Case Title: Manzara v. State

Citation: 

Docket Number: SC91025

State: missouri

Court: Missouri Supreme Court

Date: 2011-08-02T00:00:00Z

Document:
SUPREME COURT OF MISSOURI 
en banc 
 
 
BARBARA MANZARA AND 
 
  
) 
KEITH MARQUARD, 
 
  
 
) 
 
 
 
 
 
 
 
) 
 
Appellants,  
 
 
 
) 
 
 
 
 
 
 
 
) 
v. 
 
 
 
 
 
 
) 
No. SC91025 
 
 
 
 
 
 
 
) 
STATE OF MISSOURI, ET AL.,  
 
) 
 
 
 
 
 
 
 
 
) 
 
Respondents.  
 
 
 
) 
 
APPEAL FROM THE CIRCUIT COURT OF COLE COUNTY 
The Honorable Patricia S. Joyce, Judge 
 
Opinion issued August 2, 2011 
 
 
Two taxpayers filed a petition for declaratory judgment challenging the 
constitutional validity of section 99.1205,1 the Distressed Areas Land Assemblage Tax 
Credit Act (Act). They claimed that the tax credits provided by the Act constituted an 
unconstitutional grant or lending of public money to private persons, associations, or 
corporations. The trial court declined to enter declaratory judgment because the taxpayers 
did not have standing to challenge the statute.  
 
The taxpayers appealed to this Court, arguing that they had standing because the 
tax credits were direct expenditures of funds generated through taxation. They also 
                                                 
1 All statutory references are to RSMo 2000, as amended by Supp. 2010.  
 
1
 
2
argued that the tax credits given under the Act are unconstitutional. Reaching the merits 
of the taxpayers’ claims is unnecessary because the taxpayers did not meet their burden to 
prove they had standing to bring a challenge to the statute as the issuance of tax credits 
does not constitute a direct expenditure of funds generated through taxation. Further, this 
Court agrees with the recent statement of the Supreme Court of the United States that tax 
credits are not public expenditures. The trial court’s judgment is affirmed.  
I. Background 
A. Distressed Areas Land Assemblage Tax Credit Act 
 
The Act establishes tax credits to encourage redevelopment of historically 
distressed or disadvantaged areas. Qualified redevelopers may apply for a land 
assemblage tax credit to offset the acquisition and interest costs incurred by the 
redeveloper in obtaining the land.  
The eligibility requirements and limitations are regulated by the statute. To receive 
the tax credit, preconditions must be met. First, for land to be an “eligible parcel,” it must 
be located within an eligible project area,2 slated for redevelopment, acquired without the 
commencement of condemnation proceedings, and have no outstanding taxes, fines, or 
bills owed to the municipal government. Section 99.1205.2(7).  
                                                 
2 An “eligible project area” is an area that satisfies five requirements: (1) it must consist of at 
least 75 acres; (2) at least 80 percent of the area must be located within a qualified census tract, 
as designated under 26 U.S.C. § 42, or within a distressed community, as it is defined in section 
135.530; (3) at least 50 of the 75 acres of land must be eligible parcels; (4) the average number 
of parcels per acre must be four or more; and (5) less than 5 percent of the acreage within the 
area must consist of owner-occupied residences that the applicant for the tax credit has identified 
for acquisition under the redevelopment or renewal plan. Section 99.1205.2(8).  
Second, the person or entity seeking the tax credit must be an applicant, as defined 
in the statute. An applicant is a person, firm, partnership, trust, limited liability company, 
or corporation that has acquired enough land to constitute an eligible project area. Section 
99.1205.2(2). In addition, the applicant must have been appointed or selected as a 
redeveloper by a municipal authority under an economic incentive law. Id.  
Once an applicant acquires an eligible parcel, the Act allows a tax credit to issue. 
An applicant is entitled to a tax credit for 50 percent of the acquisition costs and 100 
percent of the interest incurred five years after acquisition. Section 99.1205.3. The tax 
credit may be applied to taxes imposed under chapters 143,3 147,4 and 148,5 except for 
sections 143.191 to 143.265.6 Id. If the amount of the credit exceeds the total tax liability 
for the year in which the applicant qualifies for a tax credit, the remaining tax credit may 
be carried over for the succeeding six years. Section 99.1250.4. Further, the tax credits 
may be transferred, sold, or assigned. Id. The transferee, purchaser, or assignee may use 
the tax credits to offset 100 percent of the tax liability imposed under chapters 143, 147, 
and 148, except for sections 143.191 to 143.265. Section 99.1205.5.  
B. Procedural History 
 
Barbara Manzara and Keith Marquard (the taxpayers) are taxpayers who live 
within a qualified census tract, as designated under 26 U.S.C. § 42, and within a 
distressed community, as defined by section 135.530. They filed a petition for declaratory 
                                                 
3 Chapter 143 contains the provisions for Missouri’s income tax. 
4 Chapter 147 contains the provisions for Missouri’s corporation franchise tax.  
5 Chapter 148 contains the provisions for the taxation of financial institutions in Missouri.  
6 Sections 143.191 to 143.265 concern employer withholding of income taxes from wages.  
 
3
judgment challenging the validity of the Act, claiming that section 99.1205 violates 
article III, section 38(a) of the Missouri Constitution because the tax credit is a “grant of 
public money or property” to a “private person, association or corporation.” 
Alternatively, taxpayers contended that the Act violates article III, section 39(1)-(2) of 
the Missouri Constitution because the tax credit is a “lending of the credit of the state in 
aid or to any person, association, municipal or other corporation,” or a “pledge [of] credit 
of the state for the payment of the liabilities . . . of any individual, association, municipal 
or other corporation.”  
 
The circuit court rejected the taxpayers’ argument, finding that they lacked 
standing to bring their claims and that, even if they did have standing, section 99.1205 
was constitutional because it serves a public purpose. The taxpayers appeal, arguing that 
the circuit court erred in finding that they lacked standing and that the Act was 
constitutional.7  
II. Standing 
The preliminary issue before this Court is whether taxpayers have standing to 
challenge the tax credits given to redevelopers under the statute. See E. Mo. Laborers 
Dist. Council v. St. Louis County, 781 S.W.2d 43, 45-46 (Mo. banc 1989) (“Regardless of 
an action’s merits, unless the parties to the action have proper standing, a court may not 
entertain the action.”). Standing is an antecedent to the right to relief. Comm. for Educ. 
Equal. v. State, 878 S.W.2d 446, 450 n.3 (Mo. banc 1994).  
                                                 
7 This Court has jurisdiction pursuant to article V, section 3 of the Missouri Constitution. 
 
4
Standing is a question of law, which is reviewed de novo. Mo. State Med. Ass’n v. 
State, 256 S.W.3d 85, 87 (Mo. banc 2008). To have standing, the party seeking relief 
must have “a legally cognizable interest” and “a threatened or real injury.” E. Mo. 
Laborers, 781 S.W.2d at 46. As the parties seeking relief, the taxpayers bear the burden 
of establishing that they have standing. See Kansas City v. Douglas, 473 S.W.2d 101, 102 
(Mo. 1971).  
Taxpayer standing has a long history in Missouri. The issue of taxpayer standing 
first arose in Newmeyer v. Missouri & Mississippi Railroad, 52 Mo. 81 (1873). There, the 
court held that taxpayers had standing to bring a suit to challenge the county’s 
subscription to capital stock of a railroad. Id. at 89. The court reasoned that the county’s 
taxpayers suffered a peculiar injury – the burden of paying for the subscription. Id. After 
Newmeyer, Missouri courts have held that when a public interest is involved and public 
monies are being expended for an illegal purpose, taxpayers have the right to enjoin the 
action. See, e.g., Civic League of St. Louis v. City of St. Louis, 223 S.W. 891 (Mo. 1920); 
Berghorn v. Reorganized Sch. Dist. No. 8, Franklin Cnty., 260 S.W.2d 573 (Mo. 1953); 
Tichenor v. Mo. State Lottery Comm’n, 742 S.W.2d 170 (Mo. banc 1988).  
In Eastern Missouri Laborers, this Court in 1989 revisited taxpayer standing. The 
court acknowledged that the mere filing of a lawsuit does not confer taxpayer standing 
upon a plaintiff. E. Mo. Laborers, 781 S.W.2d at 46. Instead, a taxpayer must establish 
that one of three conditions exists: (1) a direct expenditure of funds generated through 
taxation; (2) an increased levy in taxes; or (3) a pecuniary loss attributable to the 
challenged transaction of a municipality. Id. at 47. The taxpayers rely on the first option 
 
5
as their basis for standing, arguing that the tax credits given under the Act are a direct 
expenditure of funds generated through taxation.8  
Taxpayer standing is available “so that ordinary citizens have the ability to make 
their government officials conform to the dictates of the law when spending public 
money.” Ste. Genevieve Sch. Dist. R-II v. Bd. of Aldermen of the City of Ste. Genevieve, 
66 S.W.3d 6, 11 (Mo. banc 2002). As this Court has recognized,  
Public policy demands a system of checks and balances whereby taxpayers 
can hold public officials accountable for their acts. . . . Taxpayers must 
have some mechanism of enforcing the law. Today’s decision provides the 
door through which taxpayers may enter the courts to seek enforcement.  
E. Mo. Laborers, 781 S.W.2d at 47.  
A. Is a Tax Credit a Direct Expenditure of Funds Generated Through Taxation? 
While this Court has put forth the test for taxpayer standing, it never has 
interpreted what “a direct expenditure of funds generated through taxation” constitutes. 
Dictionary definitions provide guidance. Direct, when used as an adjective, is defined as 
“without any intervening agency or step.” WEBSTER’S THIRD NEW INTERNATIONAL 
DICTIONARY UNABRIDGED 640 (1993). An expenditure is “[a] sum paid out.” BLACK’S 
LAW DICTIONARY 658 (9th ed. 2009). A fund is “[a] sum of money or other liquid 
assets.” Id. at 743. Generate is defined as “to come into existence.” WEBSTER’S THIRD 
NEW INTERNATIONAL DICTIONARY UNABRIDGED at 945. Taxation is “the means by 
                                                 
8 The taxpayers do not ask this Court to revisit the requirements for taxpayer standing in the 
context of challenging the validity of a statute granting tax credits. Without such briefing by the 
taxpayers, it would be inappropriate for this Court to analyze whether taxpayer standing should 
be expanded. See, e.g., Thummel v. King, 570 S.W.2d 679, 686 (Mo. banc 1978) (“It is not the 
function of the appellate court to serve as advocate for any party to an appeal. That is the 
function of counsel. It would be unfair to the parties if it were otherwise. . . . Courts should not 
be asked or expected to assume such a role.”).  
 
6
which the state obtains the revenue required for its activities.” BLACK’S LAW 
DICTIONARY at 1598.  Therefore, “a direct expenditure of funds generated through 
taxation” is a sum paid out, without any intervening agency or step, of money or other 
liquid assets that come into existence through the means by which the state obtains the 
revenue required for its activities.  
The tax credits created by the Act do not meet the definition of “a direct 
expenditure of funds generated through taxation,” as tax credits are not expenditures. 
Expenditures typically occur in government when checks are written by the state 
treasurer based on appropriations or warrants. No such withdrawal of public funds or 
such “expenditure” occurs with the granting of a tax credit. While “expenditures” and 
“tax credits” might be compared in that their end result is “less” money in the state 
treasury, the similarity is superficial. Said differently, a tax credit expresses the 
legislature’s wish to declare a portion of the pool of taxable assets off-limits to its own 
power to collect taxes. Properly understood, this does not result in “less” money in the 
treasury because the legislature never wished it to be there in the first place. A tax credit 
is not a drain on the state’s coffers; it closes the faucet that money flows through into the 
state treasury rather than opening the drain.  
Further, taxpayers never argued that the money at issue was received by the State 
or that it ever belonged to the public. The legislature, through approving the Act, decided 
to leave the money in the hands of a particular person or entity. Its passage of the Act 
constituted an acknowledgment that the State never would have the tax revenue to spend 
because it was waived by tax credits. Lowering tax liability by such means does not move 
 
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money out of the public treasury; it leaves it in private hands. A particular person or 
entity would retain the power to spend the money instead of paying the money over to the 
government as taxes. Insofar as the purpose of taxpayer standing is to give taxpayers a 
way to conform government spending to the law, that purpose is not served if the State is 
spending nothing. 
B. Missouri Case Law   
Although no reported Missouri case has considered whether a tax credit is a direct 
expenditure of funds generated through taxation for the purpose of taxpayer standing, in 
W.R. Grace & Co. v. Hughlett, 729 S.W.2d 203 (Mo. banc 1987), the court considered 
whether a taxpayer had standing to bring a constitutional challenge against the 
“manufacturers tax,” which gave exemptions for certain types of tangible personal 
property. The taxpayer argued that the exemptions resulted in a lack of tax uniformity 
violative of the Missouri Constitution. Id. at 204-05. Before considering the constitutional 
validity of the exemptions, W.R. Grace determined whether appellant had standing to 
challenge the validity of the statute. Id. at 206. The court stated that it “fail[ed] to see how 
it can be said that [the taxpayer] has been ‘adversely affected by the statutes in question’ 
when those statutes . . . merely excuse the tax obligations of others.” Id. at 206-07 
(quoting Ryder v. Cnty. of St. Charles, 552 S.W.2d 705, 707 (Mo. banc 1977)); cf. State 
ex rel. Kansas City Power & Light Co. v. McBeth, 322 S.W.3d 525, 529 (Mo. banc 2010) 
(noting that taxpayers “lack standing to challenge other taxpayers’ property tax 
assessments, as they are not injured personally by others’ assessment calculations”). The 
taxpayer was not “adversely affected” because, if the “exemptions” were ruled 
 
8
unconstitutional, the taxpayer would not have been entitled to receive a refund of the 
taxes it paid under a wholly separate taxing statute. W.R. Grace, 729 S.W.2d at 207.  
Although the taxpayer in W.R. Grace did not claim that it had taxpayer standing to 
challenge the statute, the court considered the possibility and analyzed the issue. Id. W.R. 
Grace recognized that “it might well be argued that [the taxpayer] has standing because 
the net result of granting an exemption to others would not seem to differ in substance 
from the spending of tax monies.” Id. The court acknowledged that in each situation, the 
result is the same: the state treasury will be diminished. Id. It rejected that contention 
because there is no “public interest” when the appellant challenges the statutory 
“exemptions” given to other taxpayers. Id.; see also Civic League of St. Louis v. City of 
St. Louis, 223 S.W. 891, 893 (Mo. 1920) (finding that a taxpayer has standing to 
challenge public funds dissipated for an illegal purpose if there are “public interests” 
involved).  
W.R. Grace’s analysis regarding the effect of tax exemptions on the state treasury 
is instructive here. The standing test asserted by taxpayers here is whether there is a direct 
expenditure of funds generated through taxation. The tax exemptions in W.R. Grace and 
the tax credits here are similar in that they both result in a reduction of tax liability. The 
government collects no money when the taxpayer has a reduction of liability, and no 
direct expenditure of funds generated through taxation can be found. The tax credits 
provided by the Act merely excuse the tax liability of redevelopers or persons to whom it 
is assigned or sold. The court in W.R. Grace correctly concluded that the taxpayer did not 
have standing as there was no direct expenditure of funds generated through taxation. 
 
9
Likewise, tax credits are not from monies paid into the state treasury by taxpayers as tax 
revenue and are not direct expenditures of funds generated through taxation.  
Judge Wolff's concurrence cites Ste. Genevieve School District as support for its 
conclusion that tax credits given under the Act are a direct expenditure of public money 
generated through taxation. There, the court held that a taxpayer had standing to 
challenge whether the city had authority to amend a revdevelopment plan without 
reconvening the Tax Increment Financing (TIF) commission. 66 S.W.3d at 11. That case 
is distinguishable from the facts here. In Ste. Genevieve School District, unlike here, it 
appears there was a challenge to the proposed expenditure of funds generated through 
taxation under the amended redevelopment plan. Further, it is distinguishable in that the 
holding in Ste. Genevieve School District arose in the unique context of analyzing the TIF 
statutes.  
The taxpayers and Judge Wolff's concurrence incorrectly rely on Curchin v. 
Missouri Industrial Development Board, 722 S.W.2d 930 (Mo. banc 1987), to support 
their position that tax credits are a grant of public money resulting in taxpayer standing. 
In Curchin, the court decided that the allowance of a tax credit constitutes a grant of 
public money or property in violation of article III, section 38(a), which bans the grant of 
public money or property to private entities.9 Id. at 933. The court held that there was a 
violation of the constitution by stating that a “tax credit is as much of a grant of public 
                                                 
9 The dissenting judge disagreed, stating that “the tax credit provision does not constitute the 
‘lending of public credit’ or the ‘granting of public money’ as those phrases are employed in the 
constitution.” Curchin, 722 S.W.2d at 937 (Rendlen, J., dissenting).  
 
10
money or property and is as much a drain on the state’s coffers as would be an outright 
payment by the state.” Id.  
But any reliance on Curchin is misplaced. The issue of standing was not raised or 
addressed in Curchin. The court in Curchin adjudicated the merits of the case by 
analyzing the constitutional question of whether tax credits are the grant of public money. 
But that question is different from the preliminary issue before this Court – whether 
taxpayers have standing. Curchin is not relevant. There is a dispositive distinction 
between the test for standing – whether there is a direct expenditure of funds generated 
through taxation – as opposed to the constitutional question – whether a tax credit is a 
grant of public money or property to a private person, association, or corporation.  
By relying on Curchin as support for its position that taxpayers have standing, 
Judge Wolff's concurrence conflates the requirements for standing and constitutional 
validity under article III, section 38(a). By merging the two requirements into one, it 
would require this Court to abandon over a century of precedent. Since Newmeyer, which 
was decided in 1873, taxpayer standing has required a challenge to an expenditure of 
public funds.10 This Court is mindful of stare decisis and declines to overrule Newmeyer 
and its progeny. See Sw. Bell Yellow Pages, Inc. v. Dir. of Revenue, 94 S.W.3d 388, 390 
(Mo. banc 2002) (“Under the doctrine of stare decisis, a decision of this court should not 
be lightly overruled, particularly where, as here, the opinion has remained unchanged for 
many years.”).  
                                                 
10 While the nomenclature of this Court has changed throughout the years, taxpayer standing still 
requires expenditure of funds that the government generates through taxation.  
 
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C. Supreme Court of the United States 
While this case was under submission, the Supreme Court of the United States 
issued an opinion in which it determined that a tax credit is not a direct expenditure of 
funds generated through taxation.11 In Arizona Christian School Tuition Organization v. 
Winn, ___ U.S. ___, 131 S. Ct. 1436, 1440 (2011), a group of taxpayers challenged an 
Arizona statute that provided for tax credits for contributions made to school tuition 
organizations. The school tuition organizations then would distribute the contributions as 
scholarships to students attending private schools, many of which are religious. Id. The 
taxpayers challenged the Arizona statute as violative of the Establishment Clause. Id.  
The Supreme Court’s threshold question was whether the taxpayers had standing 
to bring their claim. Id. The taxpayer standing doctrine is applied narrowly in federal 
courts, as it only pertains to alleged violations of the Establishment Clause. Id. at 1445. 
Taxpayers have standing in federal courts in such cases if: (1) there is a “logical link” 
between taxpayer status and the legislative enactment; and (2) there is “a nexus” between 
taxpayer status and the constitutional infringement alleged. Id. (citing Flast v. Cohen, 392 
U.S. 83, 102 (1968)). “‘The taxpayer’s allegation in such cases would be that his tax 
money is being extracted and spent in violation of specific constitutional protections 
against such abuses of legislative power.’” Id. at 1446 (quoting Flast, 392 U.S. at 106).  
The task for the Supreme Court was to determine whether a tax credit constituted 
public money that was extracted and spent in violation of the Establishment Clause. See 
                                                 
11 This Court sought additional briefing from the parties regarding the effect of that opinion on 
the case at hand.  
 
12
id. at 1447. In that context, the Court concluded that a tax credit is not a government 
expenditure. Id. While tax credits and government expenditures have similar 
consequences, a tax credit does not implicate all taxpayers like a government expenditure 
does. Id. A government expenditure implicates every taxpayer. Id. “A dissenter whose tax 
dollars are ‘extracted and spent’ knows that he has in some small measure been made to 
contribute to an establishment in violation of conscience.” Id. (quoting Flast, 392 U.S. at 
106). “[T]he taxpayer’s direct and particular connection with the establishment does not 
depend on economic speculation or political conjecture.” Id. On the other hand, a tax 
credit merely has an effect on the taxpayer who claims it. Id. There is no specific 
connection between the dissenting taxpayer and the establishment. Id. “Any financial 
injury [to the dissenting taxpayer] remains speculative.” Id.  
The taxpayers here argue that Arizona Christian School is inapplicable because 
federal taxpayer standing is distinct from Missouri taxpayer standing. It is true that the 
United States Constitution does not have provisions that are similar to article III, sections 
38 and 39 of the Missouri Constitution, which prohibit the State from expending taxpayer 
money or lending credit to private persons, associations, or organizations. And the test for 
taxpayer standing in federal courts is narrower than the standard for taxpayer standing in 
Missouri courts.  
Despite the Supreme Court’s decision in Arizona Christian School arising in a 
different context, it is instructive because the taxpayer standing in both federal and 
Missouri courts is similar: both require an expenditure. Before the Court determined 
whether there was an Establishment Clause violation under the federal constitution, it 
 
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analyzed generally whether a tax credit is an expenditure of public money. The same 
analysis is required in this case; determining whether tax credits are a direct expenditure 
of funds generated through taxation must be analyzed as a preliminary matter before 
reaching the constitutional question.  
As discussed previously, this Court agrees with the Supreme Court’s holding in 
Arizona Christian School. Here, the redeveloper tax credit does not implicate every 
taxpayer as a government expenditure does. When a government expenditure extracts 
money from the public treasury, every taxpayer’s dollars contribute to the disbursement. 
A tax credit, on the other hand, merely affects the taxpayer who claims it. Because the 
money never is deposited into the state’s coffers, any effect on the taxpayers in general is 
“merely speculative.” See Arizona Christian School, 131 S. Ct. at 1447.  
III. Taxpayers’ Right to Complain 
 
The prediction in Judge Wolff’s concurrence that today’s holding will result in a 
taxpayer not having a right of recourse if he disagrees with the legislature’s decision to 
issue tax credits is an exaggeration. Our system of government provides for checks and 
balances whereby taxpayers can hold public officials accountable for their acts. 
Taxpayers always retain the power at the ballot box to remove elected officials who 
support unpopular tax credits. And taxpayers, through the initiative process, may propose 
a law or an amendment to our state constitution to prohibit the issuance of tax credits. See 
MO. CONST. art. III, sec. 49 (“The people reserve power to propose and enact or reject 
laws and amendments to the constitution by the initiative, independent of the general 
assembly . . . .”).  
 
14
 
To illustrate its concern that taxpayers do not have a remedy, Judge Wolff's 
concurrence forecasts that if tax credits are not considered public money, then taxpayers 
would not have standing to challenge the legislature’s establishment of a tax credit 
program to help build new churches. The parties do not make this argument, nor is there 
any evidence in the record that the legislature ever has granted churches or other religious 
institutions tax credits. This Court does not rule on hypotheticals or speculative issues not 
raised by the case. This is a false alarm because it is unlikely that the legislature would 
set up such a tax credit program in the future for churches because religious institutions 
typically are exempt from taxes. See, e.g., section 137.100(5) (providing property tax 
exemption for property ordinarily used for religious purposes); section 144.030.2(19) 
(providing sales tax exemption for sales made by or to religious institutions). As tax 
credits lower tax liability, they are given to entities or persons who meet eligibility 
requirements and have potential liability such as redevelopers here, as opposed to 
churches, which have no potential tax liability. Any tax credit for religious institutions is 
pointless.  
Further, Judge Wolff's concurrence’s attempt to distinguish types of tax credits is 
irrelevant to standing. Although this concurrence implies that some tax credits are good 
and others are not, it is not clear from a standing viewpoint, as opposed to a policy 
viewpoint, whether there is any difference. All tax credits are intended to encourage 
private citizens or entities to spend their own money on a particular project to improve 
the lives of the public, while avoiding the need to spend public money. Whether tax 
 
15
 
16
credits are a good idea or improve the lives of the public is a different issue, and 
taxpayers retain the power to challenge the issuance of tax credits as mentioned above.  
 
This Court’s opinion does nothing to constrain the taxpayers’ right to use the 
courts to challenge the expenditure of public money if it is being spent on matters that the 
constitution forbids or on projects that have no public purpose.  
IV. Conclusion 
The taxpayers did not meet their burden to prove that they have standing. The trial 
court did not err in finding there was no taxpayer standing as the Act’s issuance of tax 
credits did not constitute a direct expenditure of funds generated through taxation. 
Further, this Court agrees with Arizona Christian School that tax credits are not 
government expenditures. Without standing, taxpayers cannot challenge the 
constitutional validity of the tax credits provided by the Act. Accordingly, the judgment 
is affirmed.  
 
 
 
 
 
 
 
 
___________________________ 
 
 
 
 
 
 
 
 
Mary R. Russell, Judge 
 
Breckenridge and Fischer, JJ., concur;  
Wolff, J., concurs in separate opinion filed;  
Teitelman, C.J., and Price, J., concur in  
opinion of Wolff, J.; Stith, J., concurs in  
principal opinion and concurs in part in  
opinion of Wolff, J., in separate opinion filed.   
 
SUPREME COURT OF MISSOURI 
en banc 
 
 
BARBARA MANZARA AND 
 
  
) 
KEITH MARQUARD, 
 
  
 
) 
 
 
 
 
 
 
 
) 
 
Appellants,  
 
 
 
) 
 
 
 
 
 
 
 
) 
v. 
 
 
 
 
 
 
) 
No. SC91025 
 
 
 
 
 
 
 
) 
STATE OF MISSOURI, ET AL.,  
 
) 
  
 
 
 
 
 
 
 
) 
 
Respondents.  
 
 
 
) 
 
CONCURRING OPINION 
 
Introduction 
 
“First, do no harm” – a fundamental precept of medicine – needs to be applied to 
this judicial decision, which may cause unnecessary harm to Missouri’s law that freely 
grants standing to taxpayers to challenge governmental spending.   
In determining that the taxpayer plaintiffs did not show that the tax credits in this 
case are an expenditure of public funds – which they are – the principal opinion takes the 
liberty, unnecessarily in my view, of distorting Missouri’s case law on standing.  
Although the principal opinion and Judge Stith’s concurring opinion leave the 
door open to get the law right in some future case, there is no principled reason not to get 
the law right in this case, or – at the very least – to leave the law of standing undisturbed.  
The principal opinion faults the taxpayer plaintiffs for not asking the Court in a 
separate “point relied on” to extend the standing doctrine to cover challenges to tax credit 
expenditures.  But the taxpayers here properly rely on Curchin v. Mo. Indust. Dev. Bd., 
722 S.W.2d 930 (Mo. banc 1987), which held that that tax credits granted to a private 
party are indistinguishable from expenditures of public funds.  Although Curchin, as is 
true of other taxpayer cases, did not expressly address the standing issue, Curchin applied 
the same analysis to tax credit expenditures as to other spending of public funds.  There is 
no need to “extend” taxpayer standing to tax credit cases – the law already is there. 
That said, I concur in the result of the principal opinion, because I believe that 
spending public funds through transferable tax credits under section 99.1205 – which is 
done in conjunction with the city government for redevelopment in north St. Louis – is 
acceptable because, under Missouri cases, the expenditure is for a “public purpose.”   
The standards for what is a “public purpose” are so lax that one has to wonder why 
the majority would invoke the doctrine of standing – which could have the effect of 
cutting off all challenges to the expenditure of the public funds through tax credit 
programs. The damage to the law from calling this an expenditure for a public purpose is 
minimal; the damage the principal opinion does to the law by invoking standing poses 
substantial problems for Missouri law and the proper role of the state’s courts. 
Let us remember: First, do no harm. The law of taxpayer standing is crucial to 
ensuring government accountability under the Missouri Constitution.  The majority 
should have left it alone. 
Taxpayers’ Standing in Missouri 
 2
To bring a lawsuit, a person must have standing, that is, a stake in the outcome of 
the lawsuit.  Missouri long has recognized that taxpayers have standing, as taxpayers, to 
challenge expenditures of public funds that a taxpayer plaintiff alleges are unlawful.  
Unlike the United States Constitution, the Missouri Constitution prescribes in detail the 
powers and limitations of the state government and its many subdivisions.  Taxpayers 
regularly come to the courts of this state seeking to enforce specific constitutional 
provisions, alleging that the state or a political subdivision is violating the constitution.  
Taxpayer standing is central to holding state and local governments accountable to limits 
on spending and other activities as specified in the state constitution. 
The state of Missouri gave Northside Regeneration, L.L.C., $28 million in 
transferable tax credits, which, when sold, would give Northside Regeneration about $25 
million in real money to spend on its redevelopment project in the city of St. Louis.  The 
principal opinion says the taxpayers have not shown that this is not public money, and, 
therefore, they do not have “standing” to bring a lawsuit claiming that this grant violates 
the Missouri Constitution. 
But the principal opinion casts doubt on whether taxpayers could challenge an 
action in which the state grants tax credits to a private company or organization – even 
when the state would be prohibited from spending public money directly for that purpose 
– because the money did not come directly from the state treasury and, therefore, the 
state’s donation of money to this project – which the state itself calls an “investment” – is 
not subject to judicial review.  
 3
These taxpayers, Manzara and Marquard, claim that the money granted to 
Northside Regeneration violates article III, section 38(a) of the constitution, which 
provides that “The general assembly shall have no power to grant public money or 
property, or lend or authorize the lending of public credit, to any private person, 
association or corporation….”1  
Because the meaning of article I, section 38(a) may not be immediately obvious, I 
offer an example from a provision of the state constitution that is clear to illustrate my 
point: Article I, section 7 of the Missouri Constitution would prohibit spending state 
money to build a church.2  But what if the state were to set up a program to which 
churches could apply for transferable tax credits to aid in building new churches?  Having 
well-built new churches, after all, would be a great benefit to the communities in which 
they are located and, presumably, would contribute to uplifting the morals of the state.  
But under the principal opinion’s analysis, a taxpayer may lack standing and, therefore, 
could not challenge the legality of the state’s action because a tax credit is not public 
money.   
 
Really? 
                                                 
1 There is no mention of “public purpose” in this provision. As discussed in the Public 
Purpose section of this opinion, however, the judicial gloss on this provision approves 
money for private entities if the spending is for a “public purpose.” See, e.g., Fust v. 
Attorney General for Mo., 947 S.W.2d 424, 429 (Mo. banc 1997); Menorah Med. Ctr. v. 
Health & Educ. Facilities Auth., 584 S.W.2d 73, 79 (Mo. banc 1979).   
2  Article I, section 7 provides that: “[N]o money shall ever be taken from the public 
treasury, directly or indirectly, in aid of any church, sect or denomination of religion, or 
in aid of any priest, preacher, minister or teacher thereof, as such; and that no preference 
shall be given to nor any discrimination made against any church, sect or creed of 
religion, or any form of religious faith or worship.”   
 4
 
Not all tax credits are created equal.  The transferable tax credits involved in this 
case share two characteristics: 
1. They are granted to an applicant that applies for the credits and demonstrates to 
a state agency that the applicant’s proposed use of the money is for the purpose 
set forth in the particular tax credit program established in the statute.  
2. The tax credits can be sold, yielding real money for the project for which the 
tax credits are granted.  The hypothetical church, described above, has no tax 
liability of its own, nor typically would a developer such as Northside 
Regeneration at the time it receives the tax credits.  No problem; the church or 
the developer can take the credits to a bank or financial institution that will sell 
them to taxpayers who owe taxes to the state, and the taxpayer buyers can use 
the credits to pay their taxes.  Typically, the institution will charge a 
commission, and the taxpayer who buys the credits will pay less than face 
value – this discount is the incentive for the tax-credit buyer to purchase credits 
rather than using actual cash to pay the taxpayer buyer’s taxes.  The amount 
paid in commissions and discounts typically is about 10 percent of the face 
value of the tax credits,3 which means that the nearly $28 million in credits 
would yield about $25 million in cash to Northside Regeneration. 
                                                 
3 Paul Rothstein & Nathan Wineinger, Transferable Tax Credits in Missouri: An 
Analytical Review, 3 FED. RES. BANK OF ST. LOUIS REGIONAL ECON. DEV., no. 2, at 53, 
66 – 67 (2007) (Table 5). 
 5
What is a transferable tax credit?4  It is a state-issued coupon that can be 
“redeemed” – that is, used instead of money – to pay taxes that the holder of the tax 
credit owes the state of Missouri.  If the recipient of the tax credit owes no taxes, the 
recipient can sell the credit to someone who does owe taxes.  Put simply, a $100 tax 
credit can be used to pay $100 in taxes owed to the state.  It is a cash alternative.5    
In fiscal 2009, there were 53 separate tax credit programs whose “redemptions” – 
that is, the amount of tax credits used to pay state taxes – totaled $584 million.6  These 
transferable tax credits are not like the tax credits that taxpayers may claim as 
entitlements on their income tax returns.  For example, if a taxpayer donates to a food 
pantry, a maternity home or a domestic violence shelter, he or she can claim a credit on 
                                                 
4 I use the term “transferable” to refer to the tax credits at issue in this case in the same 
sense as the term is used in the Federal Reserve Bank analysis cited in footnote three, 
though some of the tax credits of the kind discussed here may have limits on their 
transferability.   
5 The principal opinion answers the “church” hypothetical by pointing out the obvious 
fact that churches pay no taxes.  That is precisely my point as well as the crucial 
distinction between “transferable” tax credits in this case and tax credits that only can be 
used by the taxpayer.  The “tax credit programs” like those in this case separate the 
grantee of the credits from the taxpayer who uses the credits to pay taxes. A grantee such 
as a church (or Northside Regeneration) that has no tax liability of its own can get a cash 
benefit by selling the credits to someone who must pay a tax liability.  There is no doubt, 
under the principal opinion’s analysis, that the state could grant tax credits to churches to 
support their building programs, and there would be no judicial remedy.  
6 See Missouri State Auditor, Audit Report No. 2010-47.  See also, Missouri Tax Credit 
Review Commission, Report of the Missouri Tax Credit Review Commission (Nov. 30, 
2010), available at http://tcrc.mo.gov/pdf/TCRCFinalReport113010.pdf. “Redemptions” 
is the word used by the state auditor to describe the process of paying one’s taxes by 
using a tax credit instead of cash.  The report of the Missouri Tax Credit Review 
Commission notes that tax credit “redemptions” increased every year from fiscal 1998 
($102.7 million or 1.7 percent of the state’s general revenue) to fiscal 2009 ($584.7 
million or 7.8 percent of the state’s general revenue) and declined in fiscal 2010 (to 
$521.5 million or 7.7 percent of general revenue). Id. at 3.  
 6
the tax return – the credit is not transferable, it is limited in amount and the taxpayer 
claiming the credit does not have to submit an application to a tax credit program.7  
These credits are simply incentives inserted into the tax code to encourage or reward 
various kinds of donations and activities. 
                                                
The “tax credit programs” such as the program that Manzara and Marquard 
challenge here – the “Distressed Area Land Assemblage Tax Credits” in section 99.1205 
– generally are referred to as “investments” on which the state expects to realize “a 
return.”8  The state grants the credits – which are assets of the state of Missouri – and 
hopes for a “return,” the project sponsor receives the credits and converts them to cash to 
support the project, the financial institutions sell the credits and receive commissions, and 
the buyers of the credits receive credits worth more than they paid so they receive 
“returns” on their investment in buying the tax credits. 
Everybody wins, except for the taxpayers to whom the principal opinion denies 
standing and, perhaps, others such as the next generation of workers whose education is 
 
7  Section 135.647; section 135.600; sections 455.200, 455.220, 488.445.  These tax 
credits for donations are similar to tax deductions in that they reward charitable giving 
when taxpayers file their returns.  Tax deductions are amounts subtracted from adjusted 
gross income prior to calculation of the amount of taxes due. See section 143.111.  The 
Distressed Land Assemblage Act differs from both the aforementioned tax credits and  
tax deductions because it is not tied to the amount of tax liability of the individual, and, 
instead, it is granted only after the applicant has fulfilled the program requirements of the 
act.  See section 99.1205.  Unless otherwise indicated, all statutory citations are to RSMo 
Supp. 2010.    
8 See also, Missouri Tax Credit Review Commission, A Report of the Missouri Tax 
Credit Review Commission, at 5 (Nov. 30, 2010), available at http://tcrc.mo.gov/pdf 
/TCRCFinalReport113010.pdf (stating that “The Governor charged the Commission to 
determine which tax programs were generating a good return on investment for the 
taxpayers of Missouri and which were not …”) 
 7
funded insufficiently because today’s grownups decided to spend the public’s money – 
by tax credits – on other priorities.  
In reading this “Distressed Area Land Assemblage Tax Credits” statute, one 
reasonably may infer that it was enacted to benefit one project in one city.  This may have 
little relevance to the validity of the tax credit program in this case, but it is interesting to 
see the good uses that the well-connected with their lobbyists can find for state 
government, which raises again the question: Should the state government’s financial 
favors bestowed through tax credits be beyond the reach of judicial review under the 
Missouri Constitution?   
The Missouri Constitution, as noted, has many specific prohibitions and 
limitations on the spending of public money.  These restrictions safeguard the scarce 
public resources that are needed to support essential public services, for instance, 
education, public health and public safety.  
The principal opinion distorts Missouri precedents that recognize standing to sue 
in cases involving transferable tax credits, most notably Curchin, which held that 
providing a transferable tax credit – that is, a tax credit that can be sold – is the 
expenditure of public funds. 722 S.W.2d at 930.  Instead of following Missouri case law 
that relates directly to the tax credits in this case, the principal opinion seems to get 
distracted by the federal constitutional standing analysis in a case involving Arizona’s 
law that grants individual taxpayers up to $500 in non-transferable tax credits for 
donations to organizations that provide scholarships for students to attend private schools, 
 8
including religious schools.  Arizona Christian School Tuition Organization v. Winn, 
__U.S.__, 131 S.Ct. 1436 (2011).9   
By indicating that taxpayers may not have standing to present a constitutional 
challenge to the spending of state resources through tax credits – regardless of whether 
the tax credit is transferable – the principal opinion provides the legislature with a 
roadmap to try to ensure that courts never will be able to review whether any grant of 
public money as a tax credit violates a specific prohibition in the Missouri Constitution.   
The principal opinion brings to mind a familiar 19th century observation that the 
American republic will endure until politicians realize they can bribe the people with 
their own money.10  This observation usually is applied to social insurance and other 
entitlements from state and federal governments and these forms of welfare generate no 
shortage of commentary predicting the end of the republic.  
The genius of those who enact transferable tax credit programs is that tax credits 
allow governments to bestow financial largess on well-connected recipients with little or 
no public scrutiny and – with this Court’s indulgence – no judicial scrutiny.   
Are these transferable tax credits public money?  If it looks like money and acts 
like money, it is money.  And, because it comes from the state of Missouri, it is public 
                                                 
9  The difference between standing in state courts and the federal Article III standing 
doctrine is illustrated by the fact that the Arizona taxpayers previously had challenged the 
school tuition tax credits in Arizona state courts and had lost on the merits – the state 
plaintiffs had “standing” in state court. Winn, 131 S.Ct. at 1440.  
10 This observation is sometimes attributed to Alexis de Tocqueville, a 19th century 
Frenchman whose DEMOCRACY IN AMERICA is often cited but not often read.  It is a 
clever observation but it is hard to find that de Tocqueville said it, though he was a fount 
of observations about American character and governance.   
 9
money.  And because it is public money, the taxpayers here, Manzara and Marquard, 
have standing to bring this lawsuit.   
The denial of standing to taxpayers who challenge tax credit spending rests on a 
flawed economic and legal analysis – an analysis sure to be noted by future historians 
tracing the origins of the congenial corruption that led to widespread distrust of 
government and ultimately to its demise.  It may not be the end of our republic, but 
perhaps we may be able to see the end from here.   
Missouri’s Law of Standing 
 
Missouri courts – unlike the federal courts – have a long history of allowing 
taxpayers as taxpayers to bring challenges to the use of public funds that are claimed to 
be unlawful or unconstitutional. Newmeyer v. Missouri & Mississippi Railroad, 52 Mo. 
81 (1873).  “Missouri courts allow taxpayer standing so that ordinary citizens have the 
ability to make their government officials conform to the dictates of the law when 
spending public money.”  Ste. Genevieve Sch. Dist. R-II v. Bd. of the Alderman of City of 
Ste. Genevieve, 66 S.W.3d 6, 11 (Mo. banc 2002) (citing State ex rel. Nixon v. Am. 
Tobacco Co., Inc., 34 S.W.3d 122, 133 (Mo. banc 2000)).  “A taxpayer has standing to 
challenge an alleged illegal expenditure of public funds, absent fraud or compelling 
circumstances, if the taxpayer can show either a direct expenditure of funds generated 
through taxation, an increased levy in taxes, or a pecuniary loss attributable to the 
challenged transaction of a municipality.”  Id. at 10 (citing E. Mo. Laborers Dist. Council 
v. St. Louis County, 781 S.W.2d 43, 47 (Mo. banc 1989)).  It is irrelevant that the 
challenged expenditure may “produce a net gain ....  Taxpayers must have some 
 10
mechanism of enforcing the law.”  E. Mo. Laborers, 781 S.W.2d at 47.  See also 
Tichenor v. Mo. State Lottery Comm'n, 742 S.W.2d 170, 172 (Mo. banc 1988) (allowing 
a taxpayer to challenge the state lottery commission's decision to use commission funds 
to participate in a multi-state lottery). 
 
The principal opinion resorts to the dictionary definitions of the words “direct 
expenditure of funds generated through taxation.”  Piecing together individual 
definitions, the majority comes up with the following definition: “a sum paid out, without 
any intervening agency or step, of money or other liquid assets that come into existence 
through the means by which the state obtains the revenue required for its activities.”  But 
by parsing these definitions, the majority cobbles together a definition of the phrase that 
seems to support the proposition that transferable tax credits are direct expenditures of 
the state’s liquid assets – money that is due in taxes.  This shows that if you are looking 
for meaning, the dictionary is not necessarily the place to go, especially if the definition 
you piece together defies common sense. 
Distorting Precedent 
 
To get to its result that taxpayers do not have standing to challenge the grant of 
transferable tax credits, the principal opinion has to distort Curchin and ignore other 
cases. 
In Curchin – a case that is right on point – this Court flatly held that a “tax credit 
is as much a grant of public money or property and is as much a drain on the state’s 
coffers as would be an outright payment by the state to the bondholder upon default.” 722 
S.W.2d at 933.  The statute in Curchin authorized the industrial development board to 
 11
issue industrial revenue bonds to promote development. Id. at 931.  The board also was 
authorized to include a provision in these bonds for “a state tax credit for the amount of 
any unpaid principal and accrued interest in default.”  Id.  The Court was asked to 
consider whether these tax credits were an improper public expenditure under article III, 
section 38(a) of the Missouri Constitution.  Id. at 932.  The board argued that because no 
payment was required by the state, no “grant of public money” occurred.  Id. at 933.  The 
Court disagreed and held that “[t]here is no difference between the state granting a tax 
credit and foregoing the collection of the tax and the state making an outright payment to 
the bondholder from revenues already collected.”  Id. at 933.  The Court reasoned that the 
tax credit was available to the original bondholder and subsequent bondholders. Id.  If the 
bondholder did not have sufficient state tax liability to take advantage of the credit, he or 
she was allowed to sell the bond to someone who could use the credit.  Id.  Finally, the 
Court noted that the tax credit could be carried forward for 10 years.  Id.  The Court 
concluded, “The transferability of the bonds, the availability of the tax credit to 
subsequent bondholders, the issuance of the bonds to failing or risky businesses, and the 
ten-year carry forward provision make the utilization of the tax credit a near certainty.” 
Id.   
In this case, the $28 million in tax credits authorized to Northside Regeneration 
under section 99.1205 affect the plaintiff taxpayers in the same way that a decision by the 
legislature to provide $28 million straight out of the state’s coffers would affect them.  
Just as in Curchin, the tax credits here are transferable – by sale or assignment – and can 
be carried forward a number of years.  Just as the issuance of the tax credits to failing or 
 12
risky businesses contributed to the Court’s finding that their use was “a near certainty,” 
here, the fact that the tax credits are only issued after several very specific requirements 
are met, including the creation of a redevelopment agreement with a municipal authority, 
section 99.1205.2(15), shows that “[t]here is no difference between the state granting a 
tax credit and foregoing the collection of the tax and the state making an outright 
payment.”  Curchin, 722 S.W.2d at 933.   
The principal opinion asserts that the money Northside Regeneration received is 
not the state’s money because it had not actually reached the state’s coffers, but, again, 
its conclusion is not supported by our cases.  In Ste. Genevieve Sch. Dist, 66 S.W.3d at 
6,11 the Court looked at whether an individual taxpayer and a school district could 
challenge an abatement of property taxes in a tax increment financing (TIF) district.  The 
defendant city had amended a redevelopment project without convening the TIF 
commission.  Id. at 9.  The amendments to the project provided for certain property 
owners in the TIF district to have any increases in their property taxes abated through the 
use of TIF revenues.  Id. at 11.  The Court held that the school district had standing 
because the abatement of taxes would deprive the school district of tax funds that it 
otherwise would have received, resulting in a pecuniary loss.  Id.  The Court also 
reasoned that the taxpayer had standing because the redevelopment project “costs the 
school district and the city future tax revenue.”  Id.  In a similar fashion, the tax credits 
                                                 
11 The principal opinion’s attempts to distinguish this case show that it is, in fact, 
indistinguishable.   
 13
issued to Northside Regeneration will result in the loss of future tax revenue to the state 
of Missouri.   
The principal opinion argues that the taxpayers do not have standing in this case 
under the rationale of W.R. Grace & Co. v. Hughlett, 729 S.W.2d 203 (Mo. banc 1987), 
but misconstrues what the Court held.  The plaintiff, W.R. Grace, brought suit against the 
Jasper County collector of revenue, challenging the “manufacturers tax” that it had been 
required to pay based on annual assessments for certain tax years under section 
150.310.1, RSMo 1978.  Id. at 204.  Grace argued that the manufacturing tax being 
imposed violated the Missouri Constitution, article X, section 3 (1945), the uniformity 
clause, which provided that taxes “be uniform upon the same class of subjects” and the 
equal protection clause of the Fourteenth Amendment.  Id. at 204-05, 205 n.3.  Grace 
argued that the uniformity clause was violated because the authorizing of exemptions for 
certain types of tangible personal property resulted in a lack of tax uniformity.  Id. at 204-
05.  It also argued that these exemptions violated the equal protection clause because 
article X, section 6 (1945, amended 1972), provided that only the property tax 
exemptions specifically enumerated in section 6 could be exempted from taxation.  Id. at 
204-05 & 204 n. 2.  Grace sought a refund of the taxes that it had paid under section 
150.310.1 due to the fact that other taxpayers had received these allegedly 
unconstitutional exemptions.  Id. at 205.  As the principal opinion here correctly notes, 
the Court found that W.R. Grace did not have standing because it was not “‘adversely 
affected by the statute[s] in question’” because “those statutes would merely excuse the 
tax obligations of others.”  Id. at 206-07 (quoting Ryder v. County of St. Charles, 552 
 14
S.W.2d 705, 707 (Mo. banc 1977)) (emphasis and brackets in original).  While the 
principal opinion focuses on this single line from the Court’s decision, it is the Court’s 
entire explanation as to why W.R. Grace did not have standing that is important here.  
The Court reasoned that “it assumes too much to say [W.R. Grace] has standing to 
raise the uniformity clause and fourteenth amendment challenges to an otherwise facially 
valid taxing statute because certain alleged unconstitutional exemptions may have been 
conferred by non-related statutes upon classes of taxpayers other than [W.R. Grace].”  
W.R. Grace & Co. 729 S.W.2d at 206.  The Court further noted that “[i]f we were to 
assume, while not deciding, that the statutes relied upon by [W.R. Grace] did in fact 
create unconstitutional exemptions, it does not follow that this would entitle [W.R. 
Grace] to a refund of the monies paid under a different and totally unrelated taxing 
statute.”  Id. at 207 (emphasis added).  W.R. Grace’s analysis is not applicable here 
because W.R. Grace was not challenging the expenditure of public money but rather the 
government’s failure to collect taxes from other entities.  The challenge of expenditures is 
necessarily a separate analysis, and W.R. Grace’s holding is irrelevant.  
The principal opinion’s conclusion that the transferable tax credits in this case are 
not payments directly from the treasury is undercut by the definition of “total state 
revenue” in the tax-limiting Hancock Amendment.  That definition, in article X, section 
17(1), supports the proposition that the tax credits in this case are part of “total state 
revenue,” because such revenues “shall include the amount of any credits not related to 
actual tax liabilities.” That portion of the definition of “total state revenue” applies to the 
transferable tax credits at issue in this case – which are granted to Northside Regeneration 
 15
and are not related to its tax liabilities.  The argument of plaintiffs in Mo. Merchs. & 
Mfrs. Ass’n v. State, 42 S.W.3d 628 (Mo. banc 2001), that tax credits should be included 
in total state revenue failed because the plaintiffs took an all-or-nothing approach to tax 
credits and the record did not support differentiating among various categories of tax 
credits.  Id. at 635-36.  The taxpayers in Mo. Merchs. did not dispute the trial court’s 
conclusion that there was no evidence as to which tax credits should be included in total 
state revenue; this Court, accordingly, remanded the case to the trial court to determine 
whether there were in fact tax credits not related to tax liabilities. Id.    
The Mo. Merchs. opinion notes the strange fact that moneys paid from the treasury 
also are counted as “revenues.”  “It may seem strange that a payment from the treasury is 
counted as ‘revenue,’ but that is precisely what article X, section 17(1) requires when it 
says that tax credits ‘not related to actual tax liabilities’ shall be included in ‘total state 
revenues.’”  Id. at 635-36.  The purpose of that provision “is to ensure that any amounts 
of tax credits that exceed tax liabilities, and result in payments from the treasury, will not 
result in a deduction in the amount of ‘total state revenues’ for the purposes of computing 
the Hancock limit.”  Id. at 636.  If the Hancock Amendment counts these kinds of tax 
credits as state revenue, it makes no sense to say that the transferable tax credits in this 
case – which are “not related to actual tax liabilities” – are not public funds.  They are 
public funds and taxpayers have standing to challenge their expenditure. 
Arizona Christian School Tuition Organization v. Winn 
 
The most troubling aspect of the principal opinion is its injection into Missouri 
standing analysis of the United States Supreme Court’s recent decision in Arizona 
 16
Christian Sch. Tuition Org. v. Winn, __U.S.__, 131 S.Ct. 1436 (2011).  The Supreme 
Court’s decision in Winn, however, is guided by federal court standing principles – 
principles that are quite different from those principles under which Missouri courts 
recognize taxpayer standing, a difference that reflects the vastly different roles of state 
and federal courts.  
The United States Supreme Court applies its doctrine under Article III of the 
United States Constitution, requiring plaintiffs challenging governmental action to show 
that they have suffered or will suffer (1) an “‘injury in fact;’” (2) “‘a causal connection 
between the injury and the conduct complained of;’” and (3) that it is “‘likely, as opposed 
to merely speculative, that the injury will be redressed by a favorable decision.’”  Id. at 
1442 (quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992)). See also, 
Massachusetts v. Mellon, 262 U.S. 447 (1923).12  In other words, to show standing under 
Article III, a taxpayer would have to show that the taxpayer has suffered an “injury” that 
is individual to him or her and not merely the generalized injury that may have been 
suffered by the public at large. 
The United States Supreme Court has recognized exceptions for taxpayer plaintiff 
only in a narrow range of cases involving challenges based on the establishment clause of 
                                                 
12 There is a vibrant debate – if debates on the history of standing can be characterized as 
vibrant – as to whether liberal justices invented or developed the law of standing to 
insulate New Deal agencies and progressive legislation from judicial scrutiny by a 
conservative Supreme Court.  See, Daniel E. Ho & Erica L. Ross, Did Liberal Justices 
Invent the Standing Doctrine?An Empirical Study of the Evolution of Standing 1921-
2006, 62 STANFORD L. REV. 591 (2010); F. Andrew Hessick, Standing, Injury in Fact, 
and Private Rights, 93 CORNELL L. REV. 275 (2008); Robert J. Pushaw, Jr., Justiciability 
and Separation of Powers: A Neo-Federalist Approach, 81 CORNELL L. REV. 393 (1996).  
 17
the First Amendment, as in  Flast v. Cohen, 392 U.S. 83 (1968).  Winn, 131 S.Ct. at 1445. 
Though discussing Flast, Winn leaves undisturbed the recent doubt that taxpayer standing 
will be recognized even in many religion cases.  See, e.g., Hein v. Freedom From 
Religion Found. Inc., 551 U.S. 587 (2007).  This trend, of course, may leave the 
enforcement of the separation of church and state to the states under their state 
constitutions, where such matters resided until the last 70 years or so.  See, e.g., Harfst v. 
Hoegen, 163 S.W.2d 609, 611-12 (Mo. 1941).   
More to the point, however, is the fundamental difference between the role of state 
courts in enforcing specific provisions of a state constitution and the role of the federal 
courts enforcing federal constitutional constraints against states.  In Winn, as noted, the 
challenge to the tax credits for tuition for religious schools first was presented to the state 
courts, and the taxpayer-plaintiffs lost on the merits.  131 S.Ct. at 1441 (citing Kotterman 
v. Killian, 972 P.2d 606 (Ariz. 1999)).  There unquestionably was taxpayer standing in 
state court, and the Arizona courts met the challenge head-on without even mentioning 
standing. 
By adhering to its Article III standing requirements, on the other hand, the United 
States Supreme Court stays out of controversies that state courts have a duty to adjudicate 
under their constitutions, as the Arizona court did in Kotterman.  The truly relevant cases, 
for our standing purposes, start with this Court’s explicit holdings on standing in 
Tichenor, 742 S.W.2d at 172, and E. Mo. Laborers Dist., 781 S.W.2d at 47, and continue 
through Ste. Genevieve Sch. Dist. R-II, 66 S.W.3d at 11, all of which recognize the 
standing of taxpayers permitted to sue as taxpayers without showing the kind of 
 18
particularized “injury in fact” that the United States Supreme Court requires under Article 
III.  The significance of these modern Missouri cases is that they explain the taxpayer 
standing doctrine that has been assumed throughout much of our state’s history.  See 
Thomas C. Albus, Taxpayer Standing in Missouri, 54 J. MO. BAR 199 (1998). 
The difference between the United States Supreme Court and the Supreme Court 
of Missouri is important – Missouri recognizes a taxpayer’s standing even though his 
injury may be no different from that of other taxpayers, and the United States Supreme 
Court does not.  The differences in taxpayer standing cases reflect the profound 
differences between the constitutions under which these courts function.  State 
constitutions “do not reflect the same level of trust in state legislative decisionmaking as 
does the federal Constitution in congressional decisionmaking.”  Helen Hershkoff, State 
Courts and the “Passive Virtues:” Rethinking the Judicial Function, 114 HARV. L. REV. 
1833, 1891-92 (2001).  “Article I of the Constitution assumes that Congress is best 
situated to decide how to carry out the terms of its authority ….  State constitutions, in 
contrast, impose not only substantive, but also procedural requirements on  legislative 
activity.”  Id. at 1892. “[S]uch provisions alter the dynamics of lawmaking, implicating 
the state courts in the resolution of certain governance questions that are largely outside 
the Article III experience.”  Id. at 1893. 
The principal opinion’s analysis may allow the legislature to circumvent not just 
article III, section 38(a) but many other requirements of the Missouri Constitution, 
evading what this Court said in E. Mo. Laborers Dist. Council about the need for “a 
 19
system of checks and balances whereby taxpayers can hold public officials accountable 
for their acts.”  781 S.W.2d at 47. 
While the choices of how to spend the public’s money are choices that the elected 
political branches of our government get to make, the state courts have a duty to guard 
the state constitution and to intervene at the behest of an aggrieved taxpayer when the 
state’s resources are being spent on matters that the constitution forbids or on projects 
that have no public purpose.13  
The principal opinion suggests that the remedy lies in the political process, but 
there is little doubt that the $500 million currently being spent on public projects to create 
jobs, make movies,14 and do other useful things – instead of fully funding the needs of 
public education, for instance – might well receive majority support.  But constitutional 
constraints may serve occasionally to restrain the current generation from robbing the 
next generation, a function that is not fulfilled by democratic majorities unless, perhaps, 
the voting age can be lowered to age 8. 
                                                 
13 “The primary basis for taxpayer suits arises from the need to ensure that government 
officials conform to the law. It rests upon the indispensable need to keep public 
corporations, their officers, agents and servants strictly within the limits of their 
obligations and faithful to the service of the citizens and taxpayers.” E. Mo. Laborers 
Dist. Council, 781 S.W.2d at 46 (internal citations omitted).    
14  Two excellent movies made in Missouri with public support both were nominated for 
Academy Awards for Best Picture: “Winter’s Bone,” (2011 nominee) ($800,000 in state 
support through tax credits) which depicts poorly educated methamphetamine addicts and 
murderers in Southwest Missouri, and “Up in the Air,” (20l0 nominee) ($5.1 million in 
state support), a story of a man played by actor George Clooney who is hired to fly 
around the country firing employees of companies that are downsizing. The stories of 
these movies seem to show that this governmental program did not suffer from irony 
deficiency.   
 20
The principal opinion in this case, I am sad to say, follows the irrelevant lead of 
the United States Supreme Court and, in doing so, may lead the Court in future cases to  
forsake its duty under the Missouri Constitution.  The United States Supreme Court can 
assume that money is not public until it is deposited in the treasury and thereby find that a 
taxpayer suffers no direct “injury in fact” sufficient to support Article III standing.  The 
Supreme Court’s standing decisions reflect its reticence to redirect taxation and spending 
by applying the constitutional principles of due process and equal protection under the 
Fourteenth Amendment.  
The reluctance of the United States Supreme Court to interfere with state decisions 
is prudent and respectful of federalism, but in state supreme courts, there are no 
federalism concerns.  When a state supreme court closes the courthouse doors to 
challenges based on specific provisions of a state constitution, the Court is not acting 
prudently – its failure is a dereliction of duty, permitting state officials to spend the 
public’s money indirectly through tax credits where they would be forbidden to spend the 
public’s money directly.  
Thereby relieved of constitutional accountability by the principal opinion in this 
case, elected officials can feel free to use state government as an ATM for dispensing 
public money through tax credits for special projects and to special pleaders.  Without 
judicial review, an important purpose of our state constitution – to safeguard the public’s 
resources for the benefit of future generations – will be entirely dependent on elected 
officials who may depend on the beneficiaries of tax credits for the financial support their 
campaigns need.  Are these elected officials cognizant of the needs of future generations?  
 21
Yes, of course, as they often express devotion if not actual money to those needs.  Are 
they dependent today on the well-being of future generations?  Not so much.   
The Arizona Supreme Court decided the merits of the controversy over the 
funding of parochial school children’s education with tax credit funds, without, as noted, 
even mentioning whether the taxpayers had standing to sue. Kotterman, 972 P.2d at 
606.15  Regardless of whether an Arizonan agreed or disagreed with the court’s resolution 
of the controversy, the Arizona taxpayers received what they had a right to receive from 
their courts – a resolution of a constitutional conflict over state spending, which is what 
Missouri taxpayers traditionally expect when they seek redress as taxpayers in our state 
courts.  When the United States Supreme Court denies standing in a controversy 
involving the spending of state money, it can be seen as a prudent respect for state 
prerogatives in a federal system.  But when state courts deny standing and refuse to reach 
the merits of a constitutional challenge to state spending, the constitutional controversy 
remains unresolved, with the consequence that a segment of our society may be 
marginalized because the merits of its side of a legal controversy never are addressed, 
and the unresolved controversy can continue to fester and build resentment.  Hence the 
importance of getting to the merits and treating the taxpayers’ grievances with the respect 
they are due.  
                                                 
15  The Arizona decision was based on the First Amendment to the United States 
Constitution; in Missouri – which has specific prohibitions dating from the 1870s – the 
state constitution is likely to be the source of the law. See, e.g., Harfst, 163 S.W.2d at 
612- 614 (discussing specific Missouri provisions).  For standing purposes, the source of 
law is unimportant. If a taxpayer as taxpayer has standing, as in both Arizona and 
Missouri, he or she has standing regardless of the law on which the claim is based. 
 22
Public Purpose 
 
The merits, however, do not favor these taxpayers.  Even though I would hold that 
the tax credits here are a grant of public money, I believe that, under our cases, money for 
the redevelopment of an economically-disadvantaged area is for a “public purpose” and, 
therefore, is constitutional.  
 
This Court has held that even if a grant of public money or property occurs, there 
is no violation of article III, section 38(a) if the grant serves a public purpose, even 
though “public purpose” is not mentioned in this constitutional provision.  See, e.g., Fust, 
947 S.W.2d at 429; Menorah Med. Ctr., 584 S.W.2d at 79.   
Judicial decisions reviewing “public purposes” have not been robust, to say the 
least.  The decision of what constitutes a public purpose is primarily left to the 
legislature.  Fust, 947 S.W.2d at 430.  This Court will not overturn the legislature’s 
determination unless it is arbitrary and unreasonable.  Id.  So long as “the primary 
purpose of a statute is public ‘the fact that special benefits may accrue to some private 
persons does not deprive the government action of its public character, such benefits 
being incidental to the primary purpose.’” State ex rel. Wagner v. St. Louis County Port 
Auth., 604 S.W.2d 592, 597 (Mo. banc 1980). 
On its face, the purpose of the tax credit in this case is to encourage and assist in 
redeveloping land in areas deemed distressed under both federal and Missouri law.  
Section 99.1205 states that it is to be known and cited as the “Distressed Areas Land 
Assemblage Tax Credit Act.”  Section 99.1205.1.  Section 99.1205.2(8)(b) requires that 
“[a]t least eighty percent of the eligible project area shall be located within a Missouri 
 23
qualified census tract area16 ... or within a distressed community as that term is defined in 
section 135.530.”  Certain criteria must be met before an applicant is eligible for a tax 
credit under section 99.1205.  These requirements include that the land be redeveloped 
within an “eligible project area” and be redeveloped in accordance with a redevelopment 
agreement approved by a municipality under an economic incentive law.  Section 
99.1205.  The statute also specifies the amount and use of the tax credits and requires that 
“funds generated through the use or sale of the tax credits ... shall be used to redevelop 
the eligible project area.”  Sections 99.1205.2(2)(b)a; 99.1205.3.   
This Court previously has said that “[r]edevelopment of ‘blighted, substandard or 
insanitary’ areas is a public purpose.”  Tierney, 742 S.W.2d at 150.  See also State ex rel. 
U.S. Steel v. Koehr, 811 S.W.2d 385, 389 (Mo. banc 1991) (“[T]he clearing and 
redevelopment of a blighted area is for the public use of revitalizing such area to make it 
healthful.”); MO. CONST. art. VI, § 21 (“Laws may be enacted, and any city or county 
operating under a constitutional charter may enact ordinances, providing for the 
clearance, replanning, reconstruction, redevelopment and rehabilitation of blighted, 
substandard or insanitary areas …”).   
                                                 
16 The statute provides that a Missouri qualified census tract is “designated by the United 
States Department of Housing and Urban Development under 26 U.S.C. Section 42.”  
Section 99.1205.2(8)(b).  26 U.S.C. section 42(d)(5)(B)(ii) defines a qualified census 
tract as  
 
any census tract which is designated by the Secretary of Housing and Urban 
Development and, for the most recent year for which census data are 
available on household income in such tract, either in which 50 percent or 
more of the households have an income which is less than 60 percent of the 
area median gross income for such year or which has a poverty rate of at 
least 25 percent .... 
 24
Nevertheless, Manzara and Marquard argue that the purpose of the statute is not a 
public use, but rather that it is designed “to promote some private end.”  See State ex rel. 
City of Jefferson v. Smith, 154 S.W.2d 101, 102 (Mo. banc 1941).  In analyzing article 
VI, section 23 and article III, section 38, courts have given further guidance as to what 
constitutes a public interest.17  A statute serves a public purpose if the primary effect of 
that statute is to promote a public interest.  Curchin, 722 S.W.2d at 930.  See also Rice v. 
Ashcroft, 831 S.W.2d 206, 209 (Mo. App. 1991).  Conversely, a statute serves a private 
interest if it primarily promotes a private interest, regardless of whether there is an 
incidental benefit to the public.  Curchin, 722 S.W.2d at 930; Rice, 831 S.W.2d at 209.  
Simply because a private individual or entity benefits from the statute does not negate its 
public purpose.  It is only if the primary purpose was to benefit an individual that the 
statute is for private use.   
The taxpayers in this case have not negated the state’s position that the primary 
purpose of the statute is to promote redevelopment of distressed communities.  The 
benefit to the redeveloper of the distressed communities is considered incidental unless 
the taxpayer shows otherwise.  Rice, 831 S.W.2d at 209 (holding that lease payments by 
Missouri, St. Louis city, and St. Louis County to the regional sport authority were for the 
                                                 
17 Article VI, section 23 says: “No county, city or other political corporation or 
subdivision of the state shall own or subscribe for stock in any corporation or association, 
or lend its credit or grant public money or thing of value to or in aid of any corporation, 
association or individual, except as provided in this constitution.” 
Both article VI, section 23 and article III, section 38 forbid a grant of public money to a 
private entity.  The article VI provision prevents a county, city or other public corporation 
or subdivisions from doing so whereas the article III provision prevents the legislature 
from doing so.  
 25
primary public purpose of increasing sporting and convention business in St. Louis 
despite an “incidental” benefit to the St. Louis NFL corporation).  See also Moschenross 
v. St. Louis County, 188 S.W.3d 13, 22 (Mo. App. 2006) (holding that St. Louis city’s 
financing of the construction of a ballpark on behalf of Cardinals Ballpark L.L.C. did not 
primarily benefit the Cardinals Ballpark L.L.C. and instead it was for the primary public 
purpose of increasing tax revenue).  Under these cases, the tax credits granted under this 
statute appear to serve a public purpose.   
Manzara and Marquard note that the predecessor to article III, section 38(a) was 
enacted to prevent the state from continuing its custom of giving large sums of money to 
railroads, canals and banks on a regular basis and abusing its power in doing so.  
Curchin, 722 S.W.2d at 934 (citing 11 Debates of the Missouri Constitution 1945, 3212 
(debate of May 23, 1944) (statement of Mr. Garten)).  In Curchin, the Court relied on this 
history and found that there was no public purpose where the Industrial Development 
Board was able to give out state tax credits to companies that had defaulted on their 
industrial revenue bonds.  Id. at 935.  Using tax credits to bail out private companies that 
defaulted on their bonds obviously fails the public purpose test. 
The tax credits in this case are explicitly tied to the developer’s agreement with a 
municipality to develop a blighted or distressed neighborhood.  There is no carte blanche 
grant of tax credits for any purpose, as in Curchin, but instead there are assurances that 
only developers furthering the purpose of section 99.1205 will obtain the tax credits.   
 26
Manzara and Marquard may disagree with the legislature’s decisions to create a 
tax credit and to implement the tax credit in the manner that it did.  But they have not met 
their burden of showing that section 99.1205 is not directed toward a public purpose.  
There is, however, a strong case to be made that the Court one day should re-visit 
the question of what is a “public purpose,” and whether it is properly a qualification for 
approving public spending under Article III, section 38(a).  Courts may not be perceived 
as doing their duty to the public when they show extraordinary deference to the 
legislature.18  The current standard for determining that spending is for a “public 
purpose” is so lax that it is difficult to imagine an expenditure of public funds, aside from 
the expenditure authorized in Curchin, that would not be considered for a “public 
purpose” if the government says that it is.  
 
 
 
 
Conclusion 
I concur in the result, but I disagree with the principal opinion’s conclusion that 
the taxpayers, Manzara and Marquard, failed to show that they have standing to sue.  I 
think it is both unnecessary and unwise to engage in a muddled discussion of standing 
                                                 
18  In another context, much of the criticism of the United States Supreme Court’s 
decision in Kelo v. City of New London, 545 U.S. 469 (2005) resulted from the Court’s 
deference to the legislative judgment that private property taken by eminent domain was 
for a “public purpose.” Daniel B. Kelly, The “Public Use” Requirement in Eminent 
Domain Law:  A Rationale Based on Secret Purchases and Private Influence, 92 
CORNELL L. REV. 1 (2006); Eric Rutkow, Kelo v. City of New London, 30 HARV. 
ENVTL. L. REV. 261, 268-70 (2006), and Ashley J. Fuhrmeister, In the Name of Economic 
Development:  Reviving “Public Use” as a Limitation on the Eminent Domain Power in 
the Wake of Kelo v. City of New London, 54 DRAKE L. REV. 171, 177 (2005).  In the 
case of eminent domain, the Missouri Constitution – in contrast to the United States 
Constitution – specifically instructs Missouri courts not to defer to the legislative 
judgment that a taking is for a public purpose.  Article I, section 29. 
 27
 28
when the use of tax credits in the redevelopment of north St. Louis can be justified as 
being for a “public purpose.”  Although I have doubts about the reliance on “public 
purpose” to justify challenges under Article III, section 38(a) to the granting of public 
funds to a private entity, that is the current law and it suffices to justify the expenditures 
under the Distressed Land Assemblage Act that the taxpayers challenge in this case.  
 
 
 
 
 
 
 
__________________________________ 
 
 
 
 
 
Michael A. Wolff, Judge 
 
SUPREME COURT OF MISSOURI 
en banc 
 
BARBARA MANZARA AND  
   
 
) 
KEITH MARQUARD,  
   
 
 
 
 
) 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
) 
 
 
 
 
 
 
 
 
 
Appellants,  
 
) 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
) 
v.  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
) No. SC91025 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
) 
STATE OF MISSOURI, ET AL.,  
 
 
)  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
) 
 
 
 
 
 
 
 
 
 
Respondents.  
 
) 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CONCURRING OPINION 
 
I concur in the analysis of the majority opinion that the plaintiffs do not have 
standing under current Missouri law regarding taxpayer standing, under which “[a] tax-
payer has standing to challenge an alleged illegal expenditure of public funds, absent 
fraud or compelling circumstances, if the taxpayer can show either a direct expenditure of 
funds generated through taxation, an increased levy in taxes, or a pecuniary loss attribut-
able to the challenged transaction of a municipality.” Ste. Genevieve Sch. Dist. R-II v. Bd. 
of the Alderman of City of Ste. Genevieve, 66 S.W.3d 6, 10 (Mo. banc 2002) (citing E. 
Mo. Laborers Dist. Council v. St. Louis County, 781 S.W.2d 43, 47 (Mo. banc 1989)).  I 
also concur that this is not the case in which to consider whether that test should be modi-
fied.  Neither of the parties has requested or briefed such a modification, appellate courts 
 
2
are not advocates and, generally, issues not raised by the parties will not be addressed.  
See Kline v. City of Kansas City, 334 S.W.3d 632, 640 (Mo. App. 2011).   
Nonetheless, because of the importance of this issue, were this issue dispositive I 
would be in favor of asking for supplemental briefing about whether a different test 
should be applied in light of the fact that the Court's rules for taxpayer standing were es-
tablished without consideration of tax credits and that strong arguments can be made that 
the taxpayer standing test should be expanded to allow a taxpayer to challenge an illegal 
tax credit because the policy for allowing taxpayer standing would be the same for tax 
credits as it is for direct expenditures of public funds generated through taxation. 
I agree with Judge Wolff, however, that the tax credits at issue here constitute an 
expenditure of public funds for a public purpose and, therefore, are valid.  Accordingly, 
there is no reason to require additional briefing and argument in this case, for the result 
would be the same regardless whether this Court were to modify the test for taxpayer 
standing.   
For these reasons, I concur in the majority opinion and in the portion of the con-
curring opinion of Judge Wolff that concludes that the tax credits constitute a valid ex-
penditure of public funds for a public purpose.   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
_________________________________  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
LAURA DENVIR STITH, JUDGE