No. 86-411 IN THE SUPREME COURT OF THE STATE OF MONTANA 1986

STATE OF MONTANA, ex rel., MONTANA SCHOOL BOARD ASSOCIATION, MONTANA ASSOCIATION OF COUNTIES, MONTANA LEAGUE OF CITIESAND TOWNS, MUSSELSHELL COUNTY, CUSTER COUNTY, CHOUTEAU COUNTY, YELLOWSTONE COUNTY, BUTTESILVER BOW LOCAL GOVERNMENT, CHARLES L. EVANS, and MICHAEL S. BECKER, Plaintiffsand Relators,

JIMWALTERMIRE, Secretaryof Stateof the Stateof Montana, Defendant and Respondent, and FRIENDS OF THE CONSTITUTION, INC., Real PartyinInterest.

ORIGINAL PROCEEDING: COUNSEL OF RECORD: ForPetitioner/Relator: Charles E. Erdmann argued, Helena, Montana For Respondent: Hon. Mike Greely, Attorney General, Helena, Montana H. Elwood Englisharqued for Secretaryof State, Helena, Montana For Real PartyinInterest: CarterPicotteargued for Friendsof the Consitution, Helena, Montana ForAmicus Curiae: David Gliko, CityAttorney, GreatFalls, Montana Roger Tippy forMontana LegalDefense Fund, Helena, Montana

Filed: Submitted: October 7, 1986 Decided: December 11, 1986 

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ClerkMr. Justice Fred J. Weber delivered the Opinion of the Court.

In an applicationto thisCourt for awrit of injunction and declaratory judgment, plaintiffs and relators challenged the constitutionality of Constitutional Initiative 27, the "property tax initiative." On October 7, 1986, this Court issued an order denying the requested relief (copyof order attached to this opinion). This opinion sets forth the Court's reasoning. The issuesare: 1. Is the Initiative invalid on its faceas a violation of the Contract Clause of the U.S. Constitution? 2. Does t.he Initiativepresent more than one amendment in a single ballot measure in violation ofMont. Const. Art. XIV, § 11? 3. Does the Initiativepresent irreconcilable conflicts with Mont. Const. Art. VIII, § 2, and Mont. Const. Art. 111, § 7?Constitutional Initiative 27was certified to theGovernor as officially filed on June 27, 1986. The Initiative would amendMontana's Constitutionby adding anew section to ArticleVIII as follows:
Section 15. Certain taxes prohibited--certain tax changes only by referendum or initiative. No tax shall be imposed on any real or personal property. The establishment of a sales tax, or the increase of sales tax orpersonal income tax shallbe accomplished only by referendum of the legislaturewith the approval of a majority of the qualified electors or initiativeof thepeople. Itwould also repeal several sectionsof the Montana Constitution: Art. VIII, 5 3, 4, and 5, and Art. XII, § l(2). On September 3, 1986,plaintiffs and relators filed an application for an originalproceeding in this Court pursuanttoRule 17of the Montana Rules ofAppellate Civil Procedure, asking that CI-27 be declared unconstitutional on its face under the Uniform Declaratory Judgment Act. They requested that the Secretary of Statebe enjoined from presenting CI-27 to the voters. They filed a brief in support of their application. This Court ordered that allnamed parties submitbriefs, reserving decision onwhether itwould accept jurisdictionof plaintiffs' application. After all briefs were filed, oral arguments were heard. This Court then issued its order denying the applicat.ion for a writ of injunction and declaratory judgment. I Is the Initiative invalid on its face as a violation of the Contract Clause of theU.S. Constitution? Article I, Section 10 of the United States Constitution provides thatno state shall pass a law impairing the obligation of contracts. Plaintiffs contend that the Initiative would impairbond contractsalready issuedby Montana cities, counties, and school districts by repealing the statutes which provide for the method of repayment of bonds. The defendants counter that there is no impaired contract now before this Court and that other sources could be arranqed for repayment of the bonds prior to the July 1987 effective date of the Initiative. Thepeoples' right to alter or abolish our state constitution and formofgovernment whenever they deem itnecessary
waspresent in our 1889 Constitutionand remains substantially unchanged today at Mont. Const. Art. 11, § 2. Under the 1889 Constitution,the people had the right tomake statutory changes by initiative. In opinions decided under thatprovision,this Court accepted jurisdiction over pre-election initiative challenges only where the challenged initiative

was not properly submitted under the election laws, e.g., State ex rel. Livingstonv. Murray (1960),137Mont. 557, 354 P.2d 552,andwhere the challenged initiativewas unconstitutional on its face, e.g., State ex rel. Steen v. Murray

(1964), 

### 144 Mont. 61, 394 P.2d 761. The right of the people to make statutory changes by initiative is retained in Art. 111,S 4 of our 1972 Constitution. The people also have the right under Art. XIV, S 9 of our 1972 Constitution to make constitutional changesby initiative:

Amendment by initiative. (1) The people may also propose constitutional amendments by initiative. Petitions including the full text of the proposed amendment shall be signed by at least ten percent of the qualified electors of the state. That number shall include at least ten percent of the qualified electors in each of two-fifths of the legislativedistricts. (2) The petitions shall be filed with the secretary of state. If the petitions are found to have been signed by the required number of electors,the secretary of state shall cause the amendment to be published as provided by law twice each month for two months previous to the next regular state-wide election. (3) At that election, the proposed amendment shall be submitted to the qualified electors for approval or rejection. If approved by a majority voting thereon, it shall become a part of the constitution effective the first day of July following its approval,unless the amendment provides otherwise. This right of the people to amend the Constitutionby initiative is aunique and important retainedpower. The inclusion of this right in the 1972 Constitution emphasizes the degree of control the people desired to retain over the changes in their Constitution. We conclude that it is not the function of thisCourt to intervene in the initiativeprocess prior to the peoples' vote absent extraordinary cause, and that ourdiscretionary jurisdiction under Rule 17, M.R.App.Civ.P., should not be exercised unless it is absolutely essential. The impairment of contract challenge does not suggest that the Initiative is unconstitutional on its face as was the initiative in Steen. In substance, it is a contention that the Initiative would be unconstitutional as applied to bonds and other obligations already issued by cities, towns, school districts, and other parts of state government. The record before us does not contain any bonds or other obligations which are alleged to have been unconstitutionally affected. If the Initiative were adopted by the people, there would be an adequate opportunity to present this issue in the court system and determine if the impairment of contract challenge in fact does apply to obligations in existence. We do not find the type of compelling requirement necessary to move our discretion in this manner. We therefore declined to accept jurisdiction of this issue prior to the election. I1 Does the Initiativepresentmore than one amendment in a single ballot measure in violation ofMont. Const. Art. XIV, § ll?Plaintiffsand relators say that the Initiative addresses several distinct subjects,includingproperty taxes, sales taxes, and s.1.D.'~. They argue that this violates Mont.. Const. Art. XIV, § 11: "Ifmore than one amendment is submitted at the same election, each shall be so prepared and distinguishedthat it canbe voted upon separately." As we stated under Issue I, this Court has exercised pre-election jurisdiction to remove an initiative from the ballot only when there was a procedural defect or when theinitiative was clearly unconstitutional its face. The Steen case involved the latter reason. There, the text of the proposed initiative clearly and directly contradicted a constitutional provision prohibiting the legislature from authorizing gambling. In the present case, in contrast, there are strong arguments on both sides of the issue of whether the Initiative violates the constitutional requirement that initiativesmust address only one subject. Such a close issue deserves the considered judgment of this Court and is inappropriate for the hurried consideration requested in the present pre-election determination of constitutionality. We concluded that topull this Initiative off theballotwhilewe considered this aspect more carefully would be an unjustified infringementon thepeople's right of initiative. Additionally, this issue could have been addressed following the election, had the Initiative been adopted. See, e.g., State 

### ex rel. Corry v. Cooney et al. 

### - (1924), 70 Mont. 355, 225 P. 1007; State ex rel. Hay 

### v. Alderson (1914),49 Mont. 387, 142 P. 210; Statev. Board of Com'rs. (1906), 34 Mont. 426, 87 P. 450. We therefore declined to exercise our discretionary jurisdiction over this issue prior to the election.

Does the Initiative present irreconcilable conflicts with Mont. Const. Art. VIII, § 2, and Mont. Const. Art. 111,

Plaintiffsand relators maintain that theportion of the Initiative which prohibits property taxes conflicts with Mont. Const. Art. VIII, $ 2,which states "[tlhepower to tax shall never be surrendered, suspended, or contracted away." They also argue that allowing sales or personal income taxesto be established or increased only after approval by a majority of the qualified electors would require a supermajority for passage of such measures, because Mont. Const. Art. 111, § 7,defines the number of qualified electors as the number of voters in the previous gubernatorial election. Plaintiffs assert that if the Initiative passed, a majority of the number ofvoters in theprevious gubernatorial election would have to approveproposed sales or personal income taxes. Plaintiffs state that thiswould conflict with Mont. Const. Art. 11, $ 2, which they say implies that a majority of the voterswillprevail. Plaintiffs contended that this Court should strike the Initiative from the November ballot because of these conflicts. We declined to do so. No constitutional conflict would exist until and unless the Initiativewas enacted into law by popular vote inNovember. Even then, the time period until July 1, 1987,would remain in which to raise objections to the Initiative before it took effect as law. At that time, any unconstitutional portions of the Initiative could be severed. These factors,along with our firm conviction of the value and importance of the right of initiativewhich is retained by the people of Montana, led us to conclude that the interestsof our statewould best be served,and the role of this Court best fulfilled, if the Court did not intervene prior to the election.

We Concur:IN THE SUPREME COURT OF THE STATE OF MONTANA

No. 86-411

STATEOF MONTANA ex rel. MONTANA SCHOOLBOARDASSOCIATION,MONTANA ASSOCIATION OF COUNTIES,MONTANA LEAGUE OF CITIES and TOWNS, MUSSELSHELL COUNTY,CUSTER COUNTY, CHOUTEAU COUNTY,YELLOWSTONE COUNTY, BUTTE-SILVER BOW LOCAL GOVERNMENT, CHARLES L. EVANS,andMICHAEL S. BECKER, Plaintiffsand Relators,

.

JIMWALTERMIRE,Secretaryof State of the State of Montana, Defendantand Respondent, FRIENDSOF THECONSTITUTION,INC., Real Party in Interest.

ORDER

Plaintiffs and Relators have filed an original proceeding in this Court for Writ of Injunction and Declaratory Judgment, in which they challenge the constitutionality of Constitutional Initiative 27,which inpart is entitled as an initiative toamend theMontana Constitution to abolish taxes

on real and personal property. Briefs, motions, and other materials have been filed by Plaintiffs and Relators,Defendants and Respondents, and Real Party in Interest. Oral argument was held before the Court on this date. The Court has concluded it is advisable to immediately issue its Order to inform allparties of the result.e qe panssp aq ~TJM qxno3 s~yq 30 uo?urdo u-e qey;G (2)

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## UO??~U~CUI 30 1TzM 203 uopqeap~ddyayq qeqb (1)Special concurrence by Mr. Justice John C. Sheehy, Mr. JusticeWilliam 

### E. Hunt, Sr.,and Mr. Frank B. Morrison, Jr.:

We have voted today,with reservations, that this Court should allow CI-27 to remain on the statewide ballot in the general election of 1986. Our reservations are that: (1) CI-27 does indeed violate the Contract Clause of the United States Constitution

(Art. I, § 10) and of the 1972 Montana Constitution (Art. 11, S 31); (2) does create an unreconcilable conflict with Art. VIII, 

### 5 2 and with Art. 111, S 7, of the 1972 Montana Constitution; and, (3) is duplicitous and even triplicitous in the number of subjects submitted in one initiative. Why would we allow it at all in the face of such substantive defects? First, because time remains after the general election and before the effective date if CI-27 passes, for the legislature and this Court to take curative actions. For exa-mple,this Court could hold the initiative unconstitutional as to contracts impaired; or we could hold that special assessments are not a form of taxation at all, but charges levied for benefits bestowed. Likewise, we can still decide, if CI-27 passes, the irreconcilable issues before the effective date. The legislature itself may adopt

a plan acceptable to the voters by referendum before the effective date. Our second reason is not legalbut practical. CI-27 is not so much a fatal disease as it is a symptom that somthing is ailing in the Montana body politic. While the economy has stagnated or receded in most areas of Montana, the ever-galling property tax load has increased out ofproportion to the local economies. There would be no gain here to record the reasons,most ofwhich lie directly at the legislature's door, some of which accrue from the bloated administrations of school districts, counties and towns, and

one ofwhich is the curtailment of the federallargesse. Not the least pain in our political body is the miserable mismanagementby the state of the 5-yearrevaluation program, which has brought thousands of property owners to their courthousedoors demandingrelief. The 55,000 signers of petition for CI-27, and their ranks of supporters, are saying out loud thatproperty taxes in Montana have become regressive. Since all taxes, regardless of their names, are paid out of our incomes, a growth in taxation which is not accompanied by a growth in

our incomes necessarily becomes strangular. Some Montanans feel a hand at their throats. They see CI-27 as ameans to escape the strangle-hold. They are as entitled to express their outrage at the ballot box against taxation as against candidates. Whether they are right can be decided later, if CI-27passes. We therefore concur.

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