Fund for Georgia private school tax credit program exhausted on Jan. 1

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The Atlanta Journal-Constitution will have Georgia’s largest team covering the Legislature during the 2015 session. No one will have more expertise on issues that matter to taxpayers when legislators begin work Monday.

The $58 million in tax credits the state allocated for its private school scholarship program for 2015 were gone by the end of New Year’s Day.

That gives supporters fresh ammunition to use for their push to increase spending on the program during the upcoming session of the General Assembly, which starts Jan. 12.

"This makes a strong case that it's a popular program for kids," said state Rep. Earl Ehrhart, a Republican from Powder Springs and one of the fathers of the program.

The program allows donors to student scholarship organizations to claim a state tax credit of up to $2,500 for married couples. Corporate donors can claim a credit worth up to 75 percent of their income tax liability. Statewide, the limit is $58 million worth of income tax credits for donating to scholarship organizations.

Those organizations then hand out scholarships to students to attend private schools. The organizations and schools promote the tax credit program and urge parents to donate. It was so popular last year that the $58 million cap on tax credits was met in a few weeks and advocates pushed unsuccessfully for it to be raised to $100 million.

Because the money went so fast last year, major scholarship organizations urged donors to submit their applications by the end of 20614. The student scholarship organizations then sent thousands of applications electronically to the Department of Revenue, beginning at 12:01 a.m. on New Year’s Day.

With strong support in the Republican-led General Assembly and an improving state budget picture, backers will make a major push to increase the limit for 2016.

Ehrhart plans to file legislation to increase the annual cap from $58 million to $250 million next year.

The program has both passionate supporters and equally passionate critics. Backers say it is an important step toward giving parents greater choice in where their children attend school. They also say it saves the state millions of dollars it would otherwise be spending educating the scholarship recipients in public schools.

Opponents say it provides a boost to private, often religion-affiliated schools while draining money from the public education system. Many of those who benefit would be going to private schools without the tax credits and scholarships, they say.

A group backed by the Southern Education Foundation sued the state over the program last year, saying the student scholarship tax credits violate both the Georgia Constitution and tax laws by, among other things, providing indirect public funding to religious schools, giving donors illegal benefits and allowing a school program to be run by private groups.

The case is pending.