Rep. Zika, We Have Your Answer

This is the blog where we learned that every time we we enjoy a cold beer, we may be (whether we like it or not) diverting money to Florida’s private school tax credit/voucher program.

On 1/9/2019, Step Up For Students’ Senior Policy Director Amy Graham gave a presentation regarding Florida’s voucher (“Scholarship”) programs to the House PreK-12 Innovation Subcommittee. Step Up For Students (SUFS) currently administers 4 of Florida’s 5 state voucher programs (the Florida Tax Credit Scholarship (FTCS), Gardiner Scholarship, Hope Scholarship and Reading Scholarship). You can watch Ms. Graham’s presentation here (starts at 37:00). 

This year the Florida Tax Credit Scholarship will serve 98,826 students in 1,796 private (mostly religious) schools. Full scholarship/voucher is offered to low income children and is worth between $6,519 and $7,111/student. Funding for the FTCS comes from tax-credited corporate contributions. Corporations who donate money to SUFS receive a dollar-for-dollar tax credit, on five different state taxes, diverting that tax revenue from the state coffers towards the private schools accepting the FTCS vouchers.

Representative Ardian Zika (R-37) wondered if funding for the program might be at risk should there be another recession. He wondered if there were any companies that contributed such a large amount to the program that the loss of that single donor might adversely affect the program. Ms. Graham claimed she didn’t have those “specific numbers” with her but “would be happy to follow up” with him…

It is our experience that when an organization offers to follow up with a lawmaker after a committee meeting it may be because they really don’t want to answer the lawmaker’s question during the public meeting…

We know the answer to Rep. Zika’s question:

The August 2018 Operational Audit of SUFS showed that, during the period of the audit (March 2016 – February 2017), just FIVE donors contributed approximately 43 percent of the total contributions to SUFS. (Total tax-diverted contributions to SUFS in 2017 equaled almost $534 million.) ONE DONOR donated 23.9% of the total contributions during that period!

So, yes, if something unfortunate were to happen to that one company, SUFS could be out almost 24% of the total contributions for that year.

According to the Tampa Bay Times, the largest donors are beverage distributors: “Breakthru Beverage Group gave $65 million in 2016, for example, and Southern Glazer’s Wine and Spirits donated $150 million in 2017.” In the SUFS 2018 Annual Report, Breakthru Beverage was celebrated for contributing an “astounding $254 million” over their 7 year partnership with SUFS.

These beverage companies take advantage of tax credits that allow them to benefit by redirecting their alcoholic beverage excise tax to Step Up For Students (Florida Statute 1002.395 and 561.1211). 

Guess who pays those excise taxes? Consumers do.

An excise tax is an indirect tax on the sale of a particular good or service such as tobacco or alcohol. Such taxes are sometimes called “sin taxes,” because they are levied on goods that have a high social cost (i.e. cigarettes or alcohol). “Indirect” means the tax is not directly paid by an individual consumer — instead, the tax is levied on the producer or merchant, who passes it onto the consumer by including it in the product’s price.

So every time someone buys beer, wine or other alcohol in Florida, they indirectly pay this excise tax, which these beverage companies then donate to SUFS, funding private religious school vouchers and earning a 1:1 tax credit that benefits the beverage company’s bottom line.

For the consumer, whether they like it or not, their tax dollars may be used to support the public funding of private schools. For a public school advocate, it’s enough to drive you to drink!