District judge: Tax rebate referendum is unconstitutional

This item originally appeared in: The Billings Gazette


Charles S. Johnson

HELENA — A state district judge has struck from the November ballot a legislative referendum that, if approved by voters, would have provided for money to be automatically refunded to taxpayers if certain fiscal conditions were met.

District Judge Jeffrey Sherlock of Helena on Tuesday ruled in favor of public employee unions and an aging agency in declaring Legislative Referendum 123 an unconstitutional delegation of power by the Legislature to a legislative fiscal analyst acting on the entire body’s behalf.

He said it violated precedents by the Montana and U.S. supreme courts.

“Everyone, including the undersigned, would like to see a tax credit or refund,” Sherlock wrote. “The Legislature could do so itself or could properly delegate this function to an executive agency. However the Legislature cannot delegate its power to one of its employees when that power should be properly exercisable only by the entire legislative body while in session or a properly designated executive agency.”

If voters had approved LR-123, it would have required the state Revenue Department to issue income tax credits — or dollar-for-dollar reductions in people’s income tax liabilities — if certain fiscal triggers were met. These triggers would kick in if the actual state general fund balance exceeded the legislative projection by a certain percentage and dollar amount.

By approving it as a legislative referendum to go on the ballot, the Republican-controlled Senate and House bypassed a potential veto last year by Democratic Gov. Brian Schweitzer.

The MEA-MFT, Montana AFL-CIO, Montana Association of Area Agencies on Aging and American Federation of State, County and Municipal Employees, Montana Council 9, sued last fall and asked Sherlock to remove LR-123 from the ballot.

“This is amazing,” MEA-MFT President Eric Feaver said Wednesday. “Well, bless Judge Sherlock because he’s right. The Legislature was giving away its authority to persons not constitutionally empowered to be making decisions.”

Former Sen. Joe Balyeat, R-Bozeman, the measure’s sponsor, said he wasn’t surprised by the decision.

“Basically what’s happening in Montana is that the courts have basically seized control of the political process,” said Balyeat, who resigned from the Senate on Monday for unrelated reasons.

“They’ve reduced the power of the Legislature to a point where we don’t even have as much power as a single bureaucrat in the executive branch.”

Sherlock said under the proposed ballot measure, a legislative fiscal analyst, Terry Johnson, the Legislature’s chief revenue forecaster, presents the Legislature’s Revenue and Transportation Interim Committee with his estimate of state revenues over a three-year period. The committee can approve or modify his estimates.

The committee’s estimates are introduced at the Legislature in House Joint Resolution 2, but Sherlock said the entire Legislature hasn’t voted on the estimate in the past four sessions.

“It also appears that the legislative fiscal analyst could make estimates the Legislature would not adopt,” Sherlock said. “In other words, the legislative fiscal analyst, under LR-123, would be doing what the Legislature as a whole certainly could do or what an executive administrative agency could do.”

The judge said this appears to be unconstitutional delegation to “a creature of the Legislature” of powers that only the full Legislature or an executive branch official can exercise. It also appears to be an unconstitutional violation of the separation of powers, he said.

Sherlock said he anticipates that his decision will be appealed to the Montana Supreme Court.

If not, he ordered that L-R 123 off the November ballot. If it still must appear on the ballot for administrative reasons, Sherlock ordered the results not to be counted.

Balyeat had another legislative referendum removed from the ballot earlier this spring. The Montana Supreme Court upheld a lower court ruling that struck Balyeat’s proposal to have justices for the high court elected from geographical districts instead of through statewide elections.