Federal scholarship tax credit: New bill would block Hochul from opting NYS in to the program

A state lawmaker has introduced legislation that would prevent Gov. Kathy Hochul from opting New York in to the controversial federal scholarship tax credit program, instead giving the state Board of Regents sole authority to do so.

State Sen. John Liu (D-Queens) announced this week that the bill, if passed, would allow the Board of Regents to decide on an annual basis, starting in 2028, if the state should participate in the program. The tax credits have been criticized by local lawmakers and teachers unions, who say they will mainly benefit private school students and could hurt public schools.

Hochul announced last month that the state would opt in to the federal program, which gives federal tax credits in exchange for contributions to scholarship-granting nonprofits. The money could be used for expenses ranging from private school tuition to tutoring and school supplies.

Starting in January, eligible taxpayers can claim an annual credit of up to $1,700 for qualifying contributions, or up to $3,400 for married couples filing jointly, according to the IRS. 

Liu, who is also the chairperson of the NYC Education Committee, said the tax credit will divert funding away from public schools. He said families who already send their children to private schools would stand to benefit the most.

"School vouchers have been consistently rejected in New York. Therefore, we should not subscribe to a national voucher program, which is exactly what this Trump program is," Liu told Newsday on Wednesday. "School vouchers inevitably take resources away from public schools." 

A spokesperson for the governor said in a statement, “Governor Hochul has been clear: she’s not going to leave money on the table when it could help our kids, including those in public schools. We believe the Federal Scholarship Tax Credit program has the potential to bring millions of additional dollars to New York students and families without taking a single dollar from public schools or our state or local budgets."

A spokesperson for the state Education Department, which includes the Board of Regents, said in a statement that the agency appreciates Liu's "commitment to preserving the independence of education policymaking and ensuring these important decisions remain where they belong."

The spokesperson, JP O'Hare, added, "Whether New York participates in a federal program with significant implications for public education is a consequential policy decision that demands careful consideration of its impact on students, families, schools, and taxpayers."

Even if the legislature passes the bill, Hochul would have to decide whether or not to sign it.