Who Benefits from Cuomo's Education Tax Credit Plan

Gov. Cuomo's tax credit plan would fund scholarships that help families pay for religious and independent schools.

Tax credits are different from deductions. Currently, a wealthy family that donates $1 million to charity could take a maximum deduction of $22,000 on their state taxes. Tax credits save a lot more money than that.

Under Gov. Andrew Cuomo's plan, if the same family gave their $1 million to education scholarships they'd save $750,000. That's because they would get credit for 75 percent of their donation, with the remainder going to the state.

Tax credits are used for all kinds of businesses, from the film industry to beer, on the theory that they generate economic development. There are also tax credits targeted specifically to poor people with children to help put more money in their pockets. But some fiscal watchdogs oppose the use of education tax credits, particularly when used for private and parochial schools.

"That's basically money that was going to go, potentially go, to public schools or other public services that now we're allowing wealthy people to individually dictate where their tax dollars are going," said Ron Deutsch, executive director of the Fiscal Policy Institute.

Deutsch's group leans to the left. Another non-partisan group, the Citizens Budget Commission, which generally sides with business groups, also opposes the credits. Its vice president and director of state studies, Elizabeth Lynam, agreed the benefits will largely benefit wealthy individuals.

"It's not good from a tax policy perspective," she said, adding she worried about subsidizing private, religious education.

Cuomo has billed his package as the Parental Choice in Education Act, because it would support both private and public schools although most of the $150 million a year benefit private schools.

A total of $50 million in annual credits is reserved for donations to scholarship funds that help low- to middle-income students attending private and parochial schools. Families can receive the scholarships if they earn up to $300,000 a year.

Proponents said most of the recipients are likely to be needy families.

"They’re lining up to get into our schools," said Susan George, executive director of the Inner City Scholarship Fund, run by the Archdiocese of New York. Even though she said her fund takes in about $17 million a year in donations, it's still not enough to give scholarships to every family who wants one.

"We’re not looking to give a hundred percent scholarships, we're not looking to take away money from the public schools," she said. "It’s about time we got a little bit of our fair share."

Catholic schools have been facing financial pressures, with many closing in recent years. Orthodox Jewish education leaders have also been lobbying hard for the tax credit which was supported by the state Senate last year, but didn't go anywhere in the Democrat-led Assembly. Albany observers said this was largely due to opposition from the teachers' unions.

This year's bill has less money for tax credits to public school programs. Proponents said they believe that's because the budget included an increase in education aid. But there are sweeteners meant to entice Assembly members, such as $70 million in credits specifically for low-income families who send their children to private schools, worth up to $500 per child. Also for public schools, Cuomo proposed $20 million in credits for those who donate to non-profit groups that support public education programs, including pre-kindergarten and extended day classes. And there's another $10 million in credits of up to $200 per public school teacher to help them pay for classroom supplies.

With Cuomo campaigning for the whole package in churches and synagogues, George called this a "make or break year."

State Assembly Speaker Carl Heastie said on Tuesday he won't bring the tax credit plan to the floor for a vote. But lots of trade-offs are made in the legislature, and Heastie also opposed the teacher evaluation plan that was eventually approved.