Arizona’s school choice plan—a model for Nevada?

Where Arizona goes, might Nevada follow?

No, this isn’t about immigration. Or recent discussions, sparked by an aide to Gov.-elect Brian Sandoval, of selling Nevada’s public buildings and leasing them back. Hey, that’s what they’re doing in Arizona.

It’s Arizona’s solution to school choice, however, that’s now a zany U.S. Supreme Court case. School vouchers were ruled unconstitutional there. So Arizona lawmakers came up with a convoluted plan to get state taxes in the hands of private and religious schools.

Sandoval supports school vouchers—awarding public funds to subsidize expensive private or religious education. But it’s unlikely that vouchers will be considered in Nevada any time soon, as it would require finagling the state constitution.

Enter Arizona. The U.S. Supreme Court recently heard arguments for and against Arizona’s tax credit policies, which funnel taxpayer money to non-profits who give scholarships to students attending, mostly, religious schools.

This gets complicated. Even justices seemed baffled at the arguments made in the case, Arizona Christian School Tuition Organization v. Winn.

“This is a major lawsuit?” complained Justice Samuel Alito after one confusing argument.

The basics: For more than a decade, Arizona has been giving its taxpayers dollar-for-dollar credits of up to $500 ($1,000 for couples) on state income-tax returns for donations to “school tuition organizations” or STOs. The STOs award the money as scholarships to kids who, in most cases, want to go to private or religious schools.

The program has expanded to include corporate tax credits, and the Arizona Republic reports that by 2009, more than 50 STOs had taken in nearly $400 million. About 93 percent of the STOs’ scholarships go to students attending religious schools, according to the newspaper’s analysis of state tax reports.

The problem boils down to whose money is being spent. The lawyer for the taxpayers challenging Arizona’s law put it ever-so-simply: “It turns on whether when the taxpayer makes the payment the taxpayer is paying the taxpayer’s own money or the money the taxpayer owes to the government.”

A tax credit is money owed in taxes that doesn’t have to be paid. It’s not the same as a tax deduction, which reduces taxable income. That’s why critics argue that Arizona’s tax credits are public money. And this public’s money is in the hands of, say, the Arizona Christian School Tuition Organization, which gives scholarships only to religious students attending religious schools. That’s discrimination, critics say.

Others disagree, like conservative Justice Anthony Kennedy: “I have some difficulty that any money that the government doesn’t take from me is still the government’s money.”

It’s hard to discern how tax credits differ from school vouchers, given a thumbs-up by the Supreme Court in 2002. The court ruled 5-4 that school vouchers used for religious schools are not a violation of the First Amendment’s guarantee that, “Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof.”

Arizona aside, I’m worried about Nevada’s schools as lawmakers meet in January to address the $1 billion budget gap. Sandoval campaigned on not raising taxes. With no new revenue, more cuts would be inevitable. To recap, this year’s cuts just to the Washoe County School District totaled $32.7 million. Washoe’s K-12 teachers and staff were hit with $10.7 million in salary cuts this year, and by adding kids to elementary school classes (fewer teachers required), the district hacked out another $5.8 million.

Constitutional protections aside, I’m not sure I would complain about a tax credit that put state income tax money in the hands of Nevada educators at public, religious or charter schools.

Of course, that would mean following the lead of Arizona, and 42 other U.S. states, and adopting—drum roll, please—a state income tax.