MEA–MFT v. McCulloch

• Decision Date: 25 September 2012
• Docket Number: No. DA 12–0358.,DA 12–0358.
• Citation: 291 P.3d 1075,366 Mont. 266
• Parties: MEA–MFT, the Montana State AFL–CIO, the Montana Public Employees Association, the Montana Association of Area Agencies on Aging, and the American Federation of State, County and Municipal Employees, Montana Council 9, Plaintiffs, Appellees and Cross–Appellants, v. Linda McCULLOCH, Secretary of State for the State of Montana, Defendant and Appellant.
• Court: Montana Supreme Court

366 Mont. 266

291 P.3d 1075

MEA–MFT, the Montana State AFL–CIO, the Montana Public Employees Association, the Montana Association of Area Agencies on Aging, and the American Federation of State, County and Municipal Employees, Montana Council 9, Plaintiffs, Appellees and Cross–Appellants,

v.Linda McCULLOCH, Secretary of State for the State of Montana, Defendant and Appellant.

No. DA 12–0358.

Supreme Court of Montana.

Submitted on briefs and decision rendered Aug. 10, 2012.

Opinion, analysis and rationale issued Sept. 25, 2012.

For Appellant: Steve Bullock, Montana Attorney General; Andrew I. Huff, Assistant Attorney General, Helena, Montana.

For Appellees and Cross–Appellants: John M. Morrison, Frederick F. Sherwood; Morrison, Motl & Sherwood, Helena, Montana.

Chief Justice MIKE McGRATH delivered the Opinion of the Court.

[366 Mont. 267]¶ 1 Secretary of State Linda McCulloch appeals from the District Court's Opinion and Order granting summary judgment to the plaintiffs and declaring Legislative Referendum 123 (LR–123) unconstitutional. On August 10, 2012 this Court entered a summary order affirming the District Court, with an opinion to follow in due course.

¶ 2 McCulloch presents the following issues for review:

¶ 3 Issue One: Whether the challenge to LR–123 is ripe and justiciable.

¶ 4 Issue Two: Whether LR–123 is unconstitutional.

¶ 5 The plaintiffs, collectively referred to as the MEA–MFT, cross-appeal from the District Court's order dismissing Count 1 of the complaint. MEA–MFT contend in the cross-appeal that LR–123 was an unconstitutional appropriation.

PROCEDURAL AND FACTUAL BACKGROUND

¶ 6 LR–123 was enacted by the Montana Legislature in 2011 as Senate Bill 426. It proposed a vote in the November 2012 generalelection on whether to provide a tax credit and potential tax refund, or outright State payment, to individuals in years in which there is a certain level of projected surplus revenue. LR–123 provides that if the unaudited ending State general fund balance exceeds 125% of the projected fund balance and this excess balance over 125% is at least $5 million, then a taxpayer could claim the tax credit as to taxes owed for the current year, and could receive a payment from the State if the credit exceeds tax liability and even if the individual had no tax liability.

¶ 7 The dispute in this case arises from the calculations required to determine whether the credit-refund threshold is reached. While LR–123 assigns various duties to the Department of Administration, the primary dispute is over the role assigned to the Legislative Fiscal Analyst. The Legislative Fiscal Analyst (LFA) is an individual employed by the Legislative Finance Committee and serves at its pleasure, § 5–12–205, MCA. The Finance Committee is a permanent joint committee of the Montana Legislature, § 5–12–201, MCA. Section 1(7)(a) of LR–123 requires the LFA to calculate a projected general fund balance by August 1 for the end of the current fiscal year.¹ This calculation involves a projection to be determined by a consideration of anticipated revenues and transfers, the impacts of enacted legislation, anticipated supplemental appropriations and anticipated reversions. The LFA is directed to calculate the projected general fund balance by adding the unassigned fund balance from the most recent completed fiscal year to the anticipated revenues and transfers, less the level of appropriations and transfers, supplemental appropriations and anticipated reversions for the most recent completed fiscal year. The constitutional issue in this case turns upon whether LR–123 impermissibly delegates legislative power to an employee (the LFA) of one of the Legislature's committees (the LFC).

¶ 8 MEA–MFT filed a complaint seeking declaratory and other relief, contending that LR–123 was unconstitutional because it proposed an appropriation and because it unlawfully delegated legislative powers. McCulloch moved to dismiss and MEA–MFT moved for summary judgment. The District Court granted the motion to dismiss as to one count of the complaint, holding that LR–123 did not provide for an appropriation. The District Court subsequently granted summary judgment to MEA–MFT, holding that LR–123 unconstitutionally delegated legislative power to the LFA.

¶ 9 A critical component of LR–123 is the requirement that the LFA determine the amount of the budgeted general fund balance. An affidavit by the LFA presented in the District Court proceedings sets out in detail the numerous separate steps, some involving other sub-steps, required to make this calculation. The calculation requires the LFA to project and anticipate fund balances, revenues, transfers, appropriations and reversions to arrive at a conclusion. That conclusion determines whether funds are paid into the State coffers or are paid out.

STANDARD OF REVIEW

¶ 10 This Court reviews a district court's decision on summary judgment de novo, using the same standards of M.R. Civ. P. 56. Reichert v. State, 2012 MT 111, ¶ 18, 365 Mont. 92, 278 P.3d 455. This Court reviews a district court's interpretation of statutory language de novo, as a question of law, Reichert, ¶ 19, and we review issues of justiciability de novo, as a question of law, Reichert, ¶ 20.

DISCUSSION

¶ 11 Issue One: Whether the challenge to LR–123 is justiciable and ripe.

¶ 12 McCulloch contends that the District Court erred by refusing to reject the action by MEA–MFT on the grounds that it was not ripe and therefore not justiciable. She contends that the issues raised in this action will not be ripe for decision unless and until the voters approve LR–123 in the November, 2012 election.

¶ 13 Montana courts have been reluctant to consider pre-election challenges to initiatives and referenda, guided by the principlethat the initiative and referenda provisions of the Constitution should be broadly construed to maintain the power of the people. Nicholson v. Cooney, 265 Mont. 406, 411, 877 P.2d 486, 488 (1994); Cobb v. State, 278 Mont. 307, 310, 924 P.2d 268, 270 (1996); Montana School Bd. Assoc. v. Waltermire, 224 Mont. 296, 299, 729 P.2d 1297, 1298–1299 (1986). However, some preelection challenges are specifically allowed by statute. Montanans Opposed to I–166 v. State, 2012 MT 168, 365 Mont. 520, 285 P.3d 435 (parts of the initiative process may be challenged under § 13–27–312, MCA).

¶ 14 This Court does not consider the constitutionality of a provision unless it is directly raised in litigation and a determination is necessary to the disposition of the case. Potter v. Furnish, 46 Mont. 391, 395, 128 P. 542, 543 (1912). And, when faced with a measure properly challenged as not properly submitted under the election laws, or as facially defective, this Court has often considered the substance of the challenge. Sawyer Stores, Inc. v. Mitchell, 103 Mont. 148, 62 P.2d 342 (1936) (vote on initiative enjoined because the form of the ballot was defective); Burgan & Walker v. State, 114 Mont. 459, 137 P.2d 663 (1943) (vote on legislative referendum enjoined because the measure was unconstitutional); Steen v. Murray, 144 Mont. 61, 394 P.2d 761 (1964) (vote on initiative enjoined because the measure was substantively unconstitutional); Montana Citizens for the Preservation of Citizens' Rights v. Waltermire, 224 Mont. 273, 729 P.2d 1283 (1986) (vote on initiative allowed to proceed after substantive analysis of the proposal); Nicholson v. Cooney, 265 Mont. 406, 877 P.2d 486 (1994) (vote allowed on referendum after Court finds the measure to be constitutional); Livingstone v. Murray, 137 Mont. 557, 354 P.2d 552 (1960) (vote on legislative referendum enjoined because the measure was unconstitutional); Harper v. Waltermire, 213 Mont. 425, 691 P.2d 826 (1984) (election on constitutional initiative enjoined because the measure was unconstitutional); Harper v. Greely, 234 Mont. 259, 763 P.2d 650 (1988) (Court rejected a challenge to a legislative referendum that the form of the ballot was deficient, and allowed the election to proceed); Cobb (election on legislative referendum enjoined based upon substantive defect); Reichert (election on legislative referendum enjoined because it was unconstitutional); and Montanans Opposed to I–166 (election allowed to proceed, form of ballot initiative not defective). In each of these cases the Court considered the substantive challenge to the measure under consideration, and did not decline to act on the ground that the issues were non-justiciable until after the election.

¶ 15 In the present case the MEA–MFT challenged the facial validity of LR–123 and requested injunctive and declaratory relief. This Court recently discussed the law of justiciability in this same context in Reichert, ¶¶ 53–60, concluding that the pre-election challenge to a referendum in that case was ripe and justiciable.

¶ 16 The requirement that courts decide only justiciable controversies derives from Article VII, Section 4 of the Montana Constitution, which confers original jurisdiction on district courts over “cases at law and in equity.” Case law has established that this language is the functional equivalent of the requirement in Article III of the United States Constitution that courts exercise jurisdiction over a “case or controversy.” Plan Helena, Inc. v. Helena Regional Airport Auth., 2010 MT 26, ¶ 6, 355 Mont. 142, 226 P.3d 567. A justiciable controversy in this context is one in which the parties have existing and genuine rights or interests; the questions are presented in an adversary context; and the controversy is one upon which the court's judgment will effectively and conclusively operate. Plan Helena, ¶¶ 7–8.

¶ 17 A component of justiciability is ripeness—whether there is an actual, present controversy, and not merely a hypothetical or speculative issue. Montana Power Co. v. PSC, 2001 MT 102, ¶ 32, 305 Mont. 260, 26 P.3d 91. Ripeness has both a constitutional dimension based upon the case or controversy requirement, and a “pr...