The concept of tuition tax credits, which has attracted growing interest across the country and the backing of the Reagan Administration, faces its first electoral test next week in a District of Columbia referendum that many view as the beginning of a nationwide push.
A tuition tax-credit bill has drawn substantial support in the U.S. Congress, and similar proposals almost made it to the ballot in California in 1978 and 1980.
But the District of Columbia’s “educational tax-credit” initiative will be the nation’s first6popular vote on the issue, according to John Augenblick, of the Education Commission of the States. (Minnesota has had the nation’s only tuition tax-deduction since 1955.)
The local proposal--which proponents say would provide parents with greater educational choice and opponents say would wreck the District’s public school system and tax structure--already has survived a protracted legal struggle that was resolved just two weeks ago.
As the Nov. 3 referendum approaches, the heated political arguments over the measure sound much like a rerun of some of those that cropped up during California’s Proposition-13 controversy.
D.C. Mayor Marion S. Barry, pledging to mobilize the city government to defeat the initiative, has threatened a 20- to 40-percent property-tax increase if the measure is passed. Meanwhile, organizers of the campaign for the proposal have countered that the initiative ultimately could save the District money and have accused the mayor of using improper, if not illegal, scare tactics.
The pitched battle over the issue, however, is far from being merely a local fray. The drive to pass the proposal has drawn campaignworkers and at least $114,000 in campaign funds from the National Taxpayers Union, a Washington-based, conservative-libertarian group that backs tax-slashing measures across the country.
Only $361 has been contributed by local residents, according to the financial reports of the local campaign committee, the D.C. Committee for Improved Education.
Likewise, the 31 local educational, religious, labor, and civil-rights groups opposed to the initiative have established a campaign staff. The groups were also expecting to receive $200,000 from a coalition of more than 40 national organizations, with the American Federation of Teachers and its parent union, the AFL-CIO, taking leading roles.
“This is not just a local D.C. issue,” saysinued on Page 16 Minnesota has had a tuition tax-deduction program since 1955
Arrington Dixon, chairman of Washington’s city council and one of the initiative’s most vocal opponents. “It’s certainly an attempt to put on a show before Congress. We’re just the target for this kind of exercise.
“If this thing gets going,” Mr. Dixon added, “it’s not going to stop in D.C. It’s a national movement.”
Another opponent, William H.L. Brown, president of the D.C. Congress of Parents and Teachers, adds: “We’re not fighting a grass-roots organization. We’re fighting something that’s only being portrayed as a local issue.”
Organizers of the campaign for the proposal say too much has been made of their connections with the National Taxpayers Union.
But the drive’s salaried chairman, William Keyes, an economist with the Joint Economic Committee of the U.S. Congress, predicts, ‘If we’re a success on Nov. 3, it’s going to make a big difference nationally.
And the proposal’s campaign manager, Charles Pike, who earlier this year ran the campaign of the libertarian candidate in New York City’s mayoral primary, demurs at the assertion that the initiative is for the benefit of the new Administration. But Mr. Pike also boasts: “This is just the starting place for a lot of activity around the nation.”
As far away as California, Michael Kirst, past president of the state Board of Education and a professor of education at Stanford University, agrees.
“The D.C. referendum is of intense interest out here,” he notes, “If it passes in the District, where the majority of the population is black, it will greatly undermine one of the big arguments against tuition tax credits--that it would hurt black and low-income students.”
Aside from its potential impact3nationally, the D.C. tax-credit initiative bears some unusual wrinkles that distinguish it from other tuition tax-credit proposals.
First, the annual maximum tax credit would start at $1,200 per child and increase by 10 percent per year thereafter--a large enough credit to cover all expenses at many parochial schools.
Most tuition tax-credit proposals, such as the Packwood-Moynihan bill before the Congress, provide a maximum credit of only $250 to $500.
Also, D.C. residents could claim the credit for private elementary- and secondary-school expenses and donations anywhere in the country, as well as expenses associated with the public schools, such as uniforms, supplies and donations.
Businesses, too, could receive a tax break. By contributing to the education of “needy students” at either private or public schools, companies could forgo paying as much as half their local income taxes.
And the D.C. initiative would allow those without children or without the $20,000-to- $25,000 annual income needed to take the maximum $1,200 credit for each child to pool credits for educational expenses, covering someone else’s expenses or taxes--with both parties benefiting financially.
To the extent that these provisions make it difficult to estimate the cost of the proposal, they have complicated discussion of an already complex educational issue.
Proponents, for instance, point to an independent study by the Media Institute, a Washington-based research organization that has not endorsed the initiative.
The study shows that the proposal initially would cost the District about $15.5 million in lost tax revenues, or about $750 for each of the estimated 20,000 D.C. students now in private schools.
It further asserts that, under the proposal, revenue losses arising out of a dramatic shift of students from public to private schools would be offset by savings to the public schools.
If 4,000 children left the 95,000-pupil school system for private schools, the study shows, the net loss would be reduced to about $13.6 million. If 32,000 pupils left the system, it actually would save a little bit of money, the study says.
These figures, said Patrick Maines, executive director of the Media Institute, are based on the assumption that the school system would reduce its staff in line with the loss of pupils; they do not take into account projected savings from the closing of schools.
But a study done for the opponents shows that passage of the initiative would mean from $24 million to $85 million in lost revenue to the District, according to Mr. Dixon. At an Oct. 16 press conference, where Mayor Barry pledged to use city employees to fight the proposal, the the estimated range of loss was narrowed to be from $38 million and $76 million.
The losses would come out of the school system’s $250-million annual budget or from the remainder of the city’s $1.9-billion budget. Either way, opponents say, the District would be forced to cut back public services--or, as Mayor Barry threatened, to raise property taxes by 20 to 40 percent to make up for the lost money.
“This would mean financial chaos for the District of Columbia,” insists Mr. Brown, of the parent-teacher association. “It’s the same thing that people said before Proposition 13,” the measure which drastically cut California’s property taxes.
Mr. Pike, the head of the camel5lpaign in favor of the measure, acknowledges that passage of the initiative would likely mean that the District “would have to cut somewhere, but there’s an awful lot of fat in the administration of the schools.”
“The real issue,” he adds, “isn’t education or the budget. It’s political power. That’s the reason people are upset about it. It will take the money and monopoly away from the public-school establishment and put it in the hands of the people.
“It will open up educational choice to a whole lot of people that don’t have it now. The only group of people that have a choice right now are those who are really well off; the large mass of people with kids in private schools are making real sacrifices to send them there,” he adds.
“And it will give the public schools a little competition. Look at the parochial schools,” Mr. Pike says. “They have really good schools, where kids are being taught at grade level, at half the cost.”
Mr. Dixon, who has two children in private schools himself, admits this line of thought is “enticing, might sound like a good idea to a lot of people.” But he warns: “If you want choices for people, you’ve got a problem with this [proposal]. The young kids in Anacostia [a low-income neighborhood of the District], won’t have a choice. Their families don’t make enough money to get the credits, and the private schools wouldn’t admit them.”
‘Outsiders’ Bitterly Criticized
The role of “outsiders,” as Mr. Brown puts it, in the tax-credit issue has been a continuing theme in the campaign against the proposal and the source of months of legal uncertainty--confusion that only ended two weeks ago with a split decision by the D.C. Court of Appeals.
The case was not over the educational or financial questions posed by the initiative, but over whether the signatures needed to place the measure on the ballot had to have3been collected by registered District voters.
Most of the 27,000 signatures--almost twice the amount needed under the city’s referendum law--were gathered by out-of-towners employed by the taxpayers’ union.
This was the justification used by the local board of elections in August, when it refused to approve the initiative. But the ruling was overturned in September by a three-member panel of the Court of Appeals.
Then the full nine-member court agreed to hear the case. On Oct. 13, after two hours of arguments in which opponents charged the proposal’s supporters with “wholesale manipulation” of the electoral process, the court ruled, 6-3, in favor of putting the initiative on the ballot.
If it is approved on Nov. 3, the initiative is likely to face further court challenges--as a possible violation of the doctrine of separation of church and state.
One constitutional scholar, Donald Jensen, an associate at Stanford University’s Institute for Research on Educational Finance and Government, remarked that the proposal stands so little chance of passing the U.S. Supreme Court’s scrutiny that he is “surprised” that it even is still on the ballot.
“The past 20 to 30 years of legal history are weighted heavily against tuition tax-credit plans,” Mr. Jensen said.
Passage of the D.C. initiative also could bring the issue of tuition tax credits to the floor of the Congress long before any federal plans are due for consideration. The District only has limited “home rule’'; District legislation, including initiatives, is subject to Congressional review.
According to Carol Richards, special assistant to Mr. Dixon, either the House or the Senate would have 30 days after passage of the initiative to kill it by passing a bill of disapproval. If no such action is taken within 30 days after the election, the proposal would stand.
A version of this article appeared in the October 26, 1981 edition of Education Week as After Bitter Campaign, D.C. Voters Are First To Decide on Controversial Tuition Tax Credits