# Petition for Writ of Certiorari — Kotterman v. Killian

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Petition for Writ of Certiorari
- **Published:** January 1, 1999
- **Citation:** 528 U.S. 921

## Text

») FILED
|

no. 98171 GAPR 5 6 jog

Supreme Comet uf the Wuited States
OCTOBER TERM, 1998

PENNY KOTTERMAN, et al.,

. Petitioners,

MaRK W. KILLIAN, ef al.,
Respondents.

On Petition for Writ of Certiorari to the
Supreme Court of Arizona

PETITION FOR WRIT OF CERTIORARI

SUSAN G. SENDROW Rorert H. CHANIN
LIEBERMAN, DODGE, SENDROW (Counsel of Record)

& GERDING, Ltd. JOHN M. WEST
Valley Bank Tower, Suite 1801 ALICE O’BRIEN
3550 North Central Avenue BREDHOFF & KAISER, P.L.L.C.
Phoenix, Arizona 85012 1000 Connecticut Avenue, N.W.
(602) 277-3000 Suite 1300
ALICE FINN GARTELL Loong gee - 20056
ARIZONA EDUCATION ASSOCIATION a
100 West Clarendon Avenue ELLIOT M. MINCBERG
Suite 1600 JUDITH E. SCHAEFFER
Phoenix, Arizona 85013 PEOPLE FOR THE AMERICAN
(602) 264-1774 WAY FOUNDATION

2000 M Street, N.W., Suite 400
Washington, D.C. 20036
(202) 467-4999

THOMAS W. PICKRELL
ARIZONA SCHOOL BOARDS ASS’N
2100 North Central Avenue

Phoenix, Arizona 85004 STEVEN K. GREEN
(602) 254-1100 AMERICANS UNITED FOR
SEPARATION OF CHURCH

CAROLINE PILCH

ARIZONA FEDERATION OF
TEACHERS 1816 Jefferson Place, N.W.

Yen & Pace Washington, D.C. 20036

1420 East Missouri, Suite 101 (202) 466-3234
Phoenix, Arizona 85014
(602) 241-0474

AND STATE

Attorneys for Petitioners

del
WILSON - EPES PRINTING Co., INC. - 789-0096 - WASHINGTON, D.C. 20001

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QUESTION PRESENTED

Whether, under the principles established by Mueller v.
Allen, 463 U.S. 388 (1983), and Committee for Public
Education v. Nyquist, 413 U.S. 756 (1973), the Establish-
ment Clause of the First Amendment is violated when a
state—by means of a dollar-for-dollar tax credit—redirects
funds from the state treasury to a class composed exclu-
sively of private elementary and sccondary schools, most
of which are sectarian and which may use the funds with-
Out restriction for religious purposes.

(i)

ii
PARTIES

This Petition for Writ of Cetriorari is filed on behalf
of petitioners Penny Kotterman, Panfilo Contreras, Frieda
Baker, Rev. Dr. Gerald S. DeGrow, Joanne Hilde,
Michael J. Hoogendyk, Pastor Stanley Jones, Jann Renert,
James Ullman, and Rabbi Joseph Weizenbaum.

Respondents are Mark W. Killian, in his official capac-
ity as Director of the Arizona Department of Revenue;
Lisa Graham Keegan, in her capacity as Superintendent
of Public Instruction and as a parent and taxpayer;
Emmett McCoy, Sr. and Alfreda McCoy, in their own
behalves and as natural guardians of their children, Dallas
McCoy, Krystal McCoy, Sean McCoy, Brandi McCoy,
Daniel McCoy, and Priscilla McCoy; Tanya Phelps, in
her own behalf and as natural guardian of her children,
Tasha Phelps and Leanessa Phelps; Rita Samaniego, in
her own behalf and as natural guardian of her children,
Geraldo Wingate, Kristin Wingate, and Sarah Wingate;
Felipe Sandoval, in his own behalf and as natural guard-
ian of his children, Felicia Sandoval and Felipe Sandoval;
Sally Shanahan, in her own behalf and as natural guard-
ian of her children, Nathan Shanahan, Kaitlyn Shanahan,
Gabriel Shanahan, and Jacob Shanahan; Jeffry Flake and
Trent Franks, as taxpayers; Arizona School Choice Trust,
Inc.; and Lwuis Rhodes.

TABLE OF CONTENTS

Page
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CONSTITUTIONAL PROVISIONS AND
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(iii)

iv

TABLE OF AUTHORITIES
CASES ' Page

Board of Education v. Allen, 392 U.S. 286 (1968)... 10
Committee for Public Education v. Nyquist, 418

ie @ 2.) | eiccke tated atoastiniagaaseacaatel passim
Committee for Public Education v. Nyquist, 350

F. Supp. 655 (S.D.N.Y. 1972), aff'd in part,

rev'd in part, 413 U.S. 756 (1973) —........0........... 8
Everson v. Board of Education, 330 U.S. 1 (1947).. 10
Bob Jones University v. United States, 461 U.S.

FRR atir tal cerereinn MINE F tes SA one a 7
Lemon v. Kurtzman, 403 U.S. 602 (1971) Scene 5
Meek v. Pittenger, 421 U.S. 349 (1975) ........000.0....... 4
Mueller v. Allen, 468 U.S. 388 (1988) 0.00.00... passim
Texas Monthly, Inc. v. Bullock, 489 U.S. 1 (1989).. 7

Witters v. Washington Dep’t of Services for the

Bend, S746 UB. GEL (IGG) .--cnevcrsecdeceseeceseveesseeves 15
CONSTITUTIONS, STATUTES, AND RULES

es I IO aa chcrtintiniantadsicmnadapbicamedetinapiaauend passim
Aris. Comat. art. 51, §.3S ......ccccccccccccoeeecoeees: rete Bee 6
CA I Fes OF Oe vacccnivctoiwctovecinnchiorsttintviiestsnnis 6
EE Ue CIID 5 and one tax credit had the effect of increasing
the personal exemption for low-income families. But
with the Private School Tax Credit the state for the first
time adopted a tax credit that simply reimburses tax-
payers for their contributions to private third parties—
thus using the mechanism of a tax credit as a substitute
for direct legislative appropriations.’

Where a state has provided what in effect are “outright
grants,” Mueller, 463 U.S. at 396-97 n.6, to support sec-
tarian private education, this Court has not allowed the
fact that such “grants” are made through manipulation
of the tax code—rather than through direct legislative ap-
propriations—to affect its review of such public expendi-
tures under the Establishment Clause. The “tax credit”
at issue here is in effect such an outright grant—not a
legitimate “part[] of a genuine system of tax laws,” id.—
and thus requires exacting scrutiny.

expense of agricultural water conservation systems); A.R.S. § 43-
1085 (credit of 10% of cost of corrective action for underground
storage tanks); A.R.S. § 43-1086 (fixed-dollar credit for purchase
of alternative fuel vehicles and equipment); A.R.S. § 43-1087
(credit for increased employment of recipients of temporary as-
sistance for needy families, based on percentage of wages paid).

5 See A.R.S. § 43-1071 (100% credit for income taxes paid to
other states); A.R.S. § 43-1072 (property tax credit of up to 100%
for low-income elderly persons); A.R.S. § 43-1078 (percentage
credit for property taxes paid by defense contractors); A.R.S. § 43-
1089.01 (100° credit for fees paid to public schools for extra-
curricular activities).

6 See A.R.S. § 43-1073.

7In the same 1997 legislative session in which the Private School
Tax Credit was enacted, the Arizona legislature also enacted a 100%
tax credit for contributions of up to $200 to charitable organizations
that provide assistance to the working poor, A.R.S. § 43-1088, which
is similar in form to the Private School Tax Credit.

ee ne eae

15

B. The heart of the Mueller/Nyquist inquiry goes to
the issue of whether, in Mueller’s language, the benefit is
broadly “available for educational expenses incurred by
all parents,” 463 U.S. at 397 (emphasis in original)—
“whether their children attend public school or private,”
id. at 398—or, to the contrary, is “provided only to par-
ents of children in nonpublic schools.” Id. (emphasis in
original) .*

The court below disposed of this issue in a scant para-
graph, asserting that here the “class of beneficiaries is
even broader than that found acceptable in Mueller,”
App. lla, in that “the Arizona tuition credit is available
to all taxpayers who are willing to contribute to an STO.
Any individual, not just a parent, may donate to the
scholarship program.” Jd.

That analysis is defective in several respects. To begin
with, the taxpayers who contribute to STOs and receive
a reimbursement of their contributions through the Private
School Tax Credit are not the ones who derive the benefit
from this statute; the balance sheet is, for them, a “wash.”
The focus, therefore, must be on the breadth of the class
that actually receives the benefit of the funds made avail-
able through the Tax Credit.®

8 See also Witters v. Washington Dep't of Services for the Blind,
474 U.S. 481, 487-88 (1986) (upholding aid program “made avail-
able generally without regard to the sectarian-nonsectarian, or
public-nonpublic nature of the institution benefited”) (quoting
Nyquist, 413 U.S. at 782-83 n.38).

9 Even if one did focus on the taxpayers, moreover, the result
would still be the same as that outlined below: only those taxpay-
ers who wish to make contributions to support education at private
schools are entitled to the tax credit. Similarly, should one focus on
the STO pass-through entities, it is only organizations that provide
scholarships to “nongovernmental” schools that qualify as STOs
for purposes of the Private School Tax Credit. A.R.S. § 43-1089(E).

16

Whether one conceives of that benefit as flowing to the
private schools that ultimately receive the funds as tuition,
or rather to the parents of children who receive scholar-
ships to attend such schools, the class of those who benefit
is in either case limited to the sector of private—predomi-
nantly sectarian—education. See A.R.S. § 43-1089(E)(1)
(defining “qualified school” as a “nongovernmental” pri-
mary or secondary school). Here, as in Nyquist, the
“public assistance amounting to tuition grants [is] pro-
vided only to parents of children in nonpublic schools.”
Mueller, 463 U.S. at 398 (emphasis in original). Unlike
the situation in Mueller, where the statute on its face
provided a tax benefit that could be used by parents of
students in both public and private schools, and where
this Court accordingly declined to speculate as to what
percentage of that benefit was likely to be used by par-
ents in either sector, see 463 U.S. at 401, it is clear from
the face of A.R.S. § 43-1089 that all of the proceeds of

the Private School Tax Credit will go to private schools
and their students.

In short, the Private School Tax Credit benefits only
private (predominantly sectarian) schools and the students
who attend them, excluding public schools and their stu-
dents altogether. Accordingly, it falls on the same side
of the line as the statute struck down in Nyquist rather
than the one upheld in Mueller.’

C. In upholding the Private School Tax Credit, the
court below devoted the bulk of its attention to the “nu-

10The court below thought significant that a different tax
credit is available for taxpayers who pay up to $200 in fees to pub-

lic schools for certain extracurricular activities. See App. 17a (cit- °

ing A.R.S. § 43-1089.01). As noted above, see supra note 5, this is
one of a number of Arizona tax credits that reduce the taxpay-
er’s state income tax in compensation for certain other taxes and
fees paid to governmental entities. Unlike the Private School Tax
Credit, A.R.S. § 43-1089.01 does not reimburse taxpayers for their
voluntary contributions.

eR ANE ete RAE. OF tl BE

17

merous private choices” through which the funds provided
by the tax credit reach sectarian private schools. App.
12a (quoting Mueller, 463 US. at 399). The court’s
error in this regard was not in noting the point—which
this Court’s decisions have indicated is relevant—but in
according controlling significance to the fact that, to a
limited extent, “private individuals choose where the funds
will go.” App. 12a.

While it is true that private individuals do make choices
that determine the specific private schools to which funds
from the Private School Tax Credit will go, what the
court below overlooked is that the same was true of the
tax benefit struck down in Nyquist. In analyzing the tax
deduction at issue in Mueller, therefore, this Court ob-
served that private choice was “of some importance... ,
albeit ‘only one among many factors to be considered.’ ”
463 U.S. at 399 (emphasis added) (quoting Nyquist, 413
U.S. at 781). Thus, Minnesota “reduced”—but did not
eliminate—the Establishment Clause objections to its stat-
ute by “channeling whatever assistance it may provide to
parochial schools through individual parents.” 463 U.S.
at 399,

The specific choices made by private individuals that
determine which particular private schools will receive
funds under the Private School Tax Credit should not
obscure the fundamental choice—made by the state—
about where these public funds will go. The state has
chosen to channel these funds exclusively to private
schools, and the choices of private individuals must be
made within that restricted universe. This is the factor
that ultimately was determinative in Mueller; it was—
along with whether the tax benefit was part of “a genuine
system of tax laws”—the basis upon which this Court
distinguished the tax benefit it had struck down in Nyquist.
See 463 U.S. at 399.

18

The state’s choice to redirect public funds—via a unique
and unprecedented 100% tax credit—from the public fisc
exclusively to private schools is the critical choice for
purposes of analyzing the Private School Tax Credit.
This use of the tax code to channel unrestricted public
funds to a recipient class composed exclusively of private
schools, most of which are pervasively sectarian, “repre-
sents a charge made upon the state for the purpose of
religious education.” Nyquist, 413 U.S. at 791. The deci-
sion of the Arizona Supreme Court is, accordingly, incon-
sistent with the principles established by this Court in
Mueller and Nyquist, and it therefore should be reviewed
and reversed.

III.

Because the Arizona Supreme Court has decided the
important Establishment Clause question presented by the
Private School Tax Credit in a way that conflicts with
the collective teaching of Mueller and Nyquist, a grant
of certiorari is warranted under Supreme Court Rule
10(c). But the Arizona court’s decision also is sympto-
matic of a more generalized confusion as to the line that
this Court has drawn between permissible and impermis-
sible uses of the tax code to provide financial support for
sectarian private education. This case offers this Court
the opportunity to clarify that line by explaining how its
holdings in Mueller and Nyquist can be harmonized.

Guidance from this Court is important for practical as
well as doctrinal reasons. Estimates of the amount of
public funds that would be channeled to private, predomi-
nantly sectarian, education under the Private School Tax
Credit vary widely, but the Arizona Department of Reve-
nue has concluded that $75 million annually would be a
“not unreasonable” estimate, and that an estimate of $35

19

million would be “extremely conservative.” 44 Nor is the
significance of this issue by any means limited to Arizona.
Legislation pursuant to which the state tax code is used
in some way to provide public financial support for sec-
tarian private education has been introduced during this
year’s legislative sessions in at least twenty other states.
This Court should grant certiorari in order to provide
States that are considering this type of legislation with a
clear understanding as to its permissibility vel non under
the Establishment Clause.

CONCLUSION
The Petition for Writ of Certiorari should be granted.

SUSAN G. SENDROW

LIEBERMAN, DODGE, SENDROW
& GERDING, Ltd.

Valley Bank Tower, Suite 1801

3550 North Central Avenue

Phoenix, Arizona 85012

(602) 277-3000

ALICE FINN GARTELL

ARIZONA EDUCATION ASSOCIATION
100 West Clarendon Avenue
Suite 1600

Phoenix, Arizona 85013

(602) 264-1774

THOMAS W. PICKRELL

ARIZONA SCHOOL BoarRDs ASS’N
2100 North Central Avenue
Phoenix, Arizona 85004

(602) 254-1100

CAROLINE PILCH

ARIZONA FEDERATION OF
TEACHERS

YEN & PILCH

1420 East Missouri, Suite 101

Phoenix, Arizona 85014

(602) 241-0474

Respectfully submitted,

ROBERT H. CHANIN
(Counsel of Record)
JOHN M. WEST
ALICE O’BRIEN
BREDHOFF & KAISER, P.L.L.C.
1000 Connecticut Avenue, N.W.
Suite 1300
Washington, D.C. 20036
(202) 833-9340

ELLIOT M. MINCBERG

JUDITH E. SCHAEFFER

PEOPLE FOR THE AMERICAN
WAY FOUNDATION

2000 M Street, N.W., Suite 400

Washington, D.C. 20036

(202) 467-4999

STEVEN K. GREEN

AMERICANS UNITED FOR
SEPARATION OF CHURCH
AND STATE

1816 Jefferson Place, N.W.

Washington, D.C. 20036

(202) 466-3234

Attorneys for Petitioners

11 Petitioners’ Appendix [to Petition for Special Action], Ex-

hibit D.

APPENDIX

a i Net ae

la

APPENDIX
[Filed Jan. 26, 1999]

SUPREME COURT OF ARIZONA
En Banc

Supreme Court No. CV-97-0412-SA

PENNY KOTTERMAN, PANFILO CONTRERAS, FREIDA BAKER,
Rev. Dr. GERALD S. DEGROW, JOANNE HILDE,
MICHAEL J. HOooGENpyK, PASTOR STANLEY JONES,
JANN RENERT, Louis RHODES, JAMES ULLMAN, and
RABBI JOSEPH WEIZENBAUM,

Petitioners,
V.

Mark W. KILLIAN, in his official Capacity as Director
of the Arizona Department of Revenue,
Respondent,

LisA GRAHAM KEEGAN, in her Capacity as Superintendent
of Public Instruction and as a parent and taxpayer;
EMMETT MCCoy, SR. and ALFREDA McCoy, in their
own behalves and as natural guardians of their children,
DALLAS McCoy, KRYSTAL McCoy, SEAN McCoy,
BRANDI McCoy, DANIEL McCoy, and PRISCILLA
McCoy; TANYA PHELPS, in her own behalf and as nat-
ural guardian of her children, TASHA PHELPS and
LEANESSA PHELPS: RITA SAMANIEGO, in her own behalf
and as natural guardian of her children, GERALDO
WINGATE, KRISTIN WINGATE, and SARAH WINGATE;
FELIPE SANDOVAL, in his own behalf and as natural
guardian of his children, FELICIA SANDOVAL and FELIPE
SANDOVAL; SALLY SHANAHAN, in her own behalf and as

2a

natural guardian of her children, NATHAN SHANAHAN,
KAITLYN SHANAHAN, GABRIEL SHANAHAN, and JACOB
SHANAHAN; and JEFFREY FLAKE and TRENT FRANKS,
as taxpayers; ARIZONA SCHOOL CHOICE TRUST, INC.,
Intervenors/Respondents.

SPECIAL ACTION
JURISDICTION ACCEPTED, RELIEF DENIED

ZLAKET, Chief Justice.

{1 Petitioners challenge the constitutionality of A.R.S.
§ 43-1089 (1997), which allows a state tax credit of up
to $500 for those who donate to school tuition organiza-
tions (STOs). The statute reads as follows:

A. For taxable years beginning from and after De-
cember 31, 1997, a credit is allowed against the taxes
imposed by this title for the amount of voluntary cash
contributions made by the taxpayer during the taxable
year to a school tuition organization, but not exceed-
ing five hundred dollars in any taxable year. The five
hundred dollar limitation also applies to taxpayers
who elect to file a joint return for the taxable year.
A husband and wife who file separate returns for a
taxable year in which they could have filed a joint
return may each claim only one-half of the tax credit
that would have been allowed for a joint return.

B. If the allowable tax credit exceeds the taxes
otherwise due under this title on the claimant’s in-
come, or if there are no taxes due under this title, the
taxpayer may carry the amount of the claim not used
to offset the taxes under this title forward for not

” in

3a

more than five consecutive taxable years’ income tax
liability.
C. The credit allowed by this section is in lieu of

any deduction pursuant to § 170 of the internal
revenue code and taken for state tax purposes.

D. The tax credit is not allowed if the taxpayer
designates the taxpayer’s donation to the school tui-
tion organization for the direct benefit of any depend-
ent of the taxpayer.

E. For purposes of this section:

1. “Qualified school” means a nongovernmental
primary or secondary school in this state that does
not discriminate on the basis of race, color, sex,
handicap, familia] status or national origin and that
satisfies the requirements prescribed by law for pri-
vate schools in this state on January 1, 1997.

2. “School tuition organization” means a chari-
table organization in this state that is exempt from
federal taxation under § 501(c)(3) of the internal
revenue code and that allocates at least ninety per-
cent of its annual revenue for educational scholar-
ships or tuition grants to children to allow them to
attend any qualified school of their parents’ choice.
In addition, to qualify as a school tuition organiza-
tion the charitable organization shall provide educa-
tional scholarships or tuition grants to students with-
out limiting availability to only students of one school.

A.R.S. § 43-1089 (footnotes omitted). Petitioners claim
that this law violates the Federal Establishment Clause
and three provisions of the Arizona Constitution. We
have original jurisdiction pursuant to Ariz. Const. art. VI,
§ 5(1) and Ariz. R. Spec. Act. 1(a) and 3(b).

4a

FEDERAL CONSTITUTION

42 The Establishment Clause, applicable to the states
by authority of the Fourteenth Amendment, proclaims that
“Congress shall make no law respecting an establishment
of religion.” U.S. Const. amend. I; see also Everson v.
Board of Educ., 330 U.S. 1, 15, 67 S. Ct. 504, 511
(1947). The simplicity of this language belies its complex
and continually evolving interpretation by the United
States Supreme Court. See generally Kristin M. Engstrom,
Comment, Establishment Clause Jurisprudence: The Sour-
ing of Lemon and the Search for a New Test, 27 Pac. L.J.
121 (1995); see also Andrew A. Adams, Note, Cleve-
land, School Choice, and “Laws Respecting an Establish-
ment of Religion,” 2 Tex. Rev. L. & Pol. 165, 171-75
(1997). That Court’s decisions reflect an effort to steer
a course of “constitutional neutrality,” Walz v. Tax
Comm'n, 397 U.S. 664, 669, 90 S. Ct. 1409, 1411
(1970), aimed “between avoidance of religious establish-
ment on the one hand, and noninterference with religious
exercise on the other.” Leonard J. Henzke, Jr., The Con-
stitutionality of Federal Tuition Tax Credits, 56 Temp.
L.Q. 911, 924 (1983). “The clearest command of the
Establishment Clause is that one religious denomination
cannot be officially preferred over another.” Larson v.
Valente, 456 U.S. 228, 244, 102 S. Ct. 1673, 1683
(1982). Similarly, religion may not be preferred over
nonreligion. See Everson, 330 U.S. at 18, 67 S. Ct. at
513.

3 This emphasis on neutrality is apparent in a recent
line of Supreme Court cases upholding a variety of educa-
tional assistance programs. See Agostini v. Felton, 521
U.S. 203, , 117 S.Ct. 1997, 2016 (1997), overrul-

ing Aguilar v. Felton, 473 U.S. 402, 105 S. Ct. 3232
(1985) (public school teachers providing remedial educa-

ee ee

Sa

tion to disadvantaged children in parochial schools);
Rosenberger v. Rector & Visitors of the Univ. of Va.,
515 U.S. 819, 845-46, 115 S. Ct. 2510, 2524-25 (1995)
(state university funds used to pay printing costs of student
newspaper espousing religious viewpoint); Zobrest v. Cat-
alina Foothills Sch. Dist., 509 U.S. 1, 3, 113 S. Ct. 2462,
2464 (1993) (sign-language interpreter provided for deaf
student in sectarian high school); Witters v. Washington
Dep’t of Servs. for the Blind, 474 U.S. 481, 482, 106 S.
Ct. 748, 749 (1986) (state financial assistance to blind
student attending private Christian college); Mueller v.
Allen, 463 U.S. 388, 390-91, 103 S. Ct. 3062, 3064-65
(1983) (state income tax deduction for educational ex-
penses, including those incurred at sectarian schools).

€4 Other courts in recent years have also found state
educational aid programs to be in compliance with the
First Amendment. See Jackson v. Benson, 578 N.W.2d
602, 619 (Wis. 1998), cert. denied, US. , 119
S. Ct. 466 (1998) (distribution of tuition vouchers for
use in private, including sectarian, schools); Matthew J. v.
Massachusetts Dep’t of Educ., 989 F.Supp. 380, 391-92
(D. Mass. 1998) (reimbursement of special education
tuition costs at private sectarian school).

€5 In Lemon v. Kurtzman, 403 U.S. 602, 612-13, 91
S. Ct. 2105, 2111 (1971), the Supreme Court adopted a
three-pronged test for evaluating compliance with the
Establishment Clause. Simply stated, a statute does not
violate the First Amendment if (1) it serves a secular
purpose; (2) its principal or primary effect neither ad-
vances nor inhibits religion; and (3) it does not “foster
an excessive government entanglement with religion.” Id.
(quoting Walz, 397 U.S. at 674, 90 S. Ct. at 1414).
While other approaches have been considered by the

6a

Court,! we believe that the “well settled” Lemon standard
provides an appropriate framework for our review. See
Mueller, 463 U.S. at 394, 103 S. Ct. at 3066.

Secular Purpose

"6 The Supreme Court rarely attributes an unconstitu-
tional motive to a legislative act such as this, “particularly
when a plausible secular purpose for the state’s program
may be discerned from the face of the statute.” Mueller,
463 U.S. at 394-95, 103 S. Ct. at 3067. The Minnesota
law at issue in Mueller permitted a tax deduction for tui-
tion, textbook, and transportation expenses of children
attending elementary or secondary schools. /d. at 391
103 S. Ct. at 3065. In upholding it, the Court said:

A state’s decision to defray the cost of educational
expenses incurred by parents—regardless of the type
of schools their children attend—evidences a purpose
that is both secular and understandable. An educated
populace is essential to the political and economic
health of any community, and a state’s efforts to as-
sist parents in meeting the rising cost of educational
expenses plainly serves this secular purpose of ensur-
ing that the state’s citizenry is well-educated.

Id. at 395, 103 S. Ct. at 3067.

“7 The Arizona Legislature has, in recent years, ex-
panded the options available in public education. See, e.g.,
A.R.S. § 15-181 (1994) (establishing charter schools in

1See Board of Educ. v. Grumet, 512 U.S. 687, 705, 114 S. Ct.
2481, 2492 (1994) (finding creation of special school district for
religious enclave violated “the requirement of government neutral-
ity”); Lee v. Weisman, 505 U.S. 577, 586-87, 112 S. Ct. 2649, 2655
(1992) (holding that graduation benedictions in public schools
coerce support for religion) ; Wallace v. Jaffree, 472 U.S. 38, 69-70,
105 S. Ct. 2479, 2496-97 (1985) (O’Connor, J., concurring) (setting
forth the “endorsement test’).

on ——_--- —-

———_—

7a

order to “provide additional academic choices for parents
and pupils”); A.R.S. § 15-816.01(A) (1995) (requiring
all public school districts to “implement an open enroll-
ment program without charging tuition”). It now seeks
to bring private institutions into the mix of educational al-
ternatives open to the people of this state.

48 The encouragement of private schools, in itself, is
not unconstitutional. Such a policy can properly be used
to facilitate a state’s overall educational goals. As the
Mueller majority noted, private schools frequently serve
to stimulate public schools by relieving tax burdens and
producing healthy competition. 463 U.S. at 395, 103 S.
Ct. at 3067 (quoting Wolman v. Walter, 433 U.S. 229,
262, 97 S. Ct. 2593, 2613 (1977) (Powell, J., concur-
ring in part and dissenting in part) ). They also further the
objective of making quality education available to all
children within a state. Thus, the legislature may “con-
clude that there is a strong public interest in assuring the
continued financial health of private schools, both sec-
tarian and non-sectarian.” Id. at 395, 103 S. Ct. at 3067.
In our view, the secular purpose prong of Lemon is satis-
fied here.

Primary Effect

{9 We next examine whether the principal effect of the
law is to further “sectarian aims of the nonpublic schools.”
Id. at 396, 103 S. Ct. at 3067 (quoting Committee for
Pub. Educ. & Religious Liberty v. Regan, 444 U.S. 646,
662, 100 S. Ct. 840, 851 (1980)). We begin by noting
that the legislature’s taxing authority is very broad. See
Kelly v. Allen, 49 F.2d 876, 877 (9th Cir. 1931) (“The
power of the state to tax is unlimited.”); Tanque Verde
Enters. v. City of Tucson, 142 Ariz. 536, 542, 691 P.2d
302, 308 (1984) (“[S]etting tax rates is a legislative func-
tion.”). Therefore, courts extend considerable deference

8a

and great latitude to the legislative creation of “classifica-
tions and distinctions in tax statutes.” Mueller, 463 U.S.
at 396, 103 S. Ct. at 3067 (quoting Regan v. Taxation
With Representation, 461 U.S. 540, 547, 103 S. Ct. 1997,
2002 (1983)).

{10 The Mueller Court identified certain significant fea-
tures of the Minnesota statute in upholding its consti-
tutionality, namely: (1) the deduction in question was one
of many allowed by the state; (2) it was open to all
parents incurring educational expenses; and (3) funds
were available “only as a result of numerous, private
choices of individual parents.” 463 U.S. at 396-400, 103
S. Ct. at 3067-70. In other words, aid was provided on
a neutral basis with any financial benefit to private schools
sufficiently attenuated.

One of Many

{11 Petitioners contend that credits are constitutionally
different from deductions, which they concede to be per-
fectly proper. At oral argument they asserted that a tax
credit is the “functional equivalent of depleting the state
treasury by a direct grant,” while a tax deduction merely
serves as “seed money” to encourage philanthropy. We
disagree.

412 It is true, of course, that there are mechanical dif-
ferences between deductions and credits. The former are
subtracted from gross income, reducing the net amount on
which a tax is assessed according to the taxpayer’s mar-
ginal rate, while the latter are taken directly from the tax
as tentatively calculated. Elizabeth A. Baergen, Note,
Tuition Tax Deductions and Credits in Light of Mueller v.
Allen, 31 Wayne L. Rev. 157, 172-73 (1984); see James
J. Freeland et al., Fundamentals of Federal Income Tax-
ation 969 (7th ed. 1991). Moreover, limits placed on

9a

these benefits may be sharply divergent: We do not be-
lieve, however, that such distinctions are constitutionally
significant. Though amounts may vary, both credits and
deductions ultimately reduce state revenues, are intended
to serve policy goals, and clearly act to induce “socially
beneficial behavior” by taxpayers. Baergen, supra, at 173.

413 In Committee for Public Education & Religious
Liberty v. Nyquist, a case heavily relief upon by the peti-
tioners, the Supreme Court said that the constitutionality
of a tax benefit “does not turn in any event on the label
we accord it.” 413 U.S. 756, 789, 93 S. Ct. 2955, 2974
(1973). This statement is consistent with the Court’s
earlier observation in Lemon that the form of any tax
measure must be examined “for the light that it casts on
the substance,” 403 U.S. at 614, 91 S. Ct. at 2112. In
Nyquist, a New York statute provided state funds for the
maintenance and repair of private schools. It also con-
tained a tax deduction for parents of children attending
such schools. 413 U.S. at 762-64, 93 S. Ct. at 2960-61.
The Supreme Court struck down these provisions, holding
that they amounted to direct stipends having the primary
effect of impermissibly advancing religion. Id. at 779-80,
791, 93 S. Ct. at 2969, 2975. It is important to note,
however, that the New York “deduction,” based on a statu-
tory formula, was plainly designed to achieve a net per-
family gain. Id. at 790, 93 S. Ct. at 2974. This preset
benefit was offered to parents without regard for the
amount of expense they actually incurred. /d.

414 As the Mueller Court described a decade later,
Nyquist involved “thinly disguised ‘tax benefits,’ actually
amounting to tuition grants, to the parents of children
atending private schools.” 463 U.S. at 394, 103 S. Ct.
at 3066. The Court also observed that the New York de-
duction had been totally inconsistent with others allowed
under the laws of that state. Jd. at 396 n.6, 103 S. Ct.

10a

at 3068 n.6. In contrast, the Minnesota deduction for
actual school expenses was “only one among many” avail-
able under the state’s tax code, including those for medical
expenses and charitable contributions. Jd. at 396, 103 S.
Ct. at 3067. Unlike the measure in Nyquist, which was
likened to an outright grant, the Minnesota statute em-
bodied a “genuine tax deduction.” Jd. at 396 n.6, 103
S. Ct. at 3068 n.6.

€ 15 Deductions and credits are legitimate tools by which
government can ameliorate the tax burden while imple-
menting social and economic goals. See Baergen, supra,
at 172-76. We conclude that the Arizona school tuition
tax credit is one of an extensive assortment of tax-saving
mechanisms available as part of a “genuine system of tax
laws.” Mueller at 396 n.6, 103 S. Ct. at 3068 n.6. For
instance, the state permits its taxpayers to take the full
“amount of itemized deductions allowable” under the In-
ternal Revenue Code. A.R.S. § 43-1042(A). This, of
course, includes charitable contributions made directly to
churches, religious schools, and other § 501(c)(3) organ-
izations.” See 26 U.S.C. § 170(c)(2)(D). Arizona’s tax

2To qualify for § 501(c)(3) status an entity must be “organized
and operated exclusively” for certain statutorily defined purposes.
26 U.S.C. § 501(c)(3). These include “religious, charitable [and]
scientific” as well as “literary, or educational purposes.” Jd. The
Supreme Court has determined that “Congress sought to provide
tax benefits to charitable organizations, to encourage the develop-
ment of private institutions that serve a useful public purpose or
supplement or take the place of public institutions of the same
kind.” Davis v. United States, 495 U.S. 472, 482-83, 110 S. Ct.
2014, 2021 (1990) (quoting Bob Jones Univ. v. United States, 461
U.S. 574, 588, 103 S. Ct. 2017, 2026 (1983)). Consequently, under
both federal and state law, organizations unabashedly devoted to
promoting religion—churches and other religious institutions—
enjoy a number of direct economic tax benefits. These organiza-
tions escape income taxes, see A.R.S. § 43-1201(4), (11), and are
not required to file returns, see A.R.S. § 43-1242. Taxpayers who

lla

code also provides for numerous credits beyond those per-
mitted at the federal level, each operating in the same gen-
eral way. See A.R.S. §§ 43-1071 through 43-1090.01.
Among them is a credit for voluntary cash contributions
made to qualifying organizations that provide assistance
to the working poor. See A.R.S. § 43-1088. Such organi-
zations clearly count among their number churches, syna-
gogues, missions, and other sectarian institutions. Also
noteworthy in the context of the present discussion is a
$200 tax credit for public school extracurricular activity
fees, covering items such as band uniforms, athletic gear,
and scientific laboratory equipment. A.R.S. § 43-1089.01.
Thus, as in Minnesota, the Arizona tax benefit now under
consideration is “only one among many.” Mueller, 463
US. at 396, 103 S. Ct. at 3067.

Availability

{16 The Mueller Court placed particular emphasis on
the fact that the benefits of Minnesota’s tax deduction ex-
tended to a broad class of recipients, not just to the
parents of private school children as in Nyquist. 463 US.
at 397-98, 103 S. Ct. at 3068. By way of comparison,
the Arizona tuition credit is available to all taxpayers
who are wiling to contribute to an STO. Any individual,
not just a parent, may donate to the scholarship program.
Thus, Arizona’s class of beneficiaries is even broader than
that found acceptable in Mueller, and clearly achieves a
greater level of neutrality.

donate to them can deduct the contributions from their federal and
state income taxes. See 26 U.S.C. § 170; A.R.S. § 43-1042(A).
Additionally, many of these organizations are exempt from prop-
erty taxes, see Ariz. Const. art. IX, § 2(2), a direct government
benefit which has long been held nonviolative of the Establishment
Clause. See Walz, 397 U.S. at 672-73, 90 S. Ct. at 1413-14.

12a
Private Choices

417 The Supreme Court also stressed the means by
which funds reach sectarian schools and the importance
of “numerous, private choices” in contrast to direct state
financial aid. Mueller, 463 U.S. at 399, 103 S. Ct. at
3069. Where assistance to religious institutions is indirect
and attenuated, i.e., private individuals choose where the
funds will go, the Justices have generally been reluctant to
find a constitutional impediment. See Witters, 474 US. at
488, 106 S. Ct. at 752 (aid flowing to religious institu-
tions does so “only as a result of the genuinely inde-
pendent and private choices of aid recipients”); Zobrest,
509 U.S. at 10, 113 S. Ct. at 2467 (presence of govern-
ment-paid interpreter in sectarian school was result of the
“private decision of individual parents”).

€ 18 A recent decision by the Wisconsin Supreme Court
upholding the constitutionality of school vouchers pro-
vides further support. Jackson v. Benson, 578 N.W.2d
602 (Wis. 1998), cert. denied, US. , 119 S.
Ct. 466 (1998). In 1995, the Wisconsin Legislature
amended a statute requiring the state to pay the educa-
tional costs of low-income Milwaukee parents who de-
sired to send their children to private schools. Id. at 607-
08. Under the amended Milwaukee Parent choice Pro-
gram (MPCP), parents were permitted to select a private
school, which could be sectarian or secular, and received
a payment from the state to cover expenses. Id. at 608-09.
The check was sent directly to the school but was made
out to the parents, who endorsed it over to the educational
institution. 7d. at 609. No restrictions were placed on the
use to which the school could put the money.* Jd. The

3 The dissent believes that limits must be placed on the uses to
which schools may put tuition money coming from STOs. /nfra at
94. But Mueller itself, while disallowing a tax deduction for
the cost of textbooks used for religious instruction, placed no

13a

Wisconsin court held that the program was permissible
under both the federal and state constitutions, id. at 607,
stating in part:

In our assessment, the importance of our inquiry here
is not to ascertain the path upon which public funds
travel under the amended program, but rather to de-
termine who ultimately chooses that path. As with
the programs in Mueller and Witters, not one cent
flows from the State to a sectarian private school un-
der the amended MPCP except as a result of the
necessary and intervening choices of individual
parents.

Id. at 618.

419 Arizona’s statute provides multiple layers of pri-
vate choice. Important decisions are made by two dis-
tinct sets of beneficiaries—taxpayers taking the credit and
parents applying for scholarship aid in sending their
children to tuition-charging institutions. The donor/
taxpayer determines whether to make a contribution, its
amount, and the recipient STO. The taxpayer cannot re-
strict the gift for the benefit of his or her own child. A.R.S.
§ 43-1089(D). Parents independently select a school and
apply to an STO of their choice for a scholarship. Every
STO must allow its scholarship recipients to “attend any
qualified school of their parents’ choice,” and may not

restriction on the uses to which the schools conid put tuition pay-
ments qualifying for the deduction. See 463 U.S. at 390 n.1, 103
S. Ct. at 3064 n.1. In addition, the statute in Mueller contained no
“opt out” provision or requirement that schools admit students
without regard to religion, features that our dissenting colleague
finds so critical in Jackson. Infra at § 99. Our tax credit statute
is more like the tax deduction in Mueller than the voucher program
in Jackson. Even in Jackson, however, no limits were placed on the

uses to which the recipient schools could put the state aid. 578
N.W.2d at 609,

14a
limit grants to students of only one such institution. A.R.S.
§ 43-1089(E)(2) (emphasis added). Thus, schools are no
more than indirect recipients of taxpayer contributions,

with the final destination of these funds being determined
by individual parents.

420 The decision-making process is completely devoid
of state intervention or direction and protects against the
government “sponsorship, financial support, and active in-
volvement” that so concerned the framers of the Estab-
lishment Clause. Walz, 397 U.S. at 668, 90 S. Ct. at
1411. As the Mueller Court noted, “[t]he historic pur-
poses of the clause simply do not encompass the sort of
attenuated financial benefit, ultimately controlled by the
private choices of individual parents, that eventually flows
to parochial schools from the neutrally available tax bene-
fit.” 463 U.S. at 400, 103 S. Ct. at 3070. Under the cir-
cumstances, we believe that “[n]o reasonable observer is
likely to draw from [these facts] an inference that the
State itself is endorsing a religious practice or belief.”
Witters, 474 U.S. at 493, 106 S. Ct. at 755 (O’Connor,
J., concurring); see also Zobrest, 509 U.S. at 10, 113
S. Ct. at 2467.

421 The dissent essentially characterizes the option of-
fered to taxpayers as a sham because “there is no real
choice—one may contribute up to $500 to support private
schools or pay the same amount to the Arizona Depart-
ment of Revenue.”* Infra at § 90. Such an argument
plainly ignores the many other credits and deductions
available in Arizona. It also assumes that maximum tax
avoidance is the inescapable motive of taxpayers in every
decision they make. We know, however, that people fre-

4This statement, like so many others in the dissent, wrongly
gives the impression that private schools, rather than scholarship
recipients, are the primary beneficiaries of contributions.

15a

quently donate to causes or organizations offering limited
or no tax benefits. Moreover, while it seems a part of
human nature to bemoan taxes, their importance to so-
ciety is generally recognized. This tax credit may provide
incentive to donate, but there is no arm twisting here.
Those who do not wish to support the school tuition pro-
gram are not obligated to do so. They are free to take
advantage of a variety of other tax benefits, or none at all.

422 We see little difference in the levels of choice avail-
able to parents under the Minnesota and Arizona plans.
In both, parents are free to participate or not, to choose
the schools their children will attend, and to take advan-
tage of all other available benefits under the state tax
scheme. Moreover, these programs will undoubtedly bring
new options to many parents. Basic education is compul-
sory for children in Arizona, A.R.S. § 15-802(A), but
until now low-income parents may have been coerced into
accepting public education. These citizens have had few
choices and little control over the nature and quality of
their children’s schooling because they have been unable
to afford a private education that may be more compat-
ible with their own values and beliefs. Arizona’s tax
credit achieves a higher degree of parity by making pri-
vate schools more accessible and providing alternatives
to public education. See Mueller, 463 U.S. at 402, 103
S. Ct. at 3070-71 (educational expense deduction worked
as set-off against added financial burden faced by parents
of private school students); Jackson, 578 N.W.2d at 619
(school voucher program “place[d] on equal footing op-
tions of public and private school choice, and vest[ed]
power in the hands of parents to choose where to direct
the funds allocated for their children’s benefit”).

423 Petitioners argue that this law is fatally deficient
because religious schools are the practical beneficiaries of
the tax credit. They contend that the “pervasively sec-

16a

tarian” composition of private schools in this state pre-
sumes an inevitable constitutional breach. Like the appel-
lants in Mueller, petitioners purport to rely on a statis-
tical analysis of private school populations. See 463 U.S.
at 400-01, 103 S. Ct. at 3070. The Supreme Court dis-
missed this approach as follows:

We would be loath to adopt a rule grounding the
constitutionality of a facially neutral law on annual
reports reciting the extent to which various classes
of private citizens claimed benefits under the law.
Such an approach would scarcely provide the cer-
tainty that this field stands in need of, nor can we
perceive principled standards by which such statis-
tical evidence might be evaluated. Moreover, the
fact that private persons fail in a particular year to
claim the tax relief to which they are entitled—under
a facially neutral statute—should be of little impor-
tance in determining the constitutionality of the stat-
ute permitting such relief.

Id. at 401, 103 S. Ct. at 3070. According to the statis-
tics offered in Mueller, ninety-five percent of Minnesota’s
private school students attended sectarian schools. /d. at
391, 103 S. Ct. at 3065. Petitioners’ numbers reflect a
lower rate of religious school attendance in Arizona. Like
the Mueller Court, however, we refuse to hinge constitu-
tional scrutiny on such ephemeral numbers. School popu-
lations change, as does the quality of education. No one
yet knows how many taxpayers will take the credit, what
dollar amounts will be generated, or how many students
will receive tuition scholarships, let alone their statistical
distribution among schools. We also cannot predict how
this tax credit may affect the ratio of secular to sectarian
private institutions in the state.

§ 24 Both Minnesota and Arizona provide by statute
for free public education. See Minn. Stat. § 120.06

Tee

= ey

17a

(1959); A.R.S. § 15-816.01 (1995). Consequently, par-
ents of children seeking to attend tuition-charging schools
are those most in need of financial assistance. This does
not mean, however, that the statute unconstitutionally
benefits a narrow segment of the population. As we have
seen, the Arizona tax credit allows all taxpayers to give
their funds voluntarily in support of a multi-dimensional
educational system for the state, and its benefits flow in
virtually every direction.

q25 It is argued that A.R.S. § 43-1089 is unconstitu-
tional because it does not provide a credit for those who
wish to support public education. We disagree. A con-
temporaneous and related statute, A.R.S. § 43-1089.01,
allows a tax credit of up to $200 for fees paid by tax-
payers in support of public school extracurricular activi-
ties. The fact that this benefit is capped at $200 does
not render the $500 credit for STO donations unconstitu-
tional. The tuition expense of a private education is us-
ually greater than the fees associated with extracurricular
activities in a public school. The legislature’s decision to
set a lower amount for the latter is likely an acknowledg-
ment of that disparity. Moreover, it strikes us as mean-
ingless to offer a tax credit for tuition scholarships to
schools that charge no tuition. The taxpayers in this state
already pay for the establishment and operation of a pub-
lic school system. Even parents who send their children
to private schools must pay taxes in support of public
education. Finally, because the ultimate goal of educa-
tional assistance programs is to reimburse parents for ex-
penses incurred in schooling their children, a credit for
contributions to the “educational mission of the public
school system,” infra at 476, is both distinguishable and
unnecessary for purposes of our constitutional analysis.

426 The primary beneficiaries of this credit are tax-
payers who contribute to the STOs, parents who might

18a

otherwise be deprived of an opportunity to make mean-
ingful decisions about their children’s educations, and the
students themselves. We realize, of course, that the bene-
fits do not end there. The ripple effects can, when viewed
through a wide-angle lens, radiate to infinity. But while
direct subsidies to sectarian schools may affront the Con-
stitution, “the Establishment Clause is not violated every
time money previously in the possession of a State is con-
veyed to a religious institution.” Witters, 474 U.S. at 486,
106 S. Ct. at 751. Private and sectarian schools are at
best only incidental beneficiaries of this tax credit, a neu-
tral result that we believe is attenuated enough to satisfy
Mueller and the most recent Establishment Clause deci-
sions. See 463 U.S. at 399, 103 S. Ct. at 3069; Agostini,
521 USS. at , 117 S. Ct. at 2014; Zobrest, 509 US.
at 8, 113 S. Ct. at 2466; Witters, 474 U.S. at 488-89,
106 S. Ct. at 752; Matthew J., 989 F. Supp. at 392.

€{ 27 In summary, we conclude that the tuition tax credit
does not prefer one religion over another, or religion over
nonreligion. It aids a “broad spectrum of citizens,” Muel-
ler, 463 U.S. at 399, 103 S. Ct. at 3069, allows a wide
range of private choices, and does not have the primary
effect of either advancing or inhibiting religion.

Excessive Entanglement

€ 28 Finally, we find no “excessive government entan-
glement with religion.” Lemon, 403 U.S. at 613 (citation
omitted). The state does not involve itself in the distribu-
tion of funds or in monitoring their application. Its role
is entirely passive. Taxpayers who choose to participate
may deduct the amount of an STO contribution on their
tax returns. The STO operates free of government inter-
ference beyond ensuring that it qualifies for § 501(c)(3)
tax exempt status and complies with state requirements.

SS ee ee eee oes

19a

Any perceived state connection to private religious schools
is indirect and attenuated.

429 We are persuaded that § 43-1089 falls within the
parameters of the Establishment Clause.

ARIZONA CONSTITUTION

30 Petitioners argue that this tax credit channels pub-
lic money to private and sectarian schools in violation of
the state constitution. Specifically, they charge that the
law offends article II, § 12 and article IX, § 10 (the “re-
ligion clauses”), as well as article IX, §7 (the “anti-
gift clause”).

{31 Legislative enactments are presumptively constitu-
tional. Hall v. A.N.R. Freight Sys., 149 Ariz. 130, 133,
717 P.2d 434, 437 (1986). The party challenging a
statute bears the burden of demonstrating its invalidity,
State v. Arnett, 119 Ariz. 38, 48, 579 P.2d 542, 552
(1978), and we resolve all uncertainties in favor of con-
stitutionality. Arizona Downs v. Arizona Horsemen's
Found., 130 Ariz. 550, 554, 637 P.2d 1053, 1057
(1981).

Religion Clauses

q 32 Article II, § 12 states in part: “No public money
or property shall be appropriated for or applied to any
religious worship, exercise, or instruction, or to the sup-
port of any religious establishment.” Article IX, § 10
says, “No tax shall be laid or appropriation of public
money made in aid of any church, or private or sectarian
school, or any public service corporation.”

“Public Money or Property”

4 33 The parties are in considerable disagreement over
the meaning of “public money or property.” No defini-

20a

tion of these words appears in the Arizona Constitution
or in our statutes. We must therefore look to their “nat-
ural, obvious and ordinary meaning.” County of Apache
v. Southwest Lumber Mills, 92 Ariz. 323, 327, 376 P.2d
854, 856 (1962); see also McElhaney Cattle Co. v.
Smith, 132 Ariz. 286, 290, 645 P.2d 801, 805 (1982)
(“When the words of a constitutional provision are not
defined within it, the meaning to be ascribed to the words
is that which is generally understood and used by the
people.”); Dunn v. Industrial Comm’n, 177 Ariz. 190,
194, 866 P.2d 858, 862 (1994) (requiring court to give
clear and unambiguous statutory language its plain mean-
ing unless doing so would lead to absurd results).

€34 In McClead v. Pima County, our court of appeals
observed that “state funds” are those “raised by the oper-
ation of some general law and therefore belonging to the
state.” 174 Ariz. 348, 356, 849 P.2d 1378, 1386 (App.
1992). A decade earlier we identified “state money” as
“money in the state treasury credited to a particular fund
therein.” Grant v. Board of Regents, 133 Ariz. 527, 529,
652 P.2d 1374, 1376 (1982). State title to funds, how-
ever, does not always vest when money enters the state
treasury. For example, when the government is a mere
custodian or conduit, funds so held do not constitute
“state monies.” Navajo Tribe v. Arizona Dep’t of Admin.,
111 Ariz. 279, 280-81, 528 P.2d 623, 624-25 (1974).

€ 35 Other courts have reached similar conclusions.
See Philip Morris Inc. v. Glendening, 709 A.2d 1230,
1241 (Md. 1998) (“gross recovery from the tobacco liti-
gation is not ‘State’ or ‘public’ money” until deposited
into state treasury); State Bd. of Accounts v. Indiana
Univ. Found., 647 N.E.2d 342, 348 (Ind. Ct. App. 1995)
(private donations received by corporation for use or
benefit of state university were not public funds because

2la

they did not come into the possession of, and were not
entrusted to, a public officer); Sherard v. State, 509
N.W.2d 194, 199-200 (Neb. 1993) (money in workers’
compensation Second Injury Fund is not state property
because it is not raised by taxation and is held in trust
by custodian, State Treasurer); Parsons v. South Dakota
Lottery Comm'n, 504 N.W.2d 593, 596 (S.D. 1993)
(state lottery prize proceeds not public funds because
money does not revert to state’s general fund); McIntosh
v. Aubry, 18 Cal. Rptr. 2d 680, 688-89 (Cal. Ct. App.
1993) (rent forbearance and inspection cost waivers are
not public funds because they involve no payment of
funds out of county coffers); Wells v. Kentucky Local
Correctional Facilities Constr. Auth., 730 S.W.2d 951,
955 (Ky. Ct. App. 1987) (construction bond proceeds
do not constitute state monies because they are trust funds
not in control of any state organization); State ex rel.
Sego v. Kirkpatrick, 524 P.2d 975, 986 (N.M. 1974)
(private donations to state university under control of
Board of Regents are not subject to appropriation, there-
fore legislature has no power to limit use or disbursement
of these funds).

€36 According to Black’s Law Dictionary, “public
money” is “[rjevenue received from federal, state, and
local governments from taxes, fees, fines, etc.” Black's
Law Dictionary 1005 (6th ed. 1990). As respondents
note, however, no money ever enters the state’s control
as a result of this tax credit. Nothing is deposited in the
State treasury or other accounts under the management or
possession of governmental agencies or public officials.
Thus, under any common understanding of the words, we
are not here dealing with “public money.”

{37 Petitioners suggest, however, that because taxpayer
money could enter the treasury if it were not excluded
by way of the tax credit, the state effectively controls and

22a

exerts quasi-ownership over it. This expansive interpre-
tation is fraught with problems. Indeed, under such rea-
soning all taxpayer income could be viewed as belonging
to the state because it is subject to taxation by the legis-
lature. That body has plenary power to set tax rates,
categorize taxable income, and determine the type and
amount of adjustments including deductions, exemptions,
and credits. See Tanque Verde Enters., 142 Ariz. at 539-
40, 691 P.2d at 305-06 (recognizing the virtually unlim-
ited authority of taxing bodies to set rates of taxation).

€38 Equally problematic is the fact that petitioners’
contention directly contradicts the decades-long accept-
ance of tax deductions for charitable contributions, in-
cluding donations made directly to churches, religiously-
affiliated schools and institutions. If credits constitute
public funds, then so must other established tax policy
equivalents like deductions and exemptions. Indeed, it
seems to us that unless a constitutionally significant differ-
ence between credits and deductions can be demonstrated,
petitioners’ argument must fail. The dissent, recognizing
this dilemma, attempts to construct a distinction based on
an alleged disparity in the amount of benefits flowing
from credits and deductions. That, however, would ap-
pear to be a matter of form rather than substance. In
our judgment, neither the dissent nor petitioners have
offered a principled way in which to address this con-
tradition.

€39 The calculation of personal income tax can be
broken into several stages. First comes a determination
of adjusted gross income, achieved by combining all
sources of income and subtracting certain expenditures,
such as contributions to individual retirement and medical
savings accounts. See I.R.S. Form 1040, U.S. Individual
Income Tax Return, Lines 7 through 32 (1997): Arizona
Form 140, Resident Personal Income Tax Return, Lines

Sete eee

23a

11 through 14 (1997). Next, taxpayers may take certain
deductions and exemptions. The resulting subtotal is tax-
able income. See Arizona Form 140, Lines 15 through
26. This figure is then referenced to the tables for a de-
termination of preliminary tax liability. Jd. at Line 27.
But the process does not end there. In fact, this point
occurs about midway through the tax calculation and is,
at most, a determination of tentative, not actual, tax
liability. See Freeland, supra, at 969. The tax preparer
may continue to reduce this amount by subtracting credits
and other payments. Only after exhausting all of these
opportunities does the taxpayer arrive at the bottom of
the tax form and the inevitable—amount owed.

{40 We do not accept the proposition, implicit in pe-
titioners’ argument, that the tax return’s purpose is to re-
turn state money to taxpayers. For us to agree that a
tax credit constitutes public money would require a find-
ing that state ownership springs into existence at the point
where taxable income is first determined,® if not before.
The tax on that amount would then instantly become pub-
lic money. We believe that such a conclusion is both
artificial and premature. It is far more reasonable to say
that funds remain in the taxpayer’s ownership at least
until final calculation of the amount actually owed to the
government, and upon which the state has a legal claim.®

441 We realize that this view may conflict with the
“tax expenditure” approach advanced by the petitioners.
Nevertheless, it is consistent with the traditional method

5 This occurs at Line 26, Arizona Form 140, Resident Personal
Income Tax 1997. But we note that the amount finally owed by the
taxpayer does not appear until Line 55.

6 As previously noted, it can be argued that state ownership does
not arise until funds actually enter the state’s possession. However,
we need not make that determination here.

24a

of constitutional construction that accords to words their
plain and simple meaning. The tax expenditure theory is
of recent origin, having been first advanced by Professor
Stanley Surrey during the late 1960s and early *70s. See
Richard P. Davies, A Flat Tax Without Bumpy Philan-
thropy: Decreasing the Impact of a “Low, Single Rate”
on Individual Charitable Contributions, 70 S. Cal. L. Rev.
1749, 1767 (1997). Proponents of the concept argue
that deductions, credits, exemptions, and exclusions “con-
stitute a form of hidden spending in the tax code and
ought accordingly to be compared with equivalent non-
tax spending programs.” Michael A. Livingston, Rein-
venting Tax Scholarship: Lawyers, Economists, and the
Role of the Legal Academy, 83 Cornell L. Rev. 365, 377
n.30 (1998). This theory has been used by government
as a tool for analyzing budgetary policy.* See Jean
Harris, Tax Expenditures: Concept and Oversight, in
Public Budgeting and Finance 385, 397 (Robert T.
Golembiewski & Jack Rabin, eds., 4th rev. ed. 1997).
It has not, however, been universally accepted as a doc-
trine of judicial decision-making. Even the Supreme
Court’s treatment of the concept “changes depending on
the substantive area of law being considered.” Donna D.
Adler, The Internal Revenue Code, the Constitution, and
the Courts: The Use of Tax Expenditure Analysis in
Judicial Decision Making, 28 Wake Forest L. Rev. 855,
857 (1993). As the author notes:

7 Of course, as is true in any area of intellectual discourse, many
other competing theories exist. In economics these days, three of
the most prominent are the comprehensive tax base approach,
optimal tax theory, and fiscal exchange or public choice theory.
See Livingston, supra, at 381-83.

8Or even legislative decision-making, for that matter. “The
grant of dollars through the tax system is not widely perceived in
Congress as a disbursement of public funds.” Allen Schick, Con-
gress and Money: Budgeting, Spending and Taxing 550 (1980).

—e re ee a

25a

[T]he Court has fully accepted the equivalence of
direct spending programs and tax expenditures in the
area of Free Speech rights, but it has not fully ap-
plied this concept in the context of Establishment
Clause analysis... . [DJifferent constitutional stand-
ards have been applied to direct spending programs
and to tax expenditures that have the same economic
effect. For example, the refusal to treat tax expendi-
tures and direct spending programs in a consistent
manner allows benefits to flow to religious institu-
tions through the Internal Revenue Code when the
same benefits would be struck down if distributed in
a direct spending program.

Id. (citation omitted). In the same term of Court, now
Chief Justice Rehnquist wrote both Regan v. Taxation
With Representation, 461 U.S. 540, 103 S. Ct. 1997
(1983), a “Free Speech” case, and Mueller, an “Estab-
lishment Clause” decision. We assume it is no accident
that the tax expenditure thesis appears in the former opin-
ion, but not in the latter. The Court has generally re-
fused to recognize the tax expenditure concept where
religion is involved.* See Joseph M. Kuznicki, Comment,
Section 170, Tax Expenditures, and the First Amend-
ment: The Failure of Charitable Religious Contributions
for the Return of a Religious Benefit, 61 Temp. L. Rev.
443, 473 (1988).

442 Modern economic theory, under some circum-
stances, may be helpful to our understanding. As has
been shown, however, it does not necessarily govern con-
Stitutional interpretation. But see Opinion of the Justices
to the Senate, 514 N.E.2d 353, 355 (Mass. 1987) (ad-
visory opinion stating that “tax expenditures . . . are the

9The dissent relies on a one-justice concurring opinion in argu-
ing that a contrary view has been adopted by the Supreme Court.
Infra at 7 143.

26a

practicai equivalent of direct government grants”). More-
over, while the plain language of the provisions now
under consideration indicates that the framers opposed
direct public funding of religion, including sectarian
schools, we see no evidence of a similar concern for in-
direct benefits. One court has noted a similar distinction
in the context of a state Freedom of Information Act
(FOIA). Sebastian County Chapter of the Am. Red
Cross v. Weatherford, 846 S.W.2d 641 (Ark. 1993).
That court said:

Refusal to read indirect government benefits or
subsidies into the term “public funds” is not at odds
with a liberal construction of FOIA. Were we to
construe “public funds” to include an entirely sepa-
rate and new category of government support, we
would be amending the FOIA to expand its applica-
tion significantly.

Id. at 644,

€ 43 We also note with interest that Arizona’s framers
did not hesitate to extend tax-exempt status to churches.
See Ariz. Const. art. IX § 2(2). In fact, they uniformly
supported property tax exemptions for all “religious as-
sociations or institutions not used or held for profit.” Jd.;
see also The Records of the Arizona Constitutional Con-
vention of 1910 469-76, 850, 861, 891, 931, 933-34
(John S. Goff, ed. 1991) (hereinafter “Records’’).
Clearly, these exemptions constitute benefits to religious
organizations, suggesting either that the framers did not
regard such tax-saving measures as direct grants of “pub-
lic money,” or that their intent in prohibiting aid to reli-
gious institutions was not as all-encompassing as petition-
ers would have us hold.

27a

“Appropriated For or Applied To”

¢44 An appropriation “set[s] aside from the public:
revenue ... a certain sum of money for a specified ob-
ject, in such a manner that the executive officers of the
government are authorized to use that money.” Rios v.
Symington, 172 Ariz. 3, 6-7, 833 P.2d 20, 23-24 (1992)
(quoting Hunt v. Callaghan, 32 Ariz. 235, 239, 257 P.
648, 649 (1927)). The power of appropriation belongs
only to the legislature. Prideaux v. Frohmiller, 47 Ariz.
347, 357, 56 P.2d 628, 632 (1936).

945 Petitioners argue that the STO tax credit diverts
to private schools funds that would otherwise be state
revenue. This, they claim, has the same effect as an ap-
propriation. We agree that Community Council v. Jor-
dan, 102 Ariz. 448, 455, 432 P.2d 460, 467 (1967),
rejected a narrow interpretation of “appropriations,” find-
ing the word to encompass executive and administrative
contracts as well as disbursements. It does not follow,
however, that reducing a taxpayer’s liability is the equiva-
lent of spending a certain sum of money. An appropria-
tion earmarks funds from “the general revenue of the
state” for an identified purpose or destination. Black &
White Taxicab Co. v. Standard Oil Co., 25 Ariz. 381,
399, 218 P. 139, 145 (1923). Furthermore, we disagree
with petitioners’ characterization of this credit as public
money or property within the meaning of the Arizona
Constitution. Therefore, we are unwilling to hold that a
proscribed appropriation or application occurs by opera-
tion of this statute.

Religious worship, exercise, aid, or establishment

{46 Section 12 prohibits the use of public money for
religious worship, exercise, instruction, or to support any
religious establishment. Even if we were to agree that an

28a

appropriation of public funds was implicated here, we
would fail to see how the tax credit for donations to a
student tuition organization violates this clause. The way
in which an STO is limited, the range of choices reserved
to taxpayers, parents, and children, the neutrality built
into the system—all lead us to conclude that benefits to
religious schools are sufficiently attenuated to foreclose a
constitutional breach.

447 As discussed earlier, safeguards built into the stat-
ute ensure that the benefits accruing from this tax credit
fall generally to taxpayers making the donation, to fam-
ilies receiving assistance in sending children to schools of
their choice, and to the students themselves. See A.R.S.
43-1089(E)(2). Moreover, to qualify for § 501(c)(3)
tax treatment, the STO must supply the Internal Revenue
Service with copies of the scholarship application and pro-
gram brochures, rules of eligibility, selection criteria and _
scholarship processing procedures. I.R.S. Publication 557,
at 19 (Rev. May 1997).

448 The dissent expresses concern over the prospect
that an Arizona taxpayer might be able to make a profit
by taking both the state tuition credit and a charitable
deduction on the federal return. Infra at 4 148 n.17.
Whether or not such a maneuver would be possible or
allowable is a policy matter for the legislature and the
taxing authorities to address, rather than this court. It
in no way changes our constitutional analysis. Similarly,
our role is not to make judgments about the overall wis-
dom of the tax credit before us. That obligation falls to
the other branches of government. We hold that the
school tax credit does not violate article II, § 12 of the
Arizona Constitution.

449 As previously indicated, article IX, § 10 states that
“[nJo tax shall be laid or appropriation of any public

29a

money made in aid of any church, or private or sectarian
school, or any public service corporation.” It applies to
all private schools, whether sectarian or not.

450 We have already concluded that this tax credit is
not an appropriation of public money. Likewise, no tax
has been laid here. To the contrary, this measure reduces
the tax liability of those choosing to donate to STOs. We
cannot say that the legislature has somehow imposed a
tax by declining to collect potential revenue from its citi-
zens. Nor does this credit amount to the laying of a tax
by causing an increase in the tax liability of those not
taking advantage of it. Such a construction tortures the
plain meaning of the constitutional text. In addition, if
we were to conclude that this credit amounts to the lay-
ing of a tax, we would be hard pressed to identify the
citizens on whom it is assessed. Because we see no con-
stitutional difference between a credit and a deduction,
we would also be forced to rule that deductions for
, charitable contributions to private schools were unconsti-
tutional because they too, would amount to the laying of
a tax. This we decline to do. We find no violation of
article IX, § 10 of the Arizona Constitution.

Anti-Gift Clause

451 Under article IX, § 7, the state shall not “give or
loan its credit in the aid of, or make any donation or
grant, by subsidy or otherwise, to any individual, associa-
tion, or corporation.” We have upheld giving when the
State action served a public purpose and adequate con-
sideration was provided for the public benefit conferred.
See Wistuber v. Paradise Valley Unified Sch. Dist., 141
Ariz. 346, 348-49, 687 P.2d 354, 356-57 (1984) (hold-
ing that state payment of portion of teacher association
president’s salary did not violate anti-gift clause).

30a

452 This constitutional provision was historically in-
tended to protect against the “extravagant dissipation of
public funds” by government in subsidizing private enter-
prises such as railroad and canal building in the guise of
“public interest.” State v. Northwestern Mutual Ins. Co.,
86 Ariz. 50, 53, 340 P.2d 200, 201 (1959) (citation
omitted). Such “evils” do not exist here. Neither do we
agree with petitioners that a tax credit amounts to a “gift.”
One cannot make a gift of something that one does not
Own.

Framers’ Intent

453 Petitioners claim that Arizona’s founders intended
to implement a much more stringent prohibition against
aid to religion than did their federal counterparts. They
offer an historical analysis in support of this position. The
dissent, despite acknowledging the “explicit text” of the
constitution, infra at 4/73, advances a similar argument.
We are persuaded, however, that our textual analysis is
sufficient to decide the issues presented here.

454 “We interpret constitutional provisions by examin-
ing the text and, where necessary, history in an attempt
to determine the framers’ intent.” Boswell v. Phoenix
Newspapers, Inc., 152 Ariz. 9, 12, 730 P.2d 186, 189
(1986) (emphasis added). Even if we agreed that an
historical search for the framers’ intent was appropriate,
we would not conclude that the statute in question vio-
lates the Arizona Constitution. There is sparse recorded
evidence respecting the clauses at issue here, and any his-
torical analysis is necessarily filled with speculation. See
Thomas E. Sheridan, Arizona: A History 385 (1995)
(“There is also no comprehensive history of the Arizona
constitutional convention or the political milieu out of
which it arose.”). The verbatim transcript of the 1910
constitutional convention reveals little discussion on the

art itl I le a i

3la

convention floor about the religion clauses. See Records,
supra, at 660, 894, 940. “In reading through the pro-
ceedings one is impressed by the fact that major issues
were often glossed over with no debate or discussion.”
Records, supra, at iv. Our dissenting colleague has him-
self noted that “[t]his court has properly been skeptical
of some approaches to divining legislative intent.” Busi-
ness Realty v. Maricopa County, 181 Ariz. 551, 558, 892
P.2d 1340, 1347 (1995). We believe even greater skep-
ticism is called for in “divining” the intent of language
drafted almost 90 years ago and about which so little has
been recorded or preserved. Thus, we cannot subscribe
with any confidence to the “framers’ indisputable desire
to exceed the federal requirements” of the Establishment
Clause. Infra at § 130.

455 Moreover, the boundaries limiting judicial inter-
pretation of framers’ intent are amorphous and “subject
to continuous adjustment.” Terrance Sandalow, Consti-
tutional Interpretation, 79 Mich. L. Rev. 1033, 1033
(1981). A provision’s meaning is necessarily conditioned
by contemporary understandings of the drafters’ inten-
tions. Jd. at 1065. In practice, courts engaging in the
search for original intent often look for the “larger pur-
poses” to which the constitution gives expression, id. at
1037, mediating differences between the historical docu-
ment and the need to accommodate changing circum-
stances and the passage of time. See id. at 1036. Fur-
ther, “historical analysis does not suggest that the original
intent of the drafters—an uncertain concept at best—
governs or controls the interpretation of those clauses
today; it merely recognizes that the history of a constitu-
tional provision influences future interpretations to some
degree.” Robert F. Utter & Edward J. Larson, Church
and State on the Frontier: The History of the Establish-

32a

ment Clauses in the Washington State Constitution, 15
Hastings Const. L.Q. 451, 451 (1988).

456 For example, in Brown v. Board of Education, 347
U.S. 483, 74 S. Ct. 686 (1954), the Supreme Court con-
sidered the framers’ intent in adopting the Fourteenth
Amendment, including the political climate of the time
and long-standing practices of racial segregation. Id. at
489-90, 74 S. Ct. at 688-89. The Court stated:

In approaching this problem, we cannot turn the
clock back to 1868 when the Amendment was
adopted, or even to 1896 when Plessy v. Ferguson
was written. We must consider public education in
the light of its full development and its present place
in American life throughout the Nation. Only in this
way can it be determined if segregation in public
schools deprives these plaintiffs of the equal protec-
tion of the laws.

Id. at 492-93, 74S. Ct. at 691.

457 We have said as much ourselves in the very con-
text of Arizona’s religion clauses:

The state constitutional provisions must be viewed
in light of contemporaneous assumptions concerning
the appropriate sphere of action for each institution.
History is clear that as a state evolves from one dec-
ade to another the role of the state “transcends tradi-
tional boundaries and assumes new dimensions” ne-
cessitating a revision of the idiomatic meaning of
“separation” to align it with “the new realities if orig-
inal purposes and expectations are to be realized.”

Community Council, 102 Ariz. at 451-52, 432 P.2d at
463-64 (quoting Donald A. Giannella, Religious Liberty,

_ Nonestablishment, and Doctrinal Development, 80 Harv.
L. Rev. 1381, 1383 (1967)) (emphasis added).

io renee

33a

458 This court long ago rejected “the strict view that in
essence no public monies may be channeled through a
religious organization for any purpose whatsoever with-
out, in fact, aiding that church contrary to constitutional
mandate.” Community Council, 102 Ariz. at 451, 432
P.2d at 463. Instead, we said:

The prohibitions against the use of public assets for
religious purposes were included in the Arizona Con-
stitution to provide for the historical doctrine of
separation of church and state, the thrust of which
was to insure that there would be no state supported
religious institutions thus precluding governmental
preference and favoritism of one or more churches.

Id. In fact, as we review Arizona history and scan the
present day horizon, it is apparent that religion has never
been hermetically sealed off from other institutions in this
State, or the nation. See, e.g., Bauchman v. West High
Sch., 132 F.3d 542, 554 (10th Cir. 1997) (“Courts have
long recognized the historical, social and cultural signifi-
cance of religion in our lives and in the world, gener-
ally.”). Arizona’s motto, Ditat Deus, means “God en-
riches.” See Ariz. Const. art. XXII, § 20. And even
though, as we have noted, the transcripts of our constitu-
tional convention reveal almost nothing about the clauses
in question, they clearly reflect religion as part of the
proceedings. Each day’s session was opened by a prayer
from the convention chaplain, Rev. Seaborn Crutchfield.
Indeed, to this day Arizona legislative sessions begin with
a prayer delivered by the Chaplain of the Day. The con-
Stitutional delegates also negotiated over whether the pre-
amble should refer to “Almighty God,” the “Supreme
Being,” or “Almighty God for Liberty.” Records, supra,
at 41, 77, 82-83. They ultimately agreed that the pream-
ble should read, “We, the people of the State of Arizona,

34a

grateful to Almighty God for our liberties, do ordain this
Constitution.” Jd. at 1399.

459 In a more contemporary vein, tax codes, both state
and federal, permit churches and other religious institu-
tions to acquire tax-free status and allow deductions for
contributions made directly to such entities. See 26 U.S.C.
§§ 501(a), (c)(3), 170(a), (c)(2)(B); A.R.S. §§ 43-
1201, 43-1042. “[TJhe doctrine of separation of church
and state does not include the doctrine of total nonrecog-
nition of the church by the state and of the state by the
church.” Community Council, 102 Ariz. at 451, 432
P.2d at 463.

€60 Clearly, the state constitution forbids the creation
of a state church or religion. It also guarantees freedom
of worship and belief by demanding absolute neutrality in
the treatment of religious groups. “The State is mandated
by [article II, § 12] to be absolutely impartial when it
comes to the question of religious preference, and public
money or property may not be used to promote or favor
any particular religious sect or denomination or religion
generally.” Pratt v. Arizona Bd. of Regents, 110 Ariz.
466, 468, 520 P.2d 514, 516 (1974). There is no evi-
dence, however, that the framers intended to divorce com-
pletely any hint of religion from all conceivably state-
related functions, nor would such a goal be realistically
attainable in today’s world.

{61 We do know that the framers “took education
seriously,” as evidenced by their creation of a separate
constitutional article on the subject. John D. Leshy, The
Making of the Arizona Constitution, 20 Ariz. St. L.J. 1,
96 (1988). They expressed the belief that educated citi-
zens are vital to a free and united society. See Roosevelt
Elementary Sch. Dist. No. 66 v. Bishop, 179 Ariz. 233,
239, 877 P.2d 806, 812 (1994). Thus, Arizona compels

LS

35a

its children to attend school—public, private, or home
school. See A.R.S. § 15-802(A). We must respect the
framers’ intent in this area as we decide the present issue.

462 One of the most enviable attributes of our consti-
tutional form of government is its adaptability to change
and innovation. As stated in Community Council, we
must view constitutional provisions “in light of contem-
poraneous assumptions.” 102 Ariz. at 451, 432 P.2d at
463. Today’s reality is that primary and secondary edu-
cation systems are facing nationwide reform. Many states
are exploring alternatives to traditional public education
—from charter schools to private school vouchers. See
Jo Ann Bodemer, Note, School Choice Through Vouch-
ers: Drawing Constitutional Lemon-Aid from the Lemon
Test, 70 St. John’s L. Rev. 273, 275-77 (1996). In
1994, Arizona authorized the creation of charter schools
supported by public funds. See A.R.S. §§ 15-181 through
15-189.02. In doing so, the legislature hoped to encour-
age the development of educational settings that would in-
vigorate learning, improve academic achievement, and
provide additional choices for parents and children. See
A.R.S. § 15-181(A). It has now adopted a tax policy
presumptively intended to further the same or similar
goals. The pursuit of such a strategy falls squarely within
the legislature’s prerogative.

{63 Some might argue that the statute in question runs
counter to these goals by encouraging more students to
attend private schools, thereby weakening the state’s pub-
lic school system. But that is a matter for the legislature,
as policy maker, to debate and decide. It is not for us
to pass on the wisdom of this or any other social policy.
Concerning ourselves only with matters of constitutional-
ity, we have concluded that the religion clauses of the
Arizona Constitution do not invalidate this attempt to

36a

keep pace with changing economic conditions and societal
goals.

Blaine Amendment and Washington State Constitution

464 The dissent relies to a great extent on external,
peripheral sources such as the Blaine amendment, intro-
duced in Congress more than 100 years ago, and the
Washington State Constitution. These do not control our
decision today.

€65 In 1875, Maine Congressman James Blaine intro-
duced a Constitutional amendment prohibiting the states
from granting public funds or taxes for the benefit of any
reiigious sect or denomination. Joseph P. Viteritti, Choos-
ing Equality: Religious Freedom and Educational Oppor-
tunity Under Constitutional Federalism, 15 Yale L. &
Pol'y Rev. 113, 144 (1996). The bill failed to muster
enough votes for passage, but was later resurrected in a
number of state constitutions. /d. at 146-47.

€66 The Blaine amendment was a clear manifestation
of religious bigotry, part of a crusade manufactured by
the contemporary Protestant establishment to counter
what was perceived as a growing “Catholic menace.”
Viteritti, supra, at 146; see also Stephen K. Green, The
Blaine Amendment Reconsidered, 36 Am. J. Legal Hist.
38, 54 (1992). Its supporters were neither shy nor secre-
tive about their motives. As one national publication
which supported the measure wrote:

Mr. Blaine did, indeed bring forward . . . a Consti-
tutional amendment directed against the Catholics,
but the anti-Catholic excitement was, as every one
knows now, a mere flurry; and all that Mr. Blaine
means to do or can do with his amendment is. not
to pass it but to use it in the campaign to catch anti-
Catholic votes.

37a

Green, supra, at 54 (quoting The Nation, Mar. 16, 1876,
at 173). Other contemporary sources labeled the amend-
ment part of a plan to “institute a general war against
the Catholic Church.” Green, supra, at 44 (quoting The
New York Tribune, July 8, 1875, at 4). While such ef-
forts were unsuccessful at the federal level, the jingoist
banner persisted in some states. By 1890, twenty-nine
states had incorporated at least some language reminiscent
of the Blaine amendment in their own constitutions.
Viteritti, supra, at 147. There is, however, no recorded
history directly linking the amendment with Arizona’s con-
stitutional convention. In our judgment, it requires sig-
nificant speculation to discern such a connection. In any
event, we would be hard pressed to divorce the amend-
ment’s language from the insidious discriminatory intent
that prompted it.

{67 The Arizona constitutional convention consumed a
mere two months from beginning to end. Leshy, supra,
at 40-41. As one of the last states admitted to the Union,
Arizona borrowed much from those that preceded it. See
Leshy, supra, at 5. Language was lifted from the consti-
tutions of Washington, Oregon, Texas, and Oklahoma, to
name a few. See, e.g., Records, supra, at 167, 179, 182,
660.

68 On several occasions we have acknowledged simi-
larities between provisions of the Washington Constitution
and our own. See Schultz v. City of Phoenix, 18 Ariz.
35, 42, 156 P. 75, 77 (1916); Faires v. Frohmiller, 49
Ariz. 366, 372, 67 P.2d 470, 472 (1937). Nevertheless,
while Washington’s judicial decisions may prove useful,
they certainly do not control Arizona law. We alone
must decide how persuasive the legal opinions of other
jurisdictions will be to our holdings. See Desert Waters,
Inc. v. Superior Court, 91 Ariz. 163, 167-68, 370 P.2d
652, 655 (1962) (noting that while a certain provision

38a

of Washington’s constitution was “identical” to Arizona’s,
“it becomes apparent that the same meaning and effect
was not intended by its adoption”). At least thirty states
have constitutions that contain provisions similar to one
or both of our religion clauses.” To our knowledge, none
of these jurisdictions has faced the precise issue before
us today.

€69 The dissent points to three Washington State cases
holding that state money could not be used to provide
financial assistance to students. See Witters v. Washing-
ton Comm'n for the Blind, 771 P.2d 1119 (Wash. 1989)
(direct financial aid for visually impaired student to pur-
sue religious studies at private bible college); Washington
State Higher Educ. Assistance Auth. v. Graham, 529 P.2d
1051 (Wash. 1974) (state agency purchasing and mak-
ing loans to students in post-secondary educational institu-
tions); Weiss v. Bruno, 509 P.2d 973 (Wash. 1973)
(direct financial assistance to students attending both pub-
lic and private elementary and high schools, as well as
private colleges and universities). In each instance, the
Washington Supreme Court found that the program vio-
lated the state’s constitutional prohibitions against using
public money to benefit sectarian schools. While these
cases are informative, they are also distinguishable on

10 See Alaska Const. art. VII, §1; Cal. Const. art. XVI, §5;
Colo. Const. art. IX, § 7; Del. Const. art. X, § 3; Fla. Const. art. I,
§ 3; Ga. Const. art. I, § 2, para. 7: Haw Const. art. X, § 1; Idaho
Const. art. IX, $5; Ill. Const. art. X, §3: Ind. Const. art. I, $6;
Mass. Const. amend. art. XVIII, § 2; Mich. Const. art. I, § 4: Minn.
Const. art. I, § 16; Miss. Const. art. VIII, § 208; Mo. Const. art.
IX, §8; Mont. Const. art. X, §6; Neb. Const. art. VII, § 11: N.H.
Const. Pt. II, art. 83; N.Y. Const. art. XI, §3; Okla. Const. art. IT,
§ 5; Or. Const. art. I, § 5; Pa. Const. art. III, § 29; S.C. Const. art.
XI, § 4; S.D. Const. art VI, § 3; Tex. Const. art. I, § 7; Utah Const.
arts. I, § 4 and X, §9; Va. Const. art. IV, § 16; Wash. Const. art. I,
§ 11; Wis. Const. art. I, § 18; Wyo. Const. art. I, § 19.

39a

their facts. In each instance, direct appropriations of
state monies were involved.

{70 It is also important to recall that Arizona and
Washington were founded under markedly different his-
torical circumstances, and their subsequent development
reflects those differences. It is difficult, if not impossible,
to apply the intent of one group of constitutional framers
to another operating at a different time and place. Thus,
we must cautiously view the constitutional decisions of
other state courts as we attempt to place our own founding
document in historical perspective. As the now Chief
Justice of the Wisconsin Supreme Court has so aptly said
in describing her approach to constitutional interpretation:
“I look at the peculiarities of my state—its land, its in-
dustry, its people, its history.” Shirley S$. Abrahamson,
Reincarnation of State Courts, 36 Sw. L.J. 951, 965
(1982).

{71 Washington State was carved from the British
Northwest Territories, controlled by the large fur trading
companies. Climate, geography and the abundance of
natural resources—timber, fish, and water—are reflected
in myriad ways in that state’s governmental institutions
and sources of economic power. The trans-Pacific influ-
ences are readily apparent to anyone who walks Seattle’s
waterfront or Chinatown. Arizona, in contrast, emerged
from an entirely different orientation reaching from Spain
and Mexico. Our founding documents are the Treaty of
Guadalupe Hidalgo and the Gadsden Purchase. Our first
settlers came looking for gold, silver, and copper, or range
land for cattle. The economic, political, and social ramifi-
cations of the lack of a resource such as water can hardly
be overestimated. In such vastly dissimilar milieus, even
identical words can carry with them a freight of startlingly
different meaning.

40a

CONCLUSION

€72 We hold that the tuition tax credit is a neutral ad-
justment mechanism for equalizing tax burdens and en-
couraging educational expenditures. Petitioners have
failed to demonstrate that it violates either the Federal or
the Arizona Constitution. We find it a valid exercise of
legislative prerogative. Relief denied.

THOMAS A. ZLAKET
Chief Justice
CONCURRING:

CHARLES E. JONES
Vice Chief Justice

FREDERICK J. MARTONE
Justice

FELDMAN, Justice, dissenting

“73 Believing A.R.S. § 43-1089 (the Arizona tax
credit) violates the explicit text of our state constitution
and the Establishment Clause of the federal constitution,
I respectfully dissent.

«74 Today’s decision upholding the use of a tax credit
to support private and sectarian schools is unfortunate in
several respects. First, the court allows the government
to provide assistance to private, predominantly sectarian
schools despite at clear-prohibition in article II, § 12 and
article IX, § 10 of the Arizona Constitution. Next, it
overlooks the historical background of these sections and
consequently ignores the framers’ plain intent. It then
confuses non-neutral, direct tax credits with neutral deduc-

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4la

tions and benefits when there is, in fact, a clear difference
in their constitutionality. Fourth, it errs in suggesting that
funds derived from tax credits are not public funds. Fi-
nally, because the statute permits uncontrolled, govern-
ment-reimbursed grants to private, primarily religious in-
stitutions and denies similar grants to public institutions,
it directly subsidizes religious education and thus violates
the Establishment Clause of the First Amendment to the
United States Constitution.

THE ARIZONA TAX CREDIT PLAN

{75 This case does not deal with or question reference
to the deity in the state’s seal or preamble to the con-
stitution. Nor does it deal with public or charter schools,
voucher programs providing educational aid to low-income
families, or even charitable contributions. Constitutionality
in this case, as in most, turns on analysis of statutory
purpose and effect. The Arizona tax credit does not sur-
vive this analysis. The tax credit statute permits any tax-
Payer, not just parents of school children, a $500 direct
credit against taxes, but only to reimburse so-called con-
tributions to school tuition organizations (STOs) support-
ing nongovernmental schools. At least seventy-two per-
cent of these schools are sectarian. See Coffey, A Survey
of Arizona Private Schools (1993) (Appendix I of Inter-
venor Lisa Graham Keegan, Arizona Superintendent of
Public Instruction). Contributions to public schools will
not qualify for the credit because a “qualified school” is
limited to “a nongovernmental primary or secondary
school” of the “parents’ choice.” § 43-1089(E) (1 ), (2)
(emphasis added).

"76 It is true the public school system is tuition-free
and students at those schools therefore need no scholar-
ships or tuition grants, but provisions could have been
made for a tax credit for contributions supporting the

42a

educational mission of the public school system. This
would have put the state’s private, sectarian, and public
schools on the same basis. But § 43-1089.01 allows only
a maximum $200 credit for contributions to public schools
and is available only to reimburse fees paid for extracur-
ricular activities. The majority intimates that comparison
of the two school credits is “unnecessary” to the analysis
because the costs of public school establishment and op-
eration are already borne by the state. Slip op. at € 25.
The problem with that argument is apparent from reading
our own opinions on the deficiencies of state financing of
public schools and the underfinanced and unfilled educa-
tional missions of those schools. See, e.g., Roosevelt Elem.
Sch. Dist. v. Bishop, 179 Ariz. 233, 877 P.2d 806
(1994). If we are to consider equality or neutrality of
the two credits, we must bear in mind that public schools,
like private schools, need assistance to perform their edu-
cational mission.

€77 Notably, the private school tax credit does not re-
strict use of the grant money to secular purposes. Thus,
the recipient schools may use the government’s subsidy
for direct support of sectarian education or observance,
the very thing both our state and federal constitutions
lorbid. Further, while prohibiting the STOs from making
grants to “only students of one school,” the statute does
not prevent an STO from directing all of its grant money
to a group of schools that restrict enrollment or education
te a particular religion or sect. § 43-1089(E)(2). In
fact, a group of taxpayers who subscribe to a particular
religion may form an STO that will support only schools
of that religion. Worse, in defining the schools qualified
to receive STO grants, the Legislature excluded schools
that “discriminate on the basis of race, color, sex, handi-
cap, familial status, or national origin” but not those that
limit admission on the basis of religious adherence, pref-

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43a

erence, or observance. § 43-1089(E)(1). Indeed, STOs
are to use the grant money to “allow” children to “attend
any qualified school of their parents’ choice.” § 43-
1089(E)(2). Thus, nothing forbids an STO from limit-
ing its grants or scholarships to students who adhere to a
particular religion and will participate in the required
religious observance.

478 There is, of course, nothing bad and everything
good in private support for religious schools and sectarian
education. But both state and federal constitutions forbid
using the power of government to provide the type of
support encompassed by Arizona’s statute. I turn first to
the federal constitution.

THE FEDERAL CONSTITUTION

€ 79 The majority believes the standard of Lemon vy.
Kurtzman, 403 U.S. 602, 91 S.Ct. 2105 (1971), provides
an appropriate framework for its review of the constitu-
tionality of § 43-1089. Slip op. at 45. The second prong
of Lemon’s three-part test requires that a statute be “neu-
tral on its face and in its application” and not have the
“primary effect” of advancing sectarian aims of nonpublic
schools. See Mueller v. Allen, 463 U.S. 388, 392, 103
S.Ct. 3062, 3065 (1983); see also Committee for Pub.
Educ. & Religious Liberty v. Nyquist, 413 U.S. 756, 788,
93 S.Ct. 2955, 2973 (1973). To comply, “aid to sectar-
ian schools must be restricted to ensure that it may not be
used to further the religious mission of those [religious]
schools.” See Mueller, 463 U.S. at 406, 103 S.Ct. at
3073 (citing Wolman v. Walter, 433 U.S. 229, 250-51,
97 S.Ct. 2593, 2606-07 (1977)). I believe § 43-1089
fails this analysis.

44a

A. The primary effect of A.R.S. § 43-1089 is not neutral

4 80 The Establishment Clause issue turns on the United
States Supreme Court’s opinions in Nyquist and Mueller.
Arizona’s tax credit contains each of the factors that led
the Court to declare the credit unconstitutional in Nyquist
and none of the provisions that saved the deduction in
Mueller.

€ 81 The New York plan considered in Nyquist involved
a tuition grant program for low income families, together
with a tuition tax deduction program that varied by in-
come level. Both plans were limited to families whose
children attended private schools; neither program was
available for parents of children who attended public
schools.

“82 The Court noted that the private schools were pre-
dominantly religious and concluded that both tuition aid
programs violated the Establishment Clause.

[When] grants are offered as an incentive to parents
to send their children to sectarian schools by making
unrestricted cash payments to them, the Establish-
ment Clause is violated whether or not the actual
dollars given eventually find their way into the sec-
tarian institutions. Whether the grant is labeled a
reimbursement, a reward, or a subsidy, its substan-
tive impact is still the same.

413 US. at 786, 93 S.Ct. at 2972.

4 83 In Nyquist, New York issued vouchers redeemable
only at private schools. Arizona’s tax credit is available
only for private school contributions. The result is state
support of private, mostly sectarian schools. And con-
trary to the majority’s assertion, it is not affected even
though the “final destination” of the money is chosen by

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45a

“individual parents,” not the state. Slip op. at 419. In
New York, the funds went first to the parents and then
to the school of their choice. /d. at 785-86, 93 S.Ct. at
2972. Similarly, under the Arizona plan, the money goes
first to the STO and then to the school of its choice. In
a footnote, the Nyquist Court made it clear that the re-
sult might be different if the scholarships and tuition
grants were neutrally “available without regard to the
sectarian-nonsectarian, or public-nonpublic nature of the
institution benefitted.” 413 U.S. at 782 n.38, 93 S.Ct.
at 2970 n.38. Arizona’s tax credit, however, may be used
only at private, mostly sectarian schools.

484 In Mueller, the Court upheld a Minnesota law al-
lowing a deduction, in part because it was “available for
educational expenses incurred by all parents including
those whose children attend public schools.” Making the
benefit available to this neutral and “broad class” is an
“important index of secular effect.” 463 U.S. at 397, 103
S.Ct. at 3068 (quoting Widmar v. Vincent, 454 U.S. 263,
274, 102 S.Ct. 269, 277 (1981)). The Court said the
Establishment Clause does “not encompass the sort of

attenuated financial benefit . . . that eventually flows to
parochial schools from the neutrally available tax benefit
at issue... .” ZId. at 400, 103 S.Ct. at 3070. Indeed,

the Mueller Court described Nyquist’s unconstitutional,
nonneutral, private school program in words directly ap-
plicable to the Arizona: “thinly disguised ‘tax benefits,’
actually amounting to tuition grants, to the parents of
children attending private schools,” the majority of which
were sectarian. 7d. at 394, 103 S.Ct. at 3066.

{85 This case is very like Nyquist and very unlike
Mueller. The Arizona tax credit is available only to
those who choose to support private, predominantly reli-
gious schools. Those who wish to contribute to public
schools are allowed only a $200 credit, and their contri-

46a

butions can be used only to reimburse fees paid for
extracurricular activities. Thus, the tax credit does not
offer the same or even similar benefits to all taxpayers,
is not neutral, and the “money involved represents a
charge made upon the state for the purpose of religious
education.” Nyquist, 413 U.S. at 791, 93 S.Ct. at 2974.

B. The tax credit is not one of a group of permissible,
generally available tax benefits

{86 The majority argues that “both credits and deduc-
tions . . . are intended to serve policy goals, and clearly
act to induce ‘socially beneficial behavior’ by taxpayers.”
Slip op. at 412 (quoting Elizabeth A. Baergen, Note,
Tuition Tax Deductions and Credits in Light of Mueller
v. Allen, 31 Wayne L. Rev. 157, 173 (1984)). The
court goes on to say there are “mechanical differences
between deductions and credits,” but “that these distinc-
tions are [not] constitutionally significant.” /d.

€87 I fear the court conflates personal philanthropy
with government grants. The difference is one of sub-
stance, not mechanics or labels. Unlike deductions al-
lowed for general charitable giving, the tax credit provides
a dollar-for-dollar reimbursement available only to those
who support our primarily sectarian private school system.
It is everything Nyquist held unconstitutional—a direct
stipend that has the primary effect of advancing religion
by tuition grants to religious schools. Nyquist, 413 U.S.
at 779-80, 791, 93 S.Ct. at 2969, 2974-75.

“88 The Court sees this quite benignly, as just one of
the “tools by which government can ameliorate the tax
burden while implementing social and economic goals.”
Slip op. at 415. But the Establishment Clause forbids
the government from promoting religious education by
special benefits unavailable for general, charitable giving.

Fe ee
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47a

This, of course, includes tax subsidies available only for
religious education. Nyquist, 413 U.S. at 782-83, 93
S.Ct. at 2970-71; see also Witters v. Washington Dep't
of Serv. for the Blind, 474 U.S. 481, 487-88, 106 S.Ct.
748, 751 (1986) (discussing impermissible direct sub-
sidies to religious education). As the Court recognized
in Nyquist’s companion case, a statute that implicates the
Establishment Clause cannot “single[] out a class of its
citizens for a special economic benefit.” Sloan v. Lemon,
413 U.S. 825, 832, 93 S.Ct. 2982, 2986 (1973). When
such a benefit acts as a tuition subsidy that helps only
children attending primarily sectarian schools, it supports
religiously oriented institutions. /d.

“89 Thus, in arguing that the Arizona tax credit is but
one of many tax credits provided by the Arizona Legisla-
ture, the court overlooks this crucial distinction: the
Establishment Clause is not implicated when the Legisla-
ture grants tax credits to support socially beneficial pro-
grams such as environmental cleanups or assistance to
the working poor. Slip op. at 415; see also §§ 43-1086,
43-1088. If it wished, the Legislature could, without con-
stitutional conflict, make direct appropriations for these
purposes. But credits that support religious education
implicate the religion clauses of both the state and federal
constitutions. //linois ex rel. McCollum v. Board of Educ..,
333 U.S. 203, 218-19, 68 S.Ct. 461, 468-69 (1948).
And when the tax credit is available only for support of
private, predominantly religious schools, the Establish-
ment Clause is not just implicated, it is violated. Nyquist,
413 US. at 793, 93 S.Ct. at 2975.

C. There is no real private choice—religious institutions
primarily benefit

“90 The court argues that the decision to contribute is
purely a matter of individual choice and that religious

48a :

institutions are only “incidental beneficiaries.” Slip op.
at 4 26. Under the provision upheld in Mueller, religious
schools benefitted only as a result of true choice made
among a wide selection of alternatives, both public and
private. 463 U.S. at 397-99, 103 S.Ct. at 3068-69. Under
the Arizona plan, there is no real choice—one may con-
tribute up to $500 to support private schools or pay the
same amount to the Arizona Department of Revenue. In
reality, this is not a choice but government action de-
signed to induce taxpayers to direct financial support to
predominantly religious schools. The majority seems to
argue that the “primary beneficiaries” of STO contribu-
tions are “scholarship recipients,” not the schools. Slip
op. at 421 n.4. No doubt the STOs, the students, the
schools, and those taxpayers wishing to support private
schools are all beneficiaries. The question, however, is
not who is a primary beneficiary but whether the state
may subsidize private, secular education, thus benefitting
any or all of these beneficiaries.

{91 The Supreme Court has assessed a law's effect by
examining the character of the institutions benefited to
determine whether they are predominantly religious. See,
e.g., Meek v. Pittenger, 421 U.S. 349, 363-64, 95 S.Ct.
1753, 1762-63 (1975). As the majority indicates, the
Mueller Court voiced concern over whether statistics could
be used to determine whether legislation will have a
predominantly religious effect. 463 U.S. at 401, 103
S.Ct. at 3070. But there is a big distinction between
Mueller and the present case. Because the Mueller stat-
ute was facially neutral and available for support of both
public and private schools, the Court chose not to examine
Statistics showing which taxpayers—those deducting for
private school expenses or those deducting for public
school expenses—actually took advantage of the tax bene-
fit. Id. “We would be loath to adopt a rule grounding

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49a

the constitutionality of a facially neutral law on annual
reports reciting the extent of various classes of private
citizens who claimed benefits under the law.” Jd. (em-
phasis added).

q¢ 92 The Arizona statute is not facially neutral because
its beneficiaries are supporters of Arizona’s private schools,
not parents who may take a deduction for either public
Or private school expenses. The Arizona tax credit, un-
like that in Mueller, is not limited to helping all parents
with school children but is available only to taxpayers
willing to direct the money to private schools. When the
benefit can flow only to private schools, the court must
determine what percentage of those private schools is sec-
tarian. This is the precise statistic the Court examined
in Meek, 421 U.S. at 364, 95 S.Ct. at 1762-63 (system
seventy-five percent sectarian); Nyquist, 413 U.S. at 757,
93 S.Ct. at 2957 (eighty-five percent sectarian); Sloan,
413 U.S. at 830, 93 S.Ct. at 2985-86 (ninety percent
sectarian); and Lemon, 403 U.S. at 610, 91 S.Ct. at 2110
(ninety-five percent sectarian ).

€93 In Meek, the Court described Pennsylvania’s sev-
enty-five percent sectarian private school system as “pre-
dominantly religious.” 421 U.S. at 363, 95 S.Ct. at 1762.
This phrase is, of course, applicable to Arizona’s private,
seventy-two percent sectarian schools. Thus, “it simply
defies reason to say that such a statute does not aid
sectarian schools.” Kosydar v. Wolman, 353 F.Supp.
744, 762 (S.D. Ohio 1972), aff'd sub nom. Grit v.
Wolman, 413 U.S. 901, 93 S.Ct. 3062 (1973). Con-
trary to the majority’s assertion, the statute promotes sup-
port of religious schools. It does this without prohibiting
use for sectarian instruction, thereby allowing direct state
subsidy of religious instruction and observance.

50a

D. A.R.S. § 43-1089 places no limitation on use of the
tuition grants

€94 The Establishment Clause is violated when state
aid is directed exclusively to private, mostly sectarian
schools without limitation on use. See Nyquist, 413 U.S.
at 780, 93 S.Ct. at 2969; Sloan, 413 U.S. at 829, 93
S.Ct. at 2985; Lemon, 403 U.S. at 616-17, 91 S.Ct. at
2113-14; see also Meek, 421 U.S. at 365-66, 95 S.Ct. at
1763-64. The Nyquist Court held that “[i]n the absence
of an effective means of guaranteeing that the state aid
derived from public funds will be used exclusively for
secular, neutral, and nonideological purposes, it is clear
from our cases that direct aid in whatever form is in-
valid.” 413 U.S. at 780, 93 S.Ct. at 2969 (emphasis
added). Mueller did not disapprove that statement. In
fact the Minnesota statute, unlike Arizona’s, disallowed
deductions for instructional books used to teach or “in-
culcate religious belief, tenets, doctrine, or worship.”
Mueller, 463 U.S. at 401, 103 S.Ct. at 3062. As the
majority notes, Mueller can be construed to allow some
types of unrestricted aid when neutrally available to both
public and private schools, but the Court has never per-
mitted unrestricted aid in a program, like Arizona’s, avail-
able only to private, mostly sectarian schools. Instead,
it has required mechanisms to restrict the aid to secular
uses. LAWRENCE H. TRIBE, AMERICAN CONSTITUTIONAL
Law § 14-10, at 1226 (2d ed. 1988). Those mechanisms
are absent from the Arizona statute.

E. The Arizona tax credit, unrestricted as to use, ex-
ceeds the boundaries set in the United States Supreme
Court’s Establishment Clause jurisprudence

€95 Because Arizona’s tax credit statute does not re-
quire that grant use be restricted to the secular aspects of
education, the STOs’ grants to private schools may be

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used in any manner the recipient school wishes. Nor does
the statute prevent an STO from directing all of its grant
money to schools that restrict enrollment or education
to adherents of a particular religion or sect. Moreover,
there is no limit on the dollar amount the STO can give
to a school on behalf of a student. Thus, an STO could
pool several contributions and then pay the full tuition
for any student, group of students, or for that matter, all
students in any group of schools of a single religious
faith.

{96 None of the Court’s cases permits such a govern-
ment subsidy. The majority incorrectly relies on a num-
ber of cases that have built on Mueller. In Witters, for
example, the benefit was used to provide vocational re-
habilitation services for a blind student at a Christian
college, but the benefit was equally available to any eligi-
ble student at any school, public or private. 474 U.S. at
488, 106 S.Ct. at 752.

€97 In Zobrest v. Catalina Foothills School District,
the Court approved a school district’s provision of sign
language interpreters under a federal act benefitting in-
dividuals with disabilities. 509 U.S. 1, 113 S.Ct. 2462
(1993). Thus, interpreters were available for deaf stu-
dents attending classes at a Catholic high school, but also
for students attending public schools. The Court held
that the government had offered “a neutral service on the
premises of a sectarian school as part of a general pro-
gram that ‘is no way skewed toward religion’... .” Id.
at 10, 113 S.Ct. at 2467.

€98 In Agostini v. Felton, the Court held that grants
for general remedial services available to aid the educa-
tional, nonreligious function of religious and public schools
are not per se invalid. 521 U.S. 203, » 197 S.Ct.

1997, 2010 (1997). The Court relied on the principles

52a

established in Nyquist and Mueller: neutral government
benefits do not violate the Establishment Clause when
provided without regard to the sectarian-nonsectarian or
public-nonpublic nature of the institutions supported. /d.
at , 117 S.Ct. at 2011. The Arizona program, how-
ever, is available only to private schools and may be used
for sectarian instruction and observance.

€99 The majority today puts great reliance on the Wis-
consin case of Jackson v. Benson, 578 N.W.2d 602, cert.
denied, 119 S.Ct. 466 (1998). Slip op. at € 18. Even
if we are to assume that Jackson will eventually withstand
Establishment Clause analysis, it does not support the
majority’s result because the Wisconsin program is quite
different from Arizona’s. First, the Wisconsin statute con-
tains an “opt-out” provision by which students may be
excused from the religious aspects of sectarian education.
Second, Wisconsin requires schools receiving grants to
admit applicants without regard to religious/nonreligious
preference. Third, Wisconsin limits support to the private
institution’s educational programs. Finally, Wisconsin’s
program is designed to help low income families send
their children to private schools.

€ 100 Arizona’s statute, on the other hand, contains no
religious instruction opt-out provision, appears to permit
religious discrimination, permits funding of religious ob-
servance, and makes the tax credit available to all tax-
payers, those who have children in school and those who
do not, the rich and the poor. Further, our statute makes
no limitation on the amount of funding a school can re-
ceive from an STO for a particular student. Wisconsin,
in short, has made some attempt, successful or not, to
limit the use of state subsidies for religious instruction
and ceremony. Arizona’s program, on the other hand,
will inevitably and primarily benefit religious observance
and instruction.

53a

€101 The majority has cited Professor Baergen’s article
for several points. See, e.g., Slip op. at 12, 15. Pro-
fessor Baergen’s conclusion, however, provides a good
summation for the Establishment Clause issue:

Mueller v. Allen held that facially neutral income
tax deductions for educational expenses are not an
unconstitutional infringement of the Establishment
Clause. This note suggests that tax credit provisions,
which could entirely subsidize private sectarian edu-
cation, should be carefully scrutinized for an uncon-
stitutional legislative purpose. Such an impermissible
purpose should be found if the credit is limited to
private educational expenses or if the credit gives
such an unbalanced benefit to the parents of private
school children that it is clearly intended as a tax
incentive to subsidize private, primarily sectarian ed-
ucation. Likewise, a credit limited to private school
expenses would suffer an unconstitutional primary
effect of advancing religious education, unmitigated
by the deference shown by courts to true legislative
tax enactments [such as deductions] which equitably
allocate tax burdens based upon a definition of net
income. Moreover, tax credit provisions which are
facially neutral but only supply a [de minimis] bene-
fit to parents of public school children should be
subject to statistical analysis to determine the true
beneficiaries of the program and expose the facial
neutrality as a facade.

Baergen, supra, 31 WAYNE L. REv. at 184 (emphasis
added).

THE STATE CONSTITUTION
A. Historical background

€ 102 The Arizona tax credit violates the state constitu-
tion’s prohibition that “[n]o public money . . . shall be

54a

applied to any religious worship, exercise, or instruction
or to the support of any religious establishment.” Article
II, § 12. It also violates the prohibition on laying any
“tax ... in aid of any... private or sectarian school
; .” Article IX, § 10. The text is clear and unam-
biguous. Thus, the case should have ended there. But
for those who somehow find ambiguity in the quoted
words, we can turn to the intent of those who wrote our
constitution.

ee

€ 103 The majority says we should use great “skepti-
cism” in divining the framers’ intent. Slip op. at © 54.
We are to look instead for the framers’ “larger purposes.”
Slip op. at € 55. But this court has always prided itself
on its devotion to text and framers’ intent. E.g., Fain
Land & Cattle Co. v. Hassell, 163 Ariz. 587, 595, 790
P.2d 242, 250 (1990) (“The cardinal rule .. . is to
follow the text and the intent of the framers... .”).
Putting aside the explicit text, I believe the framers’ in-
tent is quite plain, even to our contemporary understand-
ing, and their larger purposes quite apparent from a closer
look at state history and the text of the relevant constitu-
tional clauses.

€ 104 The authors of the Arizona Constitution did not
adopt the religion clauses in a historical vacuum. Article
IT, § 12 and article IX, § 10 were the product of con-
temporary social forces and a national and local battle
over separation of church and state in public school in-
struction. The people who formed this state attempted
to save us from religious bigotry by separating religion
from state funding and support through our explicit reli-
gion clauses.

1. The national scene

€ 105 In the nineteenth century atmosphere. before the
Establishment Clause applied to the states, the emerging

a

S$Sa

public schools commonly included explicit religious in-
struction. The religious make-up of the United States was
predominantly Protestant, and public school instruction
reflected this majority religion. The latter half of the
nineteenth century, however, witnessed large Catholic im-
migration into the United States. Catholic church leaders
resisted the open Protestantism that pervaded public
school curriculum. As Catholic political power grew, so
did efforts to secure state aid to parochial schools. At
the same time, Protestants sought to “preserve the [Pro-
testant] religious aspects of the public school curriculum
and to protect the common culture from the growing
Catholic menace. The Blaine Amendment was a product
of that sentiment.” Joseph P. Viteritti, Choosing Equality:
Religious Freedom and Educational Opportunity Under
Constitutional Federalism, 15 YALE L. & Pot’y REv. 113,
145-46 (1996).

€ 106 These education-related contests between Protest-
ants and Catholics led to calls for stringent separation of
church and state in education finance. President Grant
took up the cause in an 1875 address to the Army of
Tennessee:

Let us then begin by guarding against every enemy
threatening this perpetuity of free republican institu-
tions. . . . The free school is the promoter of that
intelligence which is to preserve us... . Let us all
. . . [e]ncourage free schools and resolve that not
one dollar appropriated for their support shall be
appropriated to the support of any sectarian schools.
Resolve that either the state or the nation, or both
combined, shall support institutions of learning suffi-
cient to afford to every child growing up in the land
the opportunity of a good common school education,
unmixed with sectarian, pagan, or atheistical dogmas.
Leave the matter of religion to the family circle, the

56a

church, and the private school supported entirely by
private contributions. Keep the church and state for-
ever separate.

Se ee

CONRAD HENRY MOEHLMAN, THE AMERICAN CONSTITU-
TIONS AND RELIGION 16 (1938) (emphasis in original).
In his next message to Congress, President Grant recom-
mended a constitutional amendment to preclude state
funding of private (Catholic) schools, while permitting
continued Protestant influence in the public schools via
reading of the King James Bible. The proposal, named
after its sponsor, Rep. John Blaine, became known as the
Blaine Amendment.

€ 107 As passed by the House of Representatives, the
amendment provided, inter alia, that “no money raised
by taxation in any state, for the support of the public
schools or derived from any public fund therefor, shall
ever be under the control of any religious sect... .”
One of the Senate’s principal objections to the amendment
was that it “would only forbid school funds [from aiding
religion and denominational schools]; it would not pro-
hibit the States from using any other public funds for
religion or sectarian schools. To block every avenue, the
Senators wrote several new strictures into the House proj-
ect.” William O’Brien, The States and “No Establish-
ment”: Proposed Amendments to the Constitution Since
1798, 4 WASHBURN L. REv. 183, 193 (1965) (second
emphasis added; cites to Congressional Record omitted).
As a result, the version of the Blaine Amendment that
narrowly failed to receive Senate approval read:

No State shall make any law respecting an estab-
lishment of religion or prohibiting the free exercise
thereof; and no religious test shall ever be required
as a qualification to any office or public trust under
any State. No public property, and no public reve-

57a

nue of, nor any loan of credit by or under the au-
thority of, the United States, or any State, Territory,
District, or municipal corporation, shall be appro-
priated to, or made or used for, the support of any
school, educational or other institution, under the
control of any religious or antireligious sect, organi-
zation, or denomination, or wherein the particular
creed or tenets shall be read or taught in any school
or institution supported in whole or in part by such
revenue or loan of credit; and no such appropriation
or loan of credit shall be made to any religious or
anti-religious sect, organization, or denomination or
to promote its interests or tenets. This article shall
not be construed to prohibit the reading of the Bible
in any school or institution.

MOEHLMAN, supra, at 17 (emphasis added).

{108 While the Blaine Amendment, and similar pro-
posals," failed in Congress, it ultimately met with con-
siderable success in the states. Between 1877 and 1917,
its language was adopted in whole or in part in twenty-
nine states constitutions. Ann Marlow Grabiel, Comment,
Minnesota Public Money and Religious Schools: Clearing
the Federal and State Constitutional Hurdles, 17 HAMLINE
L. Rev. 203, 223 (1993). Ironically, however, the anti-
Catholic bigotry that inspired the Blaine Amendment was
displaced in many of those states by a principled commit-
ment to strict separation between church and state in edu-

11 Several congressmen continued to propose similar constitu-
tional amendments through 1888. See Frank J. Conklin & James M.
Vache, The Establishment Clause and the Free Exercise Clause of
the Washington Constitution: A Proposal to the Supreme Court,
8 U. PuGet SounpD L. REv. 411, 433 n.115 (1985). From 1889 on,
the Blaine agenda was advanced in Congress by inserting require-
ments in the enabling acts for prospective states that church/state
separation clauses be included in the constitutions of newly ad-
mitted states. See id. at 433.

58a

cation. “It is one of the great ironies of American con-
stitutional history that the Blaine Amendment, which
erupted out of a spirit of religious bigotry and a politics
that sought to promote Protestantism in public schools,
eventually became an emblem of religious freedom in
some states.” Viteritti, supra, 15

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386005_0708%3A1. Public record. Not legal advice.