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Espinoza v. Mont. Dep't of Revenue - 2018 MT 306, 393 Mont. 446, 435 P.3d 603


Mont. Const. art. X, § 6 directly prohibits various entities, including the Montana Legislature, from aiding sectarian schools. Preliminarily, the court recognizes that an individual taxpayer may give money to any cause she wishes. A taxpayer is free to donate to a Student Scholarship Organization (SSO), a Qualified Education Provider (QEP), or any other charitable cause of her choice. There is no prohibition on a taxpayer giving her money away, nor would such prohibition be constitutional. 


The Montana Department of Revenue is responsible for administering § 15-30-3111, MCA (the Tax Credit Program), which provides a taxpayer a dollar-for-dollar tax credit based on the taxpayer's donation to a Student Scholarship Organization (SSO). SSOs fund tuition scholarships for students who attend private schools meeting the definition of Qualified Education Provider (QEP). The Legislature instructed the Department to implement the Tax Credit Program in compliance with Article V, Section 11(5),  and Article X, Section 6, of the Montana Constitution. Pursuant to that grant of authority, the Department implemented Admin. R. M. 42.4.802 (Rule 1), which it believed was necessary to constitutionally administer the Tax Credit Program. Rule 1 adds to the Legislature's definition of QEP and excludes religiously-affiliated private schools from qualifying as QEPs. Plaintiffs are parents whose children attend a religiously-affiliated private school. Plaintiffs filed this proceeding challenging Rule 1. The District Court determined the Tax Credit Program was constitutional without Rule 1 and accordingly granted Plaintiffs summary judgment. The Department appealed.


Did the Tax Credit Program violate Article X, Section 6, of the Montana Constitution?




The Tax Credit Program of Mont. Code Ann. § 15-30-3111 violated Mont. Const. art. X, § 6, which prohibits aid to sectarian school, because the tax credit encouraged the transfer of money from a taxpayer donor to a sectarian school by reimbursing, dollar-for-dollar, the donation to a student scholarship organization that directly funded tuition scholarships at religiously-affiliated schools. Mont. Admin. R. 42.4.802 (Rule 1), through which the department of revenue implemented the tax credit program, was superfluous because it was based on an unconstitutional statute, and it was also enacted outside the department's rulemaking authority. Section 15-30-3111 was severed from the remainder of Part 31, Mont. Code Ann. §§ 15-30-3101 to -3114 because Senate Bill 410 contained a severability clause permitting severance of the unconstitutional provision.

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