Still Working to Restore the Promise Scholarship

September 22, 2010

Chair, House Tax Policy Committee
990 House Office Building
Lansing, MI 48909

Dear Madam Chair:

House Bill 5376, which I introduced, has been before the House Tax Policy Committee since September of 2009. The bill maintains our commitment to Michigan Promise Scholarship recipients by providing a tax credit in the amount of the scholarship that we withheld in 2009 when the program was discontinued.

Earlier today, the House Education Committee held a hearing on House Bill 6453, which also provides a tax credit to Promise Scholarship recipients. I would point out that House Bill 6453 was introduced just one day prior to notice of the hearing while my proposal has been sitting without a hearing for one full year. In addition, I would suggest that HB 6453 is highly problematic in terms of revenue when compared to my original proposal.

Under House Bill 6453, any portion of the Promise Scholarship tax credit that exceeds the student's tax liability shall be immediately refunded. If sufficient revenues existed to provide recipients with $4,000 over the course of one year, I highly doubt we would have discontinued the program in the first place.

In my original proposal, the credit is non-refundable but eligibility continues over multiple years until the full amount is claimed by the student. This reduces the impact in any given budget year and offsets the credit with additional sales and property taxes paid by the recipient.

Use of a non-refundable tax credit spread over multiple years also offers greater opportunity to keep our young professionals working here in Michigan. Conversely, House Bill 6453 requires only one year of residency after students finish their degree.

Finally, House Bill 6453 is extremely vague as it deals with Michigan Promise Zones. Any diversion of funds from students to a largely unfunded and untested authority should be troubling to parents as it alters the nature of the promise that Michigan made.

With this letter, I would like to restate my request for a hearing, and urge you to contemplate the more effective policy offered in House Bill 5376. I look forward to your consideration.

Sincerely,


Kenneth B. Horn
State Representative

Michigan’s 94th District