Teacher tax-credit bill moves along

Lawmakers advanced a bill Monday that would provide a tax credit to public and private school teachers for out-of-pocket classroom expenses.

The credit would offset income taxes a teacher owes — a move one critic said amounts to a tax hike for the rest of the taxpayers. The teachers union, which supports the bill, argues that teachers are forced to spend their own money because of budget cuts.

The House Education Committee on Monday unanimously passed out Senate Bill 573 but left the amount of the proposed credit unspecified. Previous versions have included credits of up to $250 and up to $500 per year.

At the $250 level, the credit would cost the state about $3.5 million a year in lost tax revenue, the state Department of Taxation estimated.

The Hawaii State Teachers Association says a recent survey of members found that half of teachers had annual out-of-pocket expenses of between $250 and $500, and some as high as $1,000. The union represents about 12,500 public and charter school teachers.

"Teachers are constantly being pushed to be more creative with their lesson plans and classroom techniques, but with limited funding," HSTA President Wil Okabe said in supporting testimony. "Few employees are expected to pay for their own work supplies at the rate of teachers."

The bill defines qualifying purchases as books, supplies other than athletic supplies, computer equipment such as software, and supplementary materials used in the classroom.

The Tax Foundation of Hawaii cited concerns about the bill, saying the tax system shouldn’t be used to compensate teachers and calling the credit a "backdoor pay increase for teachers."

"Credits are appropriate for alleviating an undue tax burden, which certainly is not the case," the foundation wrote in testimony. "While there is much empathy for the anecdotal reports of teachers using their own funds for classroom materials, the problem is with the bureaucratic system of requesting the funds and having the system take as much as six months to approve the money."

The state Tax Department noted that a $250 federal tax deduction already exists for elementary and secondary school teachers.

"We appreciate what the Legislature is trying to do for teachers, but when they get the federal deduction, that means they’re not being taxed on that income, and the state credit would be on top of that," said Tax Department spokes­woman Mallory Fuji­tani.

The bill next goes before the House Finance Committee.