Michigan Senate votes to expand tax-free accounts for K-12 expenses

By DAVID EGGERT, Associated Press
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LANSING, Mich. - Michigan parents could use tax-free accounts to pay for extracurricular activities and other education-related expenses under partially approved legislation that would expand the state's college savings program.

Five bills were approved 23-14 in the Republican-led chamber Tuesday, with 10 Democrats and four GOP senators opposed.

The main sponsor, Republican Sen. Patrick Colbeck of Wayne County's Canton Township, said the measures sent to the GOP-controlled House would boost education funding, open the door work-study programs and help parents "stretch their dollars" to cover sports activity and other fees.

The state Education Department would determine which services offered by schools are eligible to be paid from "enhanced" Michigan Education Savings Program accounts. Tax-free MESP accounts now can be used for college tuition, room and board expenses, books and other supplies.

A bill that was unexpectedly not voted on would let people deduct from state income taxation money they contribute to the accounts - up to $5,000 for a single return and up to $10,000 for a joint return each year. Amber McCann, spokeswoman for Senate Majority Leader Arlan Meekhof, said there were "some issues" with the bill that were being reviewed and there was no rush to vote on it.

Democrats had planned to propose an amendment to boost Michigan's personal income tax exemption from $4,000 to $6,000.

"It's big on parental empowerment," Colbeck, a gubernatorial candidate, said of the bills. He said parents and schools would not have to participate, and money paid to schools would not affect any existing public funding.

Democrats, however, likened the legislation to a "voucher program" and criticized it as a tax break for the wealthy. The nonpartisan Senate Fiscal Agency estimates it could cost between $60 million and $100 million to implement the Enhanced Michigan Education Savings Program, which potentially could be covered by administrative or transaction fees assessed on account holders. The tax break would likely reduce revenue by more than $13.7 million annually, the agency says.

"If we just started investing in our education programs to begin with, there would be no reason to create special savings accounts for affluent folks to send their children to private schools," said Democratic Sen. Hoon-Yung Hopgood of Taylor.

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Senate Bills 544-49

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