972 P.2d 606 (Ariz. 1999), CV-97-0412, Kotterman v. Killian

Docket Nº:CV-97-0412-SA.
Citation:972 P.2d 606, 193 Ariz. 273
Opinion Judge:[7] The opinion of the court was delivered by: Zlaket, Chief Justice.
Party Name:Penny KOTTERMAN, Panfilo Contreras, Frieda Baker, Rev., Dr. Gerald S. Degrow, Joanne Hilde, Michael J. Hoogendyk, 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 h
Attorney:[6] Robert Chanin, John M. West, and Alice O'Brien Bredhoff & Kaiser Pllc Washington, D.c. Susan G. Sendrow Lieberman Dodge Sendrow & Gerding Ltd Phoenix Alice Finn Gartell Arizona Education Association Phoenix Thomas W. Pickrell Arizona School Boards Association Phoenix Caroline A. Pilch Yen & P...
Case Date:January 26, 1999
Court:Supreme Court of Arizona

Page 606

972 P.2d 606 (Ariz. 1999)

193 Ariz. 273

Penny KOTTERMAN, Panfilo Contreras, Frieda Baker, Rev., Dr. Gerald S. Degrow, Joanne Hilde, Michael J. Hoogendyk, Pastor Stanley Jones, Jann Renert, Louis Rhodes, James Ullman, and Rabbi Joseph Weizenbaum, Petitioners.


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 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 guardian of his children, Felicia Sandoval and Felipe Sandoval; Sally Shanahan, in her own behalf and as natural guardian of her children, Nathan Shanahan, Kaitlyn Shanahan, Gabriel Shanahan, and Jacob Shanahan; and Jeffry Flake and Trent Franks, as taxpayers; Arizona School Choice Trust, Inc., Intervenors/Respondents.

No. CV-97-0412-SA.

Supreme Court of Arizona, En Banc.

January 26, 1999

Page 607

[Copyrighted Material Omitted]

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[Copyrighted Material Omitted]

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[193 Ariz. 276] Robert Chanin, John M. West, and Alice O'Brien, Bredhoff & Kaiser PLLC, Washington, D.C., Susan G. Sendrow, Lieberman, Dodge, Sendrow & Gerding LTD, Phoenix, Alice Finn Gartell, Arizona Education Association, Phoenix, Thomas W. Pickrell, Arizona School Boards Association, Phoenix, Caroline A. Pilch, Yen & Pilch PLC, Phoenix, Elliot M. Mincberg and Judith E. Schaeffer, People for the American Way, Washington, D.C., Steven K. Green, Americans United for Separation of Church and State, Washington, D.C., Attorneys for Petitioners.

Hon. Grant Woods, Attorney General By: Thomas P. McGovern, Patrick Irvine, Michael F. Kempner and Gale Garriott, Phoenix, Attorneys for Respondent.

Clint Bolick, William H. Mellor, and Nicole S. Garnett, Institute for Justice, Washington, D.C., Patrick Byrne and Samuel Cowley, Snell & Wilmer, LLP, Phoenix, Richard W. Garnett, III, Scottsdale, Attorneys for Intervenors/Respondents Lisa Graham Keegan.

Michael J. Meehan, Meehan & Associates, Tucson, Attorney for Intervenor/Respondent, Arizona School Choice Trust.

Eleanor Eisenberg, Patrick D. Berry and Shari Lightstone, Phoenix, AzCLU Cooperating Attorneys, Phoenix, Attorney for Amicus Curiae American Civil Liberties Union.

Len Munsil, Center for Arizona Policy, Scottsdale, Attorney for Amicus Curiae Center for Arizona Policy.

Andrew S. Gordon and Samuel G. Coppersmith, Coppersmith & Gordon P.L.C., Phoenix, Attorneys for Amicus Curiae Arizona Hospital and Healthcare Association.



¶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 organizations (STOs). The statute reads as follows:

  1. For taxable years beginning from and after December 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 exceeding 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.

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  2. [193 Ariz. 277] If the allowable tax credit exceeds the taxes otherwise due under this title on the claimant's income, 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 more than five consecutive taxable years' income tax liability.

  3. 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.

  4. The tax credit is not allowed if the taxpayer designates the taxpayer's donation to the school tuition organization for the direct benefit of any dependent of the taxpayer.

  5. 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, familial status or national origin and that satisfies the requirements prescribed by law for private schools in this state on January 1, 1997.

    2. "School tuition organization" means a charitable 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 percent of its annual revenue for educational scholarships 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 organization the charitable organization shall provide educational scholarships or tuition grants to students without 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).


    ¶2 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, 91 L.Ed. 711 (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 Souring of Lemon and the Search for a New Test, 27 Pac. L.J. 121 (1995); see also Andrew A. Adams, Note, Cleveland, School Choice, and "Laws Respecting an Establishment 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, 25 L.Ed.2d 697 (1970), aimed "between avoidance of religious establishment on the one hand, and noninterference with religious exercise on the other." Leonard J. Henzke, Jr., The Constitutionality 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, 72 L.Ed.2d 33 (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 educational assistance programs. See Agostini v. Felton, 521 U.S. 203, ----, 117 S.Ct. 1997, 2016, 138 L.Ed.2d 391 (1997), overruling Aguilar v. Felton, 473 U.S. 402, 105 S.Ct. 3232, 87 L.Ed.2d 290 (1985) (public school teachers providing remedial education 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, 132 L.Ed.2d 700 (1995) (state university funds used to pay printing costs of student newspaper espousing religious viewpoint); Zobrest v. Catalina Foothills Sch. Dist., 509 U.S. 1, 3, 113 S.Ct. 2462, 2464, 125 L.Ed.2d 1 (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.

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    481, 482, 106 S.Ct. 748, 749, 88 L.Ed.2d 846 (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, 77 L.Ed.2d 721 (1983) (state income tax deduction for educational expenses, 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, 218 Wis.2d 835, 578 N.W.2d 602, 619 (1998), cert. denied, --- U.S. ----, 119 S.Ct. 466, 142 L.Ed.2d 419 (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, 29 L.Ed.2d 745 (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 advances 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 Court, 1 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 unconstitutional 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...

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