S 113 EQUAL EDUCATION OPPORTUNITY SCHOLARSHIP

Sen Jerry Ortiz y Pino

Actions: SPREF [1] SEC/SJC/SFC-SEC [4] DP/a-SJC [8] w/drn - ref STBTC/SFC-STBTC

Scheduled: Not Scheduled

 Senate Bill 113 (SB 113) enacts the Equal Education Opportunity Scholarship Act and provides for Tuition Scholarship Organizations to grant educational scholarships to low-income students to attend public and nonpublic schools. SB 113 creates income tax and corporate income tax credits for contributions to tuition scholarship organizations that provide educational scholarships for low-income students .
 

 Senate Bill 113 (SB 113) adds new sections to Education to Create the Equal Education Opportunity Scholarship Act (Act) and supporting department directions. SB 113 also creates income tax and corporate income tax credits for contributions to tuition scholarship organizations.

SECTION 1 adds new material to Education to create the Equal Education Opportunity Scholarship Act. Sections 1 through 5 may be cited as the Act.

SECTION 2 adds new material to provide definitions as used in the Act.

SECTION 3 adds new material to provide certification of a tuition scholarship organization (Organization). An Organization may seek certification from the department by submitting an application to the department. To be certified, the Organization shall provide the appropriate documentation as specified in this Section.

SECTION 4 adds new material to provide the duties of a Tuition Scholarship Organization.
A. No later than 30 days prior to the start of a new school year or the start of a new semester, an Organization shall provide to the department the names of eligible students who received educational scholarships and the students' previous school district or charter school affiliation. The Organization shall provide verification that the eligible students have been awarded an educational scholarship and have enrolled in a private school for the new school year or the new semester. 
B. The Organization shall ensure that a school participating in the tuition scholarship organization's scholarship program meets the criteria listed in this subsection.
C. By June 1 of each year beginning in 2024, a tuition scholarship organization shall report the information specified in this subsection to the department and the Taxation and Revenue Department.
D. An Organization shall maintain and provide records as listed in this subsection. It shall provide an annual report to the interim Legislative Education Study Committee and the Public Education Department (PED) by June 1 of each year containing information on how many scholarships were provided by the Organization and the amount of each scholarship.

SECTION 5 adds new material to provide the department’s duties. The department shall administer the Act as specified in this section.

SECTION 6 adds a new section of the Income Tax Act to provide an Equal Education Opportunity Scholarship Income Tax Credit as specified in this section. To ensure that the department receives the information needed to allow a tax credit, the department shall develop a contribution receipt that requests all of the information needed by the department to determine if a credit is due. Upon receiving notice from the PED that an organization has been certified as an Organization, the department shall provide receipts to the Organization for its contributors.
The department shall require a taxpayer claiming the scholarship income tax credit to submit the receipt from the Organization to which the taxpayer contributed money with the taxpayer's application for the credit provided by this section. 
The scholarship income tax credit shall not be allowed for a contribution that is included for the taxable year in the taxpayer's itemized deductions, as defined in Section 63 of the Internal Revenue Code. Subsections F through J, provide specific requirements to the taxpayer to file for the income tax credit.

Subsection K provides definitions as used in this section.

SECTION 7 adds a  new section of the Corporate Income and Franchise Tax Act to provide an Equal Education Opportunity Scholarship Corporate Income Tax Credit.
A taxpayer that files a New Mexico corporate income tax return may claim a credit against the corporate income tax liability of the taxpayer for a contribution made to a tuition scholarship organization. The credit may be approved in an amount equal to 80 percent of the total contributions made by the taxpayer to a tuition scholarship organization for which contribution receipts have been provided during the taxable year but shall not exceed 50 percent of the taxpayer's corporate income tax liability for the taxable year. The credit provided in this section may be referred to as the Equal Education Opportunity Scholarship Corporate Income Tax Credit. To ensure that the department receives the information needed to allow a corporate income tax credit, the department shall develop a contribution receipt that requests all of the information needed by the department to determine if a credit is due. Upon receiving notice from the PED that an organization has been certified as an Organization, the department shall provide contribution receipts to an Organization. 

The department shall require a taxpayer claiming the corporate income tax credit to submit the certification document from the Organization to which the taxpayer contributed money with the taxpayer's application for the credit provided by this section. 

The corporate income tax credit shall not be allowed for a contribution that is included for the taxable year in the taxpayer's itemized deductions, as defined in Section 63 of the Internal Revenue Code. Any amount of the corporate income tax credit allowed by the department that exceeds 50 percent of the corporate income tax liability of the taxpayer in the taxable year in which the credit is first claimed may be carried forward for three consecutive taxable years. 

The department shall compile an annual report on the credit allowed pursuant to this section that shall include the information specified. The department shall present the report to the interim Revenue Stabilization and Tax Policy Committee and the Legislative Finance Committee with an analysis of the cost of the tax credit. 

A taxpayer that claims a corporate income tax credit pursuant to the Act shall not also claim a scholarship income tax credit pursuant to the Income Tax Act. The corporate income tax credit shall be applied to the taxpayer's tax liability before application of any other tax credit claimed for the taxable year by the taxpayer. 

Subsection I provides definitions as used in this section.

SECTION 8 makes the repeal of Sections 1 through 7 of this Act effective July 1, 2027. 

SECTION 9 provides the applicability of the provisions of Sections 6 and 7 of this Act apply to taxable years beginning on or after January 1, 2023 but before January 1, 2027. 

SECTION 10 provides the effective date of the provisions of Sections 1 through 5 as July 1, 2023. The effective date of the provisions of Sections 6 and 7 is January 1, 2024. 

 Senate Bill 113 (SB 113) is amended by the Senate Education Committee (SEC) in SECTION 5 addressing department duties in regards to administration of the Equal Education Opportunity Scholarship Act to insert in Subsection B(6) that the department shall ensure that no more than 400 students per school year receive educational scholarships pursuant to the provisions of the Scholarship Act. 

 Senate Bill 113 duplicates House Bill 266 to enact the Equal Education Opportunity Scholarship Act.