State Ex Rel. Montana School Boards Ass'n v. Waltermire

No. 86-411

I N THE SUPREME COURT OF THE STATE OF MONTANA

1986

STATE OF MONTANA, e x r e l . , MONTANA
SCHOOL BOARD A S S O C I A T I O N , MONTANA
A S S O C I A T I O N OF COUNTIES, MONTANA
LEAGUE OF C I T I E S AND TOWNS, MUSSEL-
SHELL COUNTY, CUSTER COUNTY, CHOUTEAU
COUNTY, YELLOWSTONE COUNTY, BUTTE-
S I L V E R BOW LOCAL GOVERNMENT, CHARLES
L . EVANS, and MICHAEL S . BECKER,

P l a i n t i f f s and R e l a t o r s ,

J I M WALTERMIRE, S e c r e t a r y of S t a t e o f
t h e S t a t e of M o n t a n a ,

D e f e n d a n t and R e s p o n d e n t ,
and

F R I E N D S OF THE C O N S T I T U T I O N , INC.,

R e a l P a r t y i n Interest.

O R I G I N A L PROCEEDING:

COUNSEL OF RECORD:

For Petitioner/Relator:

C h a r l e s E. E r d m a n n argued, H e l e n a , Montana

For R e s p o n d e n t :

Hon. M i k e G r e e l y , A t t o r n e y G e n e r a l , H e l e n a , M o n t a n a
H. E l w o o d E n g l i s h arqued f o r S e c r e t a r y of S t a t e ,
H e l e n a , Montana

For R e a l P a r t y i n I n t e r e s t :

C a r t e r P i c o t t e a r g u e d f o r F r i e n d s of t h e C o n s i t u t i o n ,
H e l e n a , Montana

F o r Amicus Curiae:

D a v i d G l i k o , C i t y A t t o r n e y , G r e a t Falls, Montana
R o g e r T i p p y f o r Montana L e g a l D e f e n s e F u n d , H e l e n a , Montana

Submitted: October 7 , 1 9 8 6
Decided: December 11, 1 9 8 6

Filed : DEC 2 1 1986
."".".----

Clerk
Mr. Justice Fred J. Weber delivered the Opinion of the Court.

In an application to this Court for a writ of injunction
and declaratory judgment, plaintiffs and relators challenged
the constitutionality of Constitutional Initiative 27, the
"property tax initiative." On October 7, 1986, this Court
issued an order denying the requested relief (copy of order
attached to this opinion). This opinion sets forth the
Court's reasoning.
The issues are:
1. Is the Initiative invalid on its face as a violation
of the Contract Clause of the U.S. Constitution?
2. Does t.he Initiative present more than one amendment
in a single ballot measure in violation of Mont. Const. Art.
XIV, § 11?
3. Does the Initiative present irreconcilable conflicts
with Mont. Const. Art. VIII, § 2, and Mont. Const. Art. 111,
§ 7?
Constitutional Initiative 27 was certified to the Gover-
nor as officially filed on June 27, 1986. The Initiative
would amend Montana's Constitution by adding a new section to
Article VIII as follows:

Section 15. Certain taxes prohibited--certain tax
changes only by referendum or initiative. No tax
shall be imposed on any real or personal property.
The establishment of a sales tax, or the increase
of sales tax or personal income tax shall be accom-
plished only by referendum of the legislature with
the approval of a majority of the qualified elec-
tors or initiative of the people.
It would also repeal several sections of the Montana Consti-
tution: Art. VIII, 5 3, 4, and 5, and Art. XII, § l(2).
On September 3, 1986, plaintiffs and relators filed an
application for an original proceeding in this Court pursuant
to Rule 17 of the Montana Rules of Appellate Civil Procedure,
asking that CI-27 be declared unconstitutional on its face
under the Uniform Declaratory Judgment Act. They requested
that the Secretary of State be enjoined from presenting CI-27
to the voters. They filed a brief in support of their
application.
This Court ordered that all named parties submit briefs,
reserving decision on whether it would accept jurisdiction of
plaintiffs' application. After all briefs were filed, oral
arguments were heard. This Court then issued its order
denying the applicat.ion for a writ of injunction and
declaratory judgment.
I

Is the Initiative invalid on its face as a violation of
the Contract Clause of the U.S. Constitution?
Article I, Section 10 of the United States Constitution
provides that no state shall pass a law impairing the obliga-
tion of contracts. Plaintiffs contend that the Initiative
would impair bond contracts already issued by Montana cities,
counties, and school districts by repealing the statutes
which provide for the method of repayment of bonds. The
defendants counter that there is no impaired contract now
before this Court and that other sources could be arranqed
for repayment of the bonds prior to the July 1987 effective
date of the Initiative.
The peoples' right to alter or abolish our state consti-
tution and form of government whenever they deem it necessary
was present in our 1889 Constitution and remains substantial-
ly unchanged today at Mont. Const. Art. 11, § 2. Under the
1889 Constitution, the people had the right to make statutory
changes by initiative. In opinions decided under that
provision, this Court accepted jurisdiction over pre-election
initiative challenges only where the challenged initiative
was not properly submitted under the election laws, e.g.,
State ex rel. Livingston v. Murray (1960), 137 Mont. 557, 354
P.2d 552, and where the challenged initiative was unconstitu-
tional on its face, e.g., State ex rel. Steen v. Murray
(1964), 144 Mont. 61, 394 P.2d 761. The right of the people
to make statutory changes by initiative is retained in Art.
111, S 4 of our 1972 Constitution. The people also have the
right under Art. XIV, S 9 of our 1972 Constitution to make
constitutional changes by initiative:

Amendment by initiative. (1) The people may also
propose constitutional amendments by initiative.
Petitions including the full text of the proposed
amendment shall be signed by at least ten percent
of the qualified electors of the state. That
number shall include at least ten percent of the
qualified electors in each of two-fifths of the
legislative districts.
(2) The petitions shall be filed with the
secretary of state. If the petitions are found to
have been signed by the required number of elec-
tors, the secretary of state shall cause the amend-
ment to be published as provided by law twice each
month for two months previous to the next regular
state-wide election.
(3) At that election, the proposed amendment
shall be submitted to the qualified electors for
approval or rejection. If approved by a majority
voting thereon, it shall become a part of the
constitution effective the first day of July fol-
lowing its approval, unless the amendment provides
otherwise.
This right of the people to amend the Constitution by initia-
tive is a unique and important retained power. The inclusion
of this right in the 1972 Constitution emphasizes the degree
of control the people desired to retain over the changes in
their Constitution. We conclude that it is not the function
of this Court to intervene in the initiative process prior to
the peoples' vote absent extraordinary cause, and that our
discretionary jurisdiction under Rule 17, M.R.App.Civ.P.,
should not be exercised unless it is absolutely essential.
The impairment of contract challenge does not suggest
that the Initiative is unconstitutional on its face as was
the initiative in Steen. In substance, it is a contention
that the Initiative would be unconstitutional as applied to
bonds and other obligations already issued by cities, towns,
school districts, and other parts of state government. The
record before us does not contain any bonds or other obliga-
tions which are alleged to have been unconstitutionally
affected. If the Initiative were adopted by the people,
there would be an adequate opportunity to present this issue
in the court system and determine if the impairment of con-
tract challenge in fact does apply to obligations in exis-
tence. We do not find the type of compelling requirement
necessary to move our discretion in this manner. We there-
fore declined to accept jurisdiction of this issue prior to
the election.
I1
Does the Initiative present more than one amendment in a
single ballot measure in violation of Mont. Const. Art. X I V ,
§ ll?
Plaintiffs and relators say that the Initiative address-
es several distinct subjects, including property taxes, sales
taxes, and s.1.D.'~. They argue that this violates Mont..
Const. Art. XIV, § 11: "If more than one amendment is sub-
mitted at the same election, each shall be so prepared and
distinguished that it can be voted upon separately."
As we stated under Issue I, this Court has exercised
pre-election jurisdiction to remove an initiative from the
ballot only when there was a procedural defect or when the
initiative was clearly unconstitutional its face. The
Steen case involved the latter reason. There, the text of
the proposed initiative clearly and directly contradicted a
constitutional provision prohibiting the legislature from
authorizing gambling. In the present case, in contrast,
there are strong arguments on both sides of the issue of
whether the Initiative violates the constitutional require-
ment that initiatives must address only one subject. Such a
close issue deserves the considered judgment of this Court
and is inappropriate for the hurried consideration requested
in the present pre-election determination of
constitutionality. We concluded that to pull this Initiative
off the ballot while we considered this aspect more carefully
would be an unjustified infringement on the people's right of
initiative. Additionally, this issue could have been ad-
dressed following the election, had the Initiative been
adopted. - e.g., State ex rel. Corry v. Cooney et al.
See,
(1924), 70 Mont. 355, 225 P. 1007; State ex rel. Hay v.
Alderson (1914), 49 Mont. 387, 142 P. 210; State v. Board of
Com'rs. (1906), 34 Mont. 426, 87 P. 450. We therefore de-
clined to exercise our discretionary jurisdiction over this
issue prior to the election.

Does the Initiative present irreconcilable conflicts
with Mont. Const. Art. VIII, § 2, and Mont. Const. Art. 111,

Plaintiffs and relators maintain that the portion of the
Initiative which prohibits property taxes conflicts with
Mont. Const. Art. VIII, $ 2, which states "[tlhe power to tax
shall never be surrendered, suspended, or contracted away. "
They also argue that allowing sales or personal income taxes
to be established or increased only after approval by a
majority of the qualified electors would require a
supermajority for passage of such measures, because Mont.
Const. Art. 111, § 7, defines the number of qualified elec-
tors as the number of voters in the previous gubernatorial
election. Plaintiffs assert that if the Initiative passed, a
majority of the number of voters in the previous gubernatori-
al election would have to approve proposed sales or personal
income taxes. Plaintiffs state that this would conflict with
Mont. Const. Art. 11, $ 2, which they say implies that a

majority of the voters will prevail.
Plaintiffs contended that this Court should strike the
Initiative from the November ballot because of these con-
flicts. We declined to do so. No constitutional conflict
would exist until and unless the Initiative was enacted into
law by popular vote in November. Even then, the time period
until July 1, 1987, would remain in which to raise objections
to the Initiative before it took effect as law. At that
time, any unconstitutional portions of the Initiative could
be severed. These factors, along with our firm conviction of
the value and importance of the right of initiative which is
retained by the people of Montana, led us to conclude that
the interests of our state would best be served, and the role
of this Court best fulfilled, if the Court did not intervene
prior to the election.

We Concur:
 IN THE SUPREME COURT OF THE STATE OF MONTANA

No. 86-411

STATE OF MONTANA ex rel. MONTANA
SCHOOL BOARD ASSOCIATION, MONTANA
ASSOCIATION OF COUNTIES, MONTANA
LEAGUE OF CITIES and TOWNS,
MUSSELSHELL COUNTY, CUSTER COUNTY,
CHOUTEAU COUNTY, YELLOWSTONE COUNTY,
BUTTE-SILVER BOW LOCAL GOVERNMENT,
CHARLES L. EVANS, and MICHAEL S.
BECKER,
Plaintiffs and Relators, .

JIM WALTERMIRE, Secretary of State
of the State of Montana,
Defendant and Respondent,
FRIENDS OF THE CONSTITUTION, INC.,
Real Party in Interest.

O R D E R

Plaintiffs and Relators have filed an original proceed-
ing in this Court for Writ of Injunction and Declaratory
Judgment, in which they challenge the constitutionality of
Constitutional Initiative 27, which in part is entitled as an
initiative to amend the Montana Constitution to abolish taxes
on real and personal property. Briefs, motions, and other
materials have been filed by Plaintiffs and Relators, Defen-
dants and Respondents, and Real Party in Interest. Oral
argument was held before the Court on this date. The Court
has concluded it is advisable to immediately issue its Order
to inform all parties of the result.
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Special concurrence by Mr. Justice John C. Sheehy, Mr.
Justice William E. Hunt, Sr., and Mr. Frank B. Morrison, Jr.:

We have voted today, with reservations, that this Court
should allow CI-27 to remain on the statewide ballot in the
general election of 1986.
Our reservations are that: (1) CI-27 does indeed
violate the Contract Clause of the United States Constitution
(Art. I, § 10) and of the 1972 Montana Constitution (Art. 11,
S 31); (2) does create an unreconcilable conflict with Art.
VIII, 5 2 and with Art. 111, S 7, of the 1972 Montana
Constitution; and, (3) is duplicitous and even triplicitous
in the number of subjects submitted in one initiative.
Why would we allow it at all in the face of such
substantive defects? First, because time remains after the
general election and before the effective date if CI-27
passes, for the legislature and this Court to take curative
actions. For exa-mple, this Court could hold the initiative
unconstitutional as to contracts impaired; or we could hold
that special assessments are not a form of taxation at all,
but charges levied for benefits bestowed. Likewise, we can
still decide, if CI-27 passes, the irreconcilable issues
before the effective date. The legislature itself may adopt

a plan acceptable to the voters by referendum before the
effective date.
Our second reason is not legal but practical. CI-27 is
not so much a fatal disease as it is a symptom that somthing
is ailing in the Montana body politic. While the economy has
stagnated or receded in most areas of Montana, the
ever-galling property tax load has increased out of
proportion to the local economies. There would be no gain
here to record the reasons, most of which lie directly at the
legislature's door, some of which accrue from the bloated
administrations of school districts, counties and towns, and
one of which is the curtailment of the federal largesse. Not
the least pain in our political body is the miserable
mismanagement by the state of the 5-year revaluation program,
which has brought thousands of property owners to their
courthouse doors demanding relief.
The 55,000 signers of petition for CI-27, and their
ranks of supporters, are saying out loud that property taxes
in Montana have become regressive. Since all taxes,
regardless of their names, are paid out of our incomes, a
growth in taxation which is not accompanied by a growth in
our incomes necessarily becomes strangular. Some Montanans
feel a hand at their throats. They see CI-27 as a means to
escape the strangle-hold. They are as entitled to express
their outrage at the ballot box against taxation as against
candidates. Whether they are right can be decided later, if
CI-27 passes.
We therefore concur.

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