Local View: LB 753 circumvents the state constitution


Published in the Lincoln Journal Star on July 21, 2023

By Dave Welsch, advisory committee member, Center for Rural Affairs

Why should you sign the petition to repeal LB 753, the Opportunity Scholarship Act?

Let's start by stating the intent language at the top of the referendum petition: "The object of this petition is to: Repeal LB 753, passed by the 108th Nebraska Legislature in 2023, which (1) authorizes certain nonprofit organizations to provide scholarships to eligible students to attend a qualified private elementary or secondary school, and (2) provides individuals and corporations tax credits for financial contributions to these organizations."

1) Why did LB 753 create these new organizations to grant scholarships to private school students?

This was done to circumvent the Nebraska State Constitution, Article VII-1, which says in part "… Notwithstanding any other provision in the Constitution, appropriation of public funds shall not be made to any school or institution of learning not owned or exclusively controlled by the state or a political subdivision thereof; …" There have been multiple court cases that have supported the intent of our state constitution to not provide public funding to private and parochial schools.

2) Why did LB 753 create tax credits for contributions to these new organizations?

The short answer is to create a far more generous tax incentive for giving to private school scholarship organizations than for donations to your church, city mission, public school foundation, food banks, cancer research or other nonprofits.

Specifically, current law allows for a tax deduction when making a donation to a nonprofit organization. LB 753 creates a dollar-for-dollar tax credit when making a contribution to a newly created organization that gives scholarships only to private school students. A tax deduction results in a potential tax savings of slightly more than 6% of a donation to a nonprofit organization (assuming that the taxpayer, corporation or other entity itemizes their deductions). But the dollar-for-dollar tax credit results in a 100% reduction in state income taxes up to half of the income tax liability of an individual, corporation or other entity! This is obviously a significant change in Nebraska tax policy when one charitable donation is treated so favorably above all others.

When you combine parts one and two, it is easy to see that public funds are going to support private and parochial schools — which is a violation of our state constitution. Public tax revenues (dollar-for-dollar income tax credits) are going to individuals, corporations and other entities that make a financial contribution to an organization that gives scholarships to private and parochial school students, who then give their scholarship money to private and parochial schools.

Parents already have the opportunity to send their kids to private and parochial schools. These schools simply need to accept those students and allow them to attend.

And individuals, corporations and other entities already have the opportunity to make donations to assist these students in attending private and parochial schools.

The only new opportunities LB 753 creates is for these "charitable donors" to receive a far more generous dollar-for-dollar income tax credit rather than the simple tax deduction provided to all other charitable donations in our state.

So, LB 753 isn't about creating more opportunities or "school choice" for students, it is about creating a scheme to circumvent the intent of our state constitution by providing state income tax dollars to private and parochial schools.

Why sign the petition? Because LB 753 is bad tax policy that violates the intent of our state constitution — and Nebraskans deserve the opportunity to vote on this issue.

To find out where you can sign a petition go to www.supportourschoolsnebraska.org.

In addition to serving on the Center's advisory committee, Dave Welsch is a farmer and president of the Milford Public Schools Board of Education.