Montana high court weighs ban on religious school tax credit

April 6, 2018 GMT

HELENA, Mont. (AP) — The Montana Supreme Court heard arguments Friday on reinstating a ban on tax credits for donations that go toward scholarships for students who attend private religious schools.

Montana revenue officials and public education advocates urged the justices to reverse a Kalispell judge’s order last year and prevent religious schools from benefiting from the tax credit program.

Attorneys for the parents of three religious school students, however, asked the justices to toss the ban because it is discriminatory and no public money is being used for religious purposes.


The disputed program, approved by the Republican-led Legislature in 2015 as an alternative to a school voucher program, gives up to $150 in tax credits for donations made to scholarship programs for private schools.

The state Department of Revenue wrote rules to administer the new law that said religious schools could not participate in the program because the Montana Constitution prohibits direct or indirect state spending on religious schools.

The rules prompted claims of discrimination from religious groups and a lawsuit by three women whose children go to religious schools. A judge in Kalispell agreed with the women last May and struck down the revenue department’s religious school exclusion.

The department appealed to the state Supreme Court, which heard arguments in the case before an audience at the University of Montana.

Department of Revenue attorney Dan Whyte said the tax credits are public funding, and the program violates the state constitution’s ban on indirect state spending for any religious purpose.

The tax credit program without the ban benefits religious schools almost exclusively, he said. That’s because more than 90 percent of the private schools that have signed up with scholarship organizations under the program are religious, Whyte said.

That may have been state lawmakers’ way of getting around the prohibition on spending state money on religious schools, Jonathan McDonald said, an attorney for the Montana Quality Education Coalition, a public education advocacy group.

“The Legislature has said we can’t give money to private religious organizations, however, you can, so we’re going to give you dollar-for-dollar back when you do,” McDonald said.

The attorneys for the students’ parents argued the tax credits are not public funds, but private money, and they benefit the students, not the religious schools.


Moreover, a ban on tax credits for religious school students is discrimination, Richard Komer said, an attorney for the Institute for Justice representing the parents.

“Discriminating against families choosing religious private schools in favor of those choosing secular private schools cannot be justified under either the Montana or federal constitutions,” Komer said.

The justices did not make an immediate ruling. Their questions included why the state considers tax credits for religious secondary school students unconstitutional, when tax credits have been allowed for decades for donations to higher education foundations, including religious-affiliated schools like Carroll College.

The case has generated national interest, with 10 educational and civil liberties groups weighing in with the court. That includes the U.S. government, which wrote in a court filing that Montana’s religious school exclusion violates the First Amendment by denying students participation in the program for religious reasons.

For all the attention, the program has not generated much money. People claiming the tax credits donated $32,129 to private school scholarship groups in 2016 and pledged $7,300 through the first 11 months of 2017, according to the Department of Revenue.

The 2015 law also allowed $150 tax credits for donations to innovative educational programs in public schools. That resulted in $7,851 in donations in 2016 and $3,150 pledged through the first 11 months in 2017.

State lawmakers had set $3 million caps for the private school scholarship program and the public school innovation program.