Court Enjoins Montana Rule Excluding Religious Schools From Tax Credit Program

In Espinoza v. Montana Department of Revenue, (MT Dist. Ct., May 26, 2017), a Montana state trial court enjoined the enforcement of a rule that bars religiously affiliated schools from participating in the state's program providing tax credits to Student Scholarship Organizations.  The Department of Revenue took the position that allowing religious schools to participate would violate state constitutional provisions barring appropriations or payments of public funds to aid sectarian schools.  the court held that the Department had incorrectly interpreted the constitutional provisions:

Non-refundable tax credits simply do not involve the expenditure of money that the state has in its treasury; they concern money that is not in the treasury and not subject to expenditure.  Since the plain language of Article V, Section 11(5) and Article X, Section 6(1) of the Montana Constitution prohibit appropriations, not tax credits, the Department's Rule 1 is based on an incorrect interpretation of law.  The court concludes that the term "appropriation" used in Article V, Section 11(5) and Article X, Section 6(1) does not encompass tax credits.

According to Daily Inter Lake, the state plans to appeal to the Montana Supreme Court. (See prior related posting.)