholarship Fund Philadelphia, said that her organization and others were scrambling to get donors to write their checks by Thursday.

The DCED can now award tax credits to companies thanks to the conditional approval, notes Jan Murphy of The Patriot-News. Organizations that benefit from the donations and businesses that receive tax credits are hoping that this experience will move lawmakers to pass legislation that allows the tax credit program to be separate from the budget approval process.

Aaron Troodler, Pennsylvania regional director for the Union of Orthodox Jewish Congregations of America, the nation’s largest Orthodox Jewish umbrella organization, said:

“The lack of clarity that has surrounded the [two tax credit programs] in light of the budget impasse has already unfortunately resulted in many donors giving their funds elsewhere. With just several days left before the New Year and still no state budget in place, businesses will inevitably be wary of writing a check for a program which remains in a period of great uncertainty.”