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Virginia Attorney General: Tax Credit Program Is Legal

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When a state approves a new voucher program, the glee felt by supporters of school choice is often tempered by an lingering uncertainty: Will the law stand up in court?

Virginia's Republican attorney general, Ken Cuccinelli, recently weighed in on the legality of a new tax credit scholarship program approved by lawmakers in his state, which offers a variation on the voucher model, and concluded that it does not run afoul of the state's constitution.

Cuccinelli, who was elected to office in 2009, issued a formal advisory opinion this month, in response to a request from Virginia state Delegate Scott A. Surovell, a Democrat and a critic of the new law.

Virginia lawmakers this year narrowly approved a measure, later signed by Republican Gov. Bob McDonnell, that gives individuals and corporations tax credits for making donations that provide students with scholarships to attend private schools. The tax credit is equal to 65 percent of the donation, and there is an annual cap of $25 million for the scholarship program. Ten states either currently offer or are in the process of creating similiar tax credit programs, according to the National Conference of State Legislatures.

Virgnia's state constitution, like those of many states, includes restrictions on public funding flowing to religious institutions and to schools not controlled by the state. It also says that the state cannot make any appropriation to any charitable institution not controlled by the state. In many states, similiar constitutional language has been the undoing of voucher programs, with state courts having ruled that state law

To backers of vouchers, one of the appealing aspects of tax-credit programs is that they are seen as more legally defensible than outright vouchers. Public funds are not removed from the state coffers and directed to private schools—instead, money that would have gone to the public treasury, through tax collections, is redirected to scholarship-granting organizations, befor it ever ends up in the hands of the government.

Cuccinelli seems to share this interpretation of the tax credit model, telling Surovell that without a specific "state appropriation" of public funds to non-public entities, the state constitution's limits "do not apply." His opinion states:

"[T]he benefit derived from a tax credit does not flow out of the state's general fund; rather, it reduces the tax revenues that would otherwise go into the general fund. Legislation providing for tax credits does not set aside a sum certain in the treasury upon its passage, nor does it identify each individual who will benefit from this passage. Moreover, it does not allocate a specific credit amount to any particular claimant since each qualifying taxpayer will not necessarily by entitled to the maximum credit for any specific year."
Surovell doesn't buy this argument. In an interview, he said Virginia's constitution offers "very explicit provisions against any state money going to private schools," and that the tax credit amounts to a voucher in disguise. He expects the tax credit to be challenged in court, and to be overturned, based on the language in Virginia's state constitution.


The tax-credit is "an accounting gimmick," he said, to get around the barriers the constitution presents to vouchers.

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