A judge says S.C. tax officials have a right to know who has received private-school tuition grants from the state’s largest school-choice nonprofit.
Administrative Law Court Judge Ralph Anderson issued an order Friday directing Palmetto Kids First Scholarship Program to give the S.C. Department of Revenue the names of parents or guardians of children who received the private-school tuition grants.
The Revenue Department asked for the names last year after receiving complaints that the nonprofit had offered parents a quid-pro-quo: tuition grants in exchange for donations that qualify for state tax credits.
Palmetto Kids denied any quid-pro-quo arrangement – make a donation, get a scholarship and a tax benefit – that would make parents ineligible for the tax credits under state law.
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Citing privacy concerns, the nonprofit also refused to release the names to the Revenue Department, filing a complaint with the court instead.
Donors can use the credits to reduce the taxes that they owe by up to 60 percent. The tax agency has said it wants to ensure that the tax credits – capped at $8 million a year – are issued fairly.
Palmetto Kids operations director Olga Lisinska said that only 3 percent of its donors have received grants.
Lisinska also said that donors have received letters from the Revenue Department asking them whether they received scholarships, making the nonprofit’s records unnecessary.
“There is no point in asking for the names other than to claim a victory,” she said.
Lisinska said 1,300 children have received private-school tuition grants from Palmetto Kids since the state launched the choice program in 2014.
The Mount Pleasant-based nonprofit has raised $12 million since the program launched in 2014, its donors qualifying for 86 percent of the tax credits lawmakers have approved.
But the nonprofit also has been at the center of criticism of the new private-school choice program.
Palmetto Kids First provided the Revenue Department with bank records, financial information, IRS filings and other documents, but refused to hand over the names, citing privacy concerns.
The nonprofit then filed a complaint with the Administrative Law Court against the Revenue Department.
Lisinska said Monday that the state tax agency has asked donors who claimed tax credits whether their children received scholarships.
Palmetto Kids has not decided whether to appeal the order. The nonprofit has 20 days from when it was notified to give the Revenue Department the names of parents or guardians of children who received grants and others who applied for but did not receive grants.
Senate spending deal 1 step closer
The S.C. Senate will continue debating Tuesday how to spend nearly $7 billion in state general-fund money.
Senators are one step closer to deciding state spending, giving an initial nod of approval to state spending Monday.
The budget needs only one more vote by senators before it is approved, and sent back to the S.C. House.
But senators can still make changes, setting up the potential for debate Tuesday.
Still, the most heated debate over state dollars is yet to come.
Senate President pro-tem Hugh Leatherman, R-Florence, hinted Monday at an impending fight over his borrowing plan before budget talks began.
Leatherman is pushing for a $237 million borrowing proposal, but acknowledge there will be opposition to the plan.
Republican Gov. Nikki Haley helped defeat a similar proposal in the S.C. House, and has said she would veto Leatherman’s proposal.
“You can’t get something for nothing,” Leatherman said, telling senators to keep that in mind when they decide whether to debate the bond package.
That package is made up of $15 million for deteriorating S.C. armories, and $222 million is spent on building needs at S.C. colleges and technical schools.
Failing to train the S.C. workforce for promised jobs would ruin future economic development deals, Leatherman said.
“We (won’t) have to worry about any other companies coming to South Carolina; I can assure you they will not be here,” he said.