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Lynch vetoes voucher tax credit

Plan rewards firms that fund education

Democratic Gov. John Lynch has vetoed a business tax credit passed by the Republican Legislature that would provide students with scholarships to attend private schools, receive home-schooling or switch to a public school outside their district.

'I believe that any tax credit program enacted by the Legislature must not weaken our public school system in New Hampshire, downshift additional costs on local communities or taxpayers, or allow private companies to determine where public school money will be spent,' Lynch said in his veto message yesterday. 'I have vetoed SB 372 because the bill does not meet that test.'

The average scholarship available to students attending private school would be about $2,500, and home-schooled students would receive about $625. For each contribution to a nonprofit scholarship organization, a business would be eligible for an 85 percent tax credit against the state's business profits tax.

Strafford Republican Sen. Jim Forsythe, the bill's primary sponsor, said Lynch's veto was 'incredibly disappointing,' and he accused the governor of including 'false and misleading statements' in his veto message. However, it seems unlikely Lynch's veto will prevent the bill from becoming law.

The measure passed the House with a veto-proof majority and the Senate also initially voted with the necessary two-thirds margin. Four senators were missing for the vote last month to concur with the House's amendments, but none of the members present that day switched their votes.

Lynch said the bill 'does not fully target scholarship funds to students most in need,' adding that 'a substantial portion of scholarships are available with no income restrictions to students already attending private school.' Forsythe said all students receiving scholarships are means-tested, and 40 percent of the scholarships must go to students eligible for the federal free and reduced lunch meals program.

Lynch also criticized the bill for allowing 'private organizations to determine the use of public education funds.' The bill says the organizations must be charitable non-profits approved by the state Department of Revenue Administration.

'I believe that the executive and legislative branches should determine where public school money is spent, not a private corporation,' Lynch said.

Forsythe said Lynch 'misses the entire point of the program.'

'It is parents who will be deciding how the money will be spent, as it should be,' Forsythe said.

Forsythe objected to Lynch's characterization of the scholarship money as public funds.

'The money used for this program would come from businesses in New Hampshire, not the state,' Forsythe said. 'If the governor believes this is public money, then the money donated to a church or the Salvation Army would also have to be considered public money.'

Lynch said for each student who receives a scholarship under the bill, the 'per pupil adequacy payment' to the recipient's former school district will be reduced between $3,450 and $8,381 the following school year.

'Importantly, this will occur after the school district budget is passed for the coming year, but before the tax rate is set,' Lynch said. 'Therefore, the loss of state funds for scholarship recipients will most likely be downshifted to local property taxpayers to make up for state funds anticipated but not received from the state.'

The Department of Education has calculated the bill will collectively cost school districts $3.68 million in year one, $5.47 million in year two and $6.3 million in year three, Lynch said. Those are reductions that 'struggling school districts and local taxpayers cannot afford,' he said.

'The loss of students from the public schools as a result of these scholarships will not meaningfully reduce school operating costs,' Lynch said.

Candidates for governor reacted to Lynch's veto yesterday along party lines, with Republican candidates Kevin Smith and Ovide Lamontagne expressing disappointment.

'I fundamentally believe in school choice, competition and giving our students the best possible chance at succeeding,' Lamontagne said. Smith accused Lynch of 'turning his back on making our state a leader in education reform' and 'carrying the water for the unions in the state.'

Democratic gubernatorial candidate Maggie Hassan applauded Lynch's veto.

'The Legislature, and the Republican candidates for governor, want to send millions in taxpayer money to private schools,' Hassan said. 'Ovide Lamontagne, Kevin Smith and this Legislature have the wrong priorities for New Hampshire's middle-class families and economy.'

(Matthew Spolar can be reached at 369-3309 or mspolar@cmonitor.com or on Twitter @mattspolar.)