Tax credits for private, parochial school scholarships pass in Nebraska

Nebraskans will soon have the opportunity to get tax incentives for donating to scholarship funds for private and faith-based schools under a bill passed in the Legislature Wednesday.

Lawmakers passed the bill (LB753) in a 33-11 vote, sending it to Gov. Jim Pillen's desk to be signed into law. The legislation was introduced by state Sen. Lou Ann Linehan of the Omaha area, who has pushed for years to provide more school choice opportunities.

LB753 will provide tax credits for individuals and entities making donations to scholarship funds intended to help students attend private and parochial schools. Under the bill, $25 million will be available for credits in 2024, with the same amount available for the next two years. After that, the limit for credits will grow to a maximum of $100 million per year.

Individuals and businesses could not receive more than $100,000 in annual credits, while estates and trusts would be capped at $1 million per year.

In a session filled with controversy, LB753 saw its fair share. Just a few weeks ago, hundreds of educators rallied in Lincoln to oppose the bill, contending that it would deplete money for public schools through the state funding used to support the tax incentives. 

Opposing lawmakers made the same argument in each round of debate. They also questioned whether it was constitutional. 

Rather than granting parents and students more school choice, opponent Sen. Wendy DeBoer of Bennington said LB753 was really about giving donors more choice. She argued the bill gives favorable treatment to a specific type of charitable giving, and neglects many other philanthropic efforts. 

"This is about giving one type of giving first-class tax status," DeBoer said. 

Linehan said the Legislature has worked on many other tax-relief measures this session alone, so lawmakers are not solely focused on benefiting the wealthy. 

"Let's not pretend we don't like tax credits," Linehan said. 

Linehan and other LB753 supporters say the bill doesn't take any money away from public schools, and have pointed to several other measures in the works this year to increase funding for public education. One of those efforts is a $1.25 billion Education Future Fund to boost state aid for schools, which passed through the approval of Nebraska's two-year budget. 

The Legislature has considered similar measures to LB753 in each of the last five years, but all have failed. Last year’s proposal fell five votes short on a filibuster-ending cloture motion.

This time around, the bill ended filibusters with the support of a handful of Democratic lawmakers — Omaha Sens. Justin Wayne, Mike McDonnell and Terrell McKinney. Wayne said LB753 contributes to his effort to enact transformational changes for parts of his district, representing low-income areas of North Omaha. 

"I support this because this multi-faceted approach is what we're supposed to do down here to make sure we raise the water and tides for everyone," Wayne said.