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Committee hears arguments for and against HB 320 education tax-credit program
Summary
Proponents said HB 320 would give families tax-credit funded accounts to pay for qualified education expenses; opponents warned of fiscal, administrative and constitutional risks and called for procurement and oversight changes.
Representative Scott (Sponsor) opened the House committee hearing on House Bill 320, a proposal to create tax-credit funded accounts to cover qualified educational expenses, and framed the session around the bill's fiscal note and administration.
Supporters said the bill would provide families flexibility to use funds for tuition, curriculum, tutoring and career training. Kendall Cotton, president and CEO of the Frontier Institute, told the committee the program's aggregate $10 million cap would be a small fraction of the state budget and would not break the state's finances. Katie Bloodgood, legislative liaison for the Office of Public Instruction, read a statement from Superintendent Henley saying HB 320 recognizes differing student needs and that parents should have flexibility to choose educational paths.
Opponents raised several concerns about the bill's costs, administration and legal vulnerability. Lance Melton of the Montana School Boards Association, speaking also for the Coalition of Advocates for Montana's Public Schools, said the bill still risks large long-term growth in credits despite recent reductions in per-donor credit maximums. Melton and others cited the fiscal note's assumptions and warned of likely litigation under Espinosa and the Montana Constitution's Article X equality guarantee. Allen Lloyd, executive director of the Montana Society of CPAs, opposed tax credits generally as a budgeting practice and said the complexity of defining eligible expenditures and multi-year carryforwards will strain Department of Revenue workloads.
Private vendors and potential program managers also testified. A representative identified as Luther, appearing on behalf of Odyssey (a for-profit vendor that administers education savings accounts in other states), urged striking a provision that limits the program manager to charitable 501(c)(3) organizations, arguing that the restriction would prevent experienced for-profit vendors from competing and raise procurement and legal costs.
State agency staff described the administrative burden the program would create. Derek Bell, division administrator at the Montana Department of Revenue, said the department expects citizen inquiries and additional compliance work to validate projected tax liability for preapproval; he noted uncertainty about the department's audit role under the bill as drafted and the staffing/time required to administer the new credits. Misty Ann Giles and Director Giles (Department of Administration) said the department's internal fund structure and rate-based divisions mean it lacks an obvious appropriation to accept and expend donations without explicit legislative appropriation, and that some oversight and procurement activities included in the bill would drive additional costs beyond the single FTE listed in the fiscal note.
Committee members pressed proponents and agency staff on key numbers in the fiscal note: the bill currently proposes a per-donor cap of $200,000; an annual claim limit of $4 million (with an asserted $10 million hard cap on total program claims) and references in the fiscal note to $24 million as the three-year accumulation figure. Witnesses disputed some of the fiscal-note assumptions (one proponent suggested roughly 17,100 private and home-school students could be eligible, while opponents suggested the true eligible population might be higher). Proponents said the program contains no automatic trigger-release mechanisms and that any future cap changes would be a legislative decision.
Representative Deming, the bill sponsor, closed by saying the bill is constitutional and framed it as a targeted way to help students currently not well served by existing public systems; he noted that the MAPS council and the program manager would post qualified expenditures and administrative details on a program website to provide transparency.
The committee took no final action on HB 320 at the hearing; the bill was returned to the record for further review.
