Suit Challenges New Rule Excluding Religious Schools From Montana Scholarship Tax Credit Law

The Montana Department of Revenue in a notice (full text) certified to the Secretary of State on Dec. 14 that it has adopted, as proposed, Rule 1 (full text) that excludes religiously affiliated schools from participating in the state's new School Contributions Tax Credit law. (See prior posting.)  On Dec. 16. three mothers sued the state challenging the new rule.  The complaint (full text) in Espinoza v. Montana Department of Revenue, (MT Dist. Ct., filed 12/16/2015) claims that the exclusion of religiously affiliated schools is inconsistent with the intent of the legislature in enacting the scholarship tax credit law, and contends that the exclusion violates the free exercise, establishment and equal protection clauses of the Montana and U.S. Constitutions.  Institute for Justice announced the filing of the lawsuit.

Montana has a procedure for committees of the state legislature to weigh in on whether they believe that a particular proposed rule is consistent with legislative intent.  Using that procedure, the relevant committees of the Montana House and Senate voted that the proposed rule is inconsistent with legislative intent. (Notice of Legislative Poll).  The results of this legislative poll are admissible in evidence in the suit challenging the new rule.

The Great Falls Tribune reported yesterday:

Montana Solicitor General Dale Schowengerdt submitted comments while the rule was still in draft form that said a judge would likely decide it is unconstitutional to categorically exclude religious entities from a neutral benefits program without reason.

“The Attorney General believes that it would not be defensible,” Schowengerdt wrote of Montana Attorney General Tim Fox.

But Fox will have to defend the rule in the lawsuit and another expected to be filed in federal court. The Department of Justice is the attorney for the state when an agency is sued.