Citing a lack of funds, lawmakers Thursday killed a proposed tax credit that would have helped teachers offset their out-of-pocket classroom expenses.

Teachers and the Hawaii State Teachers Association had lobbied for the legislation, helping it survive despite concerns from the state Department of Taxation.

Supporting testimony from teachers fell off after the announcement last month of a contract deal that included annual raises of at least 3 percent.

"While I know we’ve kept this particular measure moving along and had wanted to consider it, I don’t believe that at this point in time it’s been budgeted for," said Senate Education Chairwoman Jill Tokuda.

Tokuda, serving as chairwoman for the Senate in a conference committee on the bill, recommended deferring Senate Bill 573 indefinitely.

House Education Chairman Roy Takumi agreed, saying that the bill could be reconsidered next year.

The amount of the proposed credit remained unspecified in the latest version of the bill. Previous versions had included credits of up to $500 per year.

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

State Tax Director Fred Pablo had previously testified that a $250 federal tax deduction already exists for elementary and secondary school teachers. He said nothing would "prevent a taxpayer from claiming both a deduction and the credit for the same expenses," resulting in "duplicate tax benefits."

The HSTA had supported the bill, testifying that a survey of its members found that half of teachers responding had annual out-of-pocket expenses of between $250 and $500, and some as high as $1,000. The union represents about 13,500 public and charter school teachers.

Nationally, teachers on average spent $356 of their own money on school supplies and materials during the 2009-10 school year, according to the National School Supply & Equipment Association.

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."