Montana court strikes down scholarship tax-credit program

December 12, 2018 GMT

HELENA, Mont. (AP) — The Montana Supreme Court on Wednesday struck down a state-run program that gives tax credits to people who donate to private-school scholarships, saying the program violates a constitutional ban against giving state aid to religious organizations.

The justices ruled 5-2 that the program giving tax credits of up to $150 for donations to organizations that give scholarships to private-school students amounts to indirect aid to schools controlled by churches. There is a ban in the Montana Constitution on any direct or indirect state aid to such schools, regardless of how large or small the amount is, the opinion by Justice Laurie McKinnon said.


“The Legislature’s enactment of the Tax Credit Program is facially unconstitutional and violates Montana’s constitutional guarantees to all Montanans that their government will not use state funds to aid religious schools,” McKinnon wrote.

School choice and private school advocates called the ruling religious discrimination. Three parents who sued to keep religious schools in the tax credit program vowed to take their case to the U.S. Supreme Court.

“The court’s ruling discriminates against religious families and every Montana child who is counting on these scholarships,” said Kendra Espinoza, one of the parents.

The high court’s ruling reverses a Kalispell judge’s order last year siding with Espinoza and the other parents who argued that the program is constitutional because it doesn’t use state funds, only taxpayer money.

Two dissenting justices agreed with the parents’ argument. Justice Beth Baker said the constitutional prohibition is on appropriations to religious schools, not on tax breaks to individuals.

The majority opinion’s interpretation that the state constitutional bans all indirect aid is an overreach, Baker wrote.

The Republican-led Legislature passed the law in 2015 as an alternative to a school voucher program designed to give students who want to attend private schools the means to do so. Most private schools in Montana have religious affiliations, and more than 90 percent of the private schools that have signed up with scholarship organizations under the program are religious.

After the law passed, the state Department of Revenue wrote a regulation prohibiting religious schools from participating because of the constitutional ban on state spending for religious purposes.


District Judge Heidi Ulbricht of Kalispell last year ruled against the department’s regulation. The Supreme Court’s ruling reversed Ulbricht’s order and said the revenue department’s regulation was superfluous because the whole program is unconstitutional.

But, the justices added, the department exceeded its authority by writing the regulation in the first place because the agency’s job is to carry out the provisions of a law, not to turn an unconstitutional law into a constitutional one.

“We appreciate the Court’s determination that the scholarship program violated the Montana Constitution, and we remain committed to administering all of Montana’s tax policies fairly, efficiently and in accordance with the law,” department director Gene Walborn said in a statement.

A second component of the 2015 law that allowed tax credits for donations for innovative programs in public schools is not affected by Wednesday’s ruling.