Written by Don Byrd

Like many other states, Montana’s constitution explicitly prohibits the use of taxpayer money to aid religion or religious education. Here are the relevant provisions:

No appropriation shall be made for religious, charitable, industrial, educational, or benevolent purposes to any private individual, private association, or private corporation not under control of the state
-Article V, Section 11(5)

The legislature, counties, cities, towns, school districts, and public corporations shall not make any direct or indirect appropriation or payment from any public fund or monies, or any grant of lands or other property for any sectarian purpose or to aid any church, school, academy, seminary, college, university, or any other literary or scientific institution, controlled in whole or in part by any church, sect, or denomination.
-Article X, Section 6(1)

On the basis of those prohibitions, Montana has refused to extend to religious schools a state program that offers tax credits for scholarship contributions toward private school tuition. Because the program would essentially pay dollar for dollar in tax credits the amount given toward tuition, the state reasoned that it amounted to an indirect appropriation to a religious institution barred by state law. But in a ruling this week, a state court disagreed and issued an injunction barring the state from excluding religious schools.

Here is an excerpt from the order explaining the decision:

Both articles of the Montana Constitution prohibit appropriations that aid religious schools but they are silent concerning tax credits.. . . Considering tax credits to be functionally equivalent to expenditures may seem sensible from a budgetary point of view, but the statute does not purport to abolish the commonly understood definitions of credits, deductions, exemptions, and appropriations.

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 treasure and not subject to expenditure. . . The Court concludes that the term “appropriation” used in Article V, Section 11(5) and in Article X, Section 6(1) does not encompass tax credits.

No word yet on whether or not the state plans to appeal this decision.