State explores tax credits for technology at schools


POSTED: Saturday, February 21, 2009

The state is considering awarding up to $500,000 in tax credits each year for donations benefiting science, technology, engineering and math programs at public schools.

A proposal moving through the Legislature would let donors claim a credit worth half the amount they give to support so-called STEM subjects.

The credits would be limited to a combined $1 million in annual contributions, according to House Bill 1082, which unanimously cleared the House Economic Revitalization, Business and Military Affairs Committee on Thursday.

The measure, crafted by Gov. Linda Lingle's administration, has the backing of the state Education and Taxation departments. It hopes to draw resources to support STEM programs aimed at preparing students for jobs and making the state competitive in a global economy.

But the Tax Foundation of Hawaii argues the bill discriminates against private schools and would cost the state precious dollars during tight budget times.

“;I can't see them seriously considering this other than for show,”; said Tax Foundation President Lowell Kalapa. “;I think it will probably die at the end because we can't afford to lose any more money.”;

Kalapa said he is concerned about oversight of the planned credit, and said it would be difficult to estimate the value of some donated goods, such as a used computer. Moreover, taxpayers—as an incentive to support education—already may claim deductions when they make donations to public or private schools, he said.

State Rep. Lyla Berg said she voted for the bill so the Finance Committee can look at it and other proposed credits to check whether they would lead to economic growth.

“;Will they really express the vision that we have for Hawaii's economic direction?”; asked Berg (D, Hahaione Valley-Aina Haina). “;If we really believe technology is the future ... then we will guide tax credits and program development and other policies in that direction.”;

Lingle spokesman Russell Pang said language in the bill prevents donors who claim deductions from simultaneously taking advantage of the suggested credits.

He said the potential $500,000 loss in tax revenue has already been accounted for under the governor's plan to balance the state budget. The credit would only apply to monetary donations and exclude equipment, he added, saying there are no plans to extend the credit to private schools.

Seven isle public high schools have established STEM academies since 2007, but the envisioned credit could potentially benefit dozens of campuses that have launched other technology programs, according to the state.

Ted Liu, director of the state Department of Business, Economic Development and Tourism, said in testimony that the bill would help attract private funding to allow academies to spread to other campuses.

But he acknowledged details such as which specific programs would qualify to receive donations under the credit still would need to be determined.