On Tuesday, January 29, 2013, Georgia State House Representative Earl Ehrhart (R-Powder Springs) filed HB 140, legislation that would provide for an increase in the annual cap on Education Expense Credits to $80 million, expand the class of students eligible to receive scholarships, and add a degree of transparency to the law. A copy of HB 140 is available at:
http://www.legis.ga.gov/Legislation/en-US/display/20132014/HB/140
Here are the key features of HB 140:
1. All taxpayers (individuals and corporations) would be entitled to contribute up to 75% of their Georgia income tax liability to student scholarship organizations in exchange for a Georgia income tax credit.
2. The definition of "corporation" would include "C" corporations and "S" corporations.
3. The tax credit would be available to offset not only corporate income taxes; but, also, other corporate state tax liabilities, including liabilities for the sale of alcoholic beverages and insurance premiums.
4. For purposes of awarding scholarships, the term "eligible students" would mean a student who is a Georgia resident enrolled or eligible to enroll in a Georgia secondary or primary public school or eligible to enroll in a qualified first grade, kindergarten program, or pre-kindergarten program.
5. Student scholarship organizations would not be permitted to transfer scholarship contributions to their participating schools to be held as "endowments" for future unnamed recipients. Instead, within one year of receipt by the SSO, contributions obligated for scholarships would have to be designated by the SSO (not the contributor) for receipt by specific scholarship recipients. Although SSOs could transfer to participating schools the entire amount projected to be used in connection with multi-year scholarships, the schools would have to hold the funds in accordance with existing Georgia Department of Revenue ("DOR") rules. The independent audit required of SSOs under the law would be required to include assurances that contributions were being handled in this manner.
6. For each SSO, each year, the DOR would be required to publish the total number and dollar value of individual contributions and tax credits approved; the total number and dollar value of corporate contributions and tax credits approved; and the total number and dollar value of scholarships awarded to eligible students.
7. The annual cap on Education Expense Credits would be increased to $80 million per tax year and any unused tax credits from the previous year would be carried forward to the following year and added to the annual cap.
8. Instead of being adjusted by the Consumer Price Index for All Urban Consumers, the annual cap would be adjusted by the slightly more generous gross output of state and local governments as defined by the National Income and Product Accounts.
9. To ensure that as many individual taxpayers as possible could participate in this extremely popular program, the aggregate amount of tax credits for taxpayers that are corporations would not be permitted to exceed 25 percent of the total aggregate amount of annual allowable tax credits.
10. Up to $100 million of Georgia income tax credits would be made available on an annual basis for taxpayer contributions made to public schools for teacher enrichment, which means professional development for certified teaching staff or salary enhancement or bonuses.
11. The amendment (including the cap increase) would be applicable to all taxable years beginning on or after January 1, 2013.
Jim Kelly serves as the volunteer General Counsel for Georgia GOAL Scholarship Program, Inc.