opinion

Roberts: Is Arizona's senate president a tuition tax credit convert?

2018 begins on a high note as we learn that Senate President Steve Yarbrough has at long last seen the light.

Suddenly, the Chandler Republican is calling for some restraint in our leaders’ drive to divert ever-larger chunks of state tax money to private and parochial schools.

No, not the school voucher program – Gov. Doug Ducey and the Republicans who run the Legislature are all in on that.

Instead, Yarbrough is talking about reining in the corporate tuition tax-credit program – the one he ushered into existence a decade ago and has zealously protected ever since then.

Suddenly, he’s figured out that it’s insane to allow an automatic 20 percent increase each year in the amount that corporations can divert from their state income tax bills to fund private school scholarships.

Good for him.

His retirement must be a total coincidence

I, for one, am sure that his interest in slowing in the ballooning tax-credit program to fund private student tuition organizations has nothing to do with the fact that he’s retiring from his post as executive director of one of the state’s largest student tuition organizations (though one funded with individual tax-credit donations).

“You don't have to be a mathematician to have determined that a 20 percent escalator that is compounding, at some point in time is actually going to exceed the totality of the corporate income tax,” Yarbrough recently told Capitol Media Services’ Howard Fischer.

Especially when the totality of the corporate income tax has taken a swan dive thanks to years of tax cuts.

Tax credits to fund private school tuition have been available to individual taxpayers since 1998. In the mid-2000s, Yarbrough spearheaded the drive to allow corporations to also divert a portion of their income taxes to STOs – an amount that he insisted should increase by 20 percent each year.

In 2007, the corporate tax-credit program siphoned $10 million from the state budget. This year, the program is draining away $74.3 million, according to the Joint Legislative Budget Committee. By 2020, $107 million in corporate income taxes could be diverted to STOs, and by 2030, an astounding $662 million.

Don't expect total STO reform

Meanwhile, the public schools are still wondering what happened to $1 billion of the $1.5 billion in state funding they lost due to budget cuts during the Great Recession.

Slashing the 20 percent annual increase in corporate tax-credit donations is at least a start (a small one) in making a statement that public schools – the ones attended by more than 95 percent of Arizona’s children – are a priority.

MORE: Controversial tax-credit program grants $1B to students

Slashing the overhead fees collected by STOs would also be a good idea. Just don’t look for that to happen.

Yarbrough is still Senate president and he’s still the Legislature’s biggest supporter of diverting tax revenues into private-school tuition.

In fact, he has profited handsomely from the program.

Yarbrough’s Arizona Christian School Tuition Organization raised $21.3 million via individual tax-credit donations in fiscal 2016, according to the non-profit’s latest IRS filing. Of that, it doled out $14.7 million in scholarships to 7,151 students.

By law, STOs get to keep 10 percent of what they raise.

Why did Yarbrough see the light? Hmm

Yarbrough snagged $126,000 in pay and benefits. He also scored by paying a company he owns $659,300 to process ACSTO’s contributions and scholarship applications. And he collected tens of thousands more in rent because ACSTO is located in a building he owns. (The IRS form puts the cost of “occupancy” at $49,180.)

School Choice Arizona, an STO that is run by Yarbrough's son and doles out scholarships from corporate tax credits, also paid rent to Yarbrough, who sits on that STO’s board ($12,240 in “occupancy” costs, according to its IRS form).

On Thursday, Yarbrough announced that he is retiring as executive director and general counsel for ACSTO.

And that suddenly, he’s open – finally – to slowing that great sucking sound that is corporate taxes being siphoned into private schools.

Good for him. And, hmm.

READ MORE:

Why Yarbrough can turn tax credits into a personal cash cow

Trump may take Arizona's school tax credit program national

4 Arizona tax credits could help you save thousands