No. 12651 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1974 

STATE ex rel. ROBERT L. WOODAHL, 

Attorney General of the State of Montana, 

and the MONTANA DEPARTMENT OF REVENUE, 

Relators, 

HERBERT F. STRAUB, JAKE H. EHRET, KENNETH 

RUSTAD, As County Commissioners for Fallon County, 

Montana, and Silver Roth, As County Treasurer of 

Fallon County, Montana, 

Respondents. 

ORIGINAL PROCEEDING: 

Counsel of Record : 

For Relators : 

Hon. Robert L. Woodahl, Attorney General, Helena, 

Montana 

Dennis Lind argued, Assistant Attorney General, 

Helena, Montana 

George Losleban, Assistant Attorney Genera 1, appeared, 

Helena, Montana 

R. Bruce McGinnis argued, Helena , Montana 

For Respondents: 

A. W. Scribner argued, Helena, Montana 

Denzil Young argued, Baker, Montana 

Sandall, Moses and Cavan, Billings, Montana 

Charles F. Moses argued and Ralph S. Wright argued, 

Billings, Montana 

For Intervenors : 

Robert Brooks, County Attorney, argued, Broadus, 

Montana 

Carroll Blend argued, Helena, Montana 

For Amici Curiae: 

Richard J . Conklin, County Attorney, argued, 

White Sulphur Springs, Montana 

Ralph Herriott, County Attorney, argued, Hysham, Montana 

Submitted: January 14, 1974 

Filed : 
Mr. Justice Wesley Castles delivered the Opinion of the Court. 

This is an original proceeding brought by the Attorney 

General and the Montana Department of Revenue. The petition 

requested assumption of jurisdiction by this Court of a complaint 

which seeks a declaratory judgment under Title 93, Chapter 89, 

Revised Codes of Montana, 1947. The named defendants are the 

county commissioners and the county treasurer of Fallon County. 

On ex parte presentation the Court accepted jurisdiction; allowed the filing of the complaint; and provided for service upon the 

Superintendent of Public Instruction and the Clerk and Recorder 

of each county as the clerk of the Board of County Commissioners 

of each county. The Court invited participation of those interested in the outcome of this proceeding. 

The essential allegations of the complaint filed by the 

plaintiffs are: 

1. Art. X, Montana Constitution, 1972, requires the 

legislature to provide a system of schools. 

2. Chapter 355, Laws of Montana, 1973, amends Chapter 

69 of Title 75, Revised Codes of Montana, by providing a new taxing system in part for the support of public schools. 

3. The tax system contained in Chapter 355 requires each 

county to levy a basic 40 mill tax [for both primary and secondary 

schools] on property in the county and if the funds raised by this 

tax exceed the amount needed to fund the "foundation program" in 

that county the excess is to be remitted to the state for deposit 

in the "earmarked revenue fund, state equalization aid account". 

4. This surplus is to be used in combination with other 

funds deposited in the account to fully fund the "foundation program" in those counties not fully funded by the basic levy. 

5. Chapter 355 authorizes the adoption of budgets in 

excess of the minimum required by the foundation program and 
provides that if this budget cannot be fully funded by the 

imposition of specified additional county levies the director 

of the Montana Department of Revenue is to impose a statewide 

property tax at such a millage as will result in full funding of 

these deficiencies in the various school districts. 

6. On August 6, 1973 in accordance with this authorization, the Department of Revenue ordered all counties to impose 

an additional mill levy of 12 mills. 

7. On August 16, 1973, an action was commenced in Powder 

River County seeking to have Chapter 355 declared void. 

8. In October 1973, defendant Fallon County Commissioners 

directed defendant Fallon County Treasurer to hold all monies 

collected under authority of Chapter 355 until such time as the 

constitutionality of that chapter was determined by the courts. 

9. Pursuant to this direction the Fallon County Treasurer 

has refused to pay over the monies, thus creating an actual controversy. 

10. This is an emergency situation since the first payment 

of these monies was scheduled for January 31, 1974, and normal 

process of law will not provide for speedy determination. 

11. That only questions of law are involved. 

12. That other counties have now begun to impound funds 

collected under authority of the Act, further aggravating the 

situation. 

In this Court's order accepting jurisdiction, the matter 

pending in Powder River County was stayed. 

Fallon County appeared by answer, which we shall discuss 

further. Powder River County, Chouteau County, Toole County, 

Meagher County and the Superintendent of Public ~nstruction appeared 

in various ways--intervention, amicus curiae and otherwise. This 

Court has been liberal in considering all matters but, as will 
appear hereinafter, the procedural problems and certain other 

policy and substantive problems alluded to in various ways by 

brief, motion and otherwise will not need be considered herein. 

Fallon County's answer to the complaint denies all of 

the legal conclusions of the complaint and then sets up these 

affirmative defenses: 

a) That Chapter 355 will require Fallon County to remit 

substantial sums to the state for the support of school districts 

located in other counties. 

b) That over allchapter 355 will require 39 counties 

to remit taxes which be distributed to 17 counties. 

c) That Chapter 355 violates Art. X, Sec. 1, Montana 

Constitution 1972, which requires the legislature to fully fund 

the school system. 

d) That Chapter 355 represents an unlawful delegation of 

legislative authority. 

e) That the tax levied discriminates against the taxpayers 

of Fallon County by requiring them to pay more than is required 

for the support of its local schools, violating both ~rticle XIII, 

Sec. 1, Montana Constitution 1972, and the Fourteenth Amendment 

to the United States Constitution. 

f) That Chapter 355 fails to set forth any reasonable 

standard justifying property taxation in Fallon County for support 

of schools in other counties. 

g) That factual issues exist which require this Court 

to decline jurisdiction. 

Even though, as respondents point out, factual issues do 

exist this is no bar to a consideration of the validity of Chapter 

355 on its face. 

Plaintiffs in the Powder River County suit raise by 

intervention a preliminary issue in this action. Essentially 
intervenors assert that prior to July 1, 1973, the legislature 

was operating under the authority of the 1889 Montana Constitution and accordingly its acts, to be valid, must conform to the 

limitations contained therein even though the acts are not to 

take effect until after the date the new Constitution replaces 

the old. 

While this Court has not heretofore considered this question, we have no hesitation in rejecting intervenors' proposition. 

While it is true that a statute, unconstitutional when it takes 

effect, is not resurrected by a subsequent constitutional change, 

State ex rel. Woodahl v. District Court, - Mon t . , 511 P.2d 

318, 30 St.Rep. 635, the instant situation differs in that the 

statute was passed in anticipation of an already approved constitutional change and was of no force or effect until after the new 

Constitution took effect. 

The Georgia Supreme Court in Henson v. Georgia Industrial 

Realty Co., 220 Ga. 857, 142 S.E.2d 219, 223, 224, observed: 

"It is the general rule in this country that a 

legislature has power to enact a statute not 

authorized by the existing constitution of that 

State when the statute is passed in anticipation 

of an amendment to its constitution authorizing it * ?k *.'' 

The rule is based on the theory that the constitutionality 

of the statute is to be tested at the time the statute takes effect ., 

and not at the time of passage. Neisel v. Moran, 80 Fla. 378, 85 

S. 346; State v. Hecker, 109 Or. 520, 221 P. 808; Alabam's Freight 

Co. v. Hunt, 29 Ariz. 419, 242 P. 658. We agree with this view 

and hold that the test of a statute's constitutionality is to be 

made at the time it takes effect and is to be made against the 

constitution as it exists at the time the statute takes effect, 

not at the time the statute was passed by the legislature. See: 

Druggan v. Anderson, 269 U.S. 36, 46 S.Ct. 14, 70 L ed 151; In re 
Opinions of the Justices, 227 Ala. 291, 149 S. 776; State v. 

Smith, 335 Mo. 840, 74 S.W.2d 27; Busch v. Turner, 26 Cal.2d 

817, 161 P.2d 456; Galveston Ry. Co. v. Gross, 47 Tex. 428. 

All of these cases approved statutes passed by the legislature 

in anticipation of constitutional change. 

Holding that the 1973 legislature could enact prospective 

or anticipatory legislation to become effective July 1, 1973, under 

the terms of the Montana Constitution 1972, we consider the constitutionality of Chapter 355 under the Montana Constitution 1972. 

Respondents' memorandum of authorities considers the 

issues raised by its answer under three general headings: 

(1) Chapter 355 violates Article X, Sec. 1 of the Montana 

Constitution 1972. 

(2) Chapter 355 discriminates against the taxpayers of 

Fallon County by attempting to tax them for the exclusive use and 

benefit of others. 

(3) That factual issues exist which would justify this 

Court in declining to accept jurisdiction. 

Because of the view the Court takes in this case, these 

issues can best be considered against the background of a general 

consideration of the state's power to levy a general property tax 

for educational purposes. 

It is clear that the taxes imposed by Chapter 355 are state 

rather than local taxes. Provision is made in Chapter 355 for 

three distinct levies. First is the basic 40 mill levy for support 

of the foundation program. The language of that levy is mandatory 

"It shall be the duty of the county commissioners of each county 

to levy", with the clear effect that all property within the state 

is levied on at the rate of 40 mills for the support of the foundation program. The other two levies--the additional levy for deficiency in foundation program funding and the permissive levy-- 
are even more clear in their uniform statewide applicability, 

with the director of the Department of Revenue ordered to impose 

the levies on all the property in the state. It is clear that a 

tax imposed by state law and levied uniformly on all property 

within a state is a state rather than a local tax. 

Once it is established that Chapter 355 is a state rather 

than a local tax, there remains the question of the state's power 

to levy a statewide property tax with the avowed purpose of providing support for education. Here, it should be recalled that 

a state constitution, such as Montana's, is a document of limitation rather than of grant and accordingly a statute must contravene some express or implied limitation of that constitution to 

be invalid. Evers v. Hudson, 36 Mont. 135, 92 P. 462; State ex 

rel. Peyton v. Cunningham, 39 Mont. 197, 103 P. 497; Billings 

Sugar Co. v. Fish, 40 Mont. 256, 106 P. 565; Northern Pac. Ry. v. 

Mjelde, 48 Mont. 287, 137 P. 386; State v. Dodd, 51 Mont. 100, 149 

P. 481; State ex rel. Corry v. Cooney, 70 Mont. 355, 225 P. 1007; 

Butte & Superior Min. Co. v. McIntyre, 71 Mont. 254, 229 P. 730; 

Graham v. State Board of Examiners, 116 Mont. 584, 155 P.2d 956; 

Mulholland v. Ayers, 109 Mont. 558, 99 P.2d 234; Plath v. Hi-Ball 

Contractors, Inc., 139 Mont. 263, 362 P.2d 1021. 

Aside from the provisions of the United States Constitution, the only limitation on the state's power to tax applicable 

here is Art. VIII, Sec. 1, Montana Constitution 1972, which provides: "Taxes shall be levied by general laws for public purposes." 

Since Chapter 355 requires all property be levied on at the same 

rate, it is clearly a general law. State ex rel. Federal Land 

Bank v. Hays, 86 Mont. 58, 282 P. 32; Stanley v. Jeffries, 86 

Mont. 114, 284 P. 134. Similarly, given the express declaration 

of Art. X, Sec. 1, Montana Constitution 1972, that the development 

of a quality system of education is a state goal, there can be no 
dispute with the proposition that a tax for the support of education is levied for a public purpose. Thus it follows that Chapter 355 is not violative of any constitutional provisions and is 

a constitutionally valid exercise of the state's power to tax. 

Against this background the issues raised by respondents 

may be settled. The first issue that Chapter 355 violates Art. X, 

Sec. 1, Montana Constitution 1972, is premised on the requirement 

contained therein that the legislature provide full funding of the 

basic educational system. It is respondents' position that Art. 

X, Sec. 1(3), requires the legislature fund its share of the cost 

of education solely from the traditional sources of foundation 

program funding--oil and gas royalties, income taxes, and corporation license taxes or other traditional general fund sources. 

This view is not correct. The only mandate contained in Art. X, 

Sec. 1(3), Montana Constitution 1972, is that the legislature 

fully fund the state's share of the cost of basic education. It 

is silent as to the means the legislature may employ for this purpose. By enacting Chapter 355, the legislature elected to employ 

a statewide property tax. While the wisdom of that legislative 

choice may be questioned, its constitutional validity may not. 

That other sources of revenue may be available, such as severance, 

excise and sales taxes as suggested, is true. But, the legislature has chosen property taxes to the dismay of many property owners. 

As our foregoing discussion indicates, the legislature could adopt 

a property tax and having done so it is free to use the proceeds 

realized by the tax for any purpose, including fulfillment 

of the duty to fund public education. 

Respondents' second issue is that Chapter 355 discriminates 

against the taxpayers of Fallon County. There are two facets to 

this issue. The first is predicated on the claim that the property 

tax levied by Chapter 355 on that particular part of all property 
in the state which is situate in Fallon County will produce funds 

in excess of those required by that particular part of the public 

school system located in Fallon County. It is asserted that those 

provisions of Chapter 355 which require the excess funds be remitted 

to the state result in a taking of property without due process. 

Reduced to its simplest terms, respondents' position is 

that revenue raised by a state tax must be expended in the county 

in which that revenue originates. Respondents reach this conclusion by first denominating the tax levied by Chapter 355 as a 

"local property tax" and then applying the generally accepted rule 

that one district cannot be subjected to tax for the benefit of 

another district. 

As our preceding discussion points out, the tax levied by 

Chapter 355 is a state tax levied for the benefit of the state as 

a whole. Viewed in that light the tax does not offend against the 

rule relied upon by respondents since the taxing district, the 

state, benefits as a whole from the tax imposed. 

That some areas derive more immediate and direct benefits 

from the tax is not an objection, if the community as a whole benefits. State ex rel. Henderson v. Dawson County, 87 Mont. 122, 137, 

286 P. 125. In Kelly v. City of Pittsburgh, 104 U.S. 78, 82, 26 

L ed 658, a landowner challenged a tax on the same grounds relied 

on by respondents here, that because he did not receive a direct 

personal benefit from a tax it amounted to a taking of property 

without due process. In rejecting this claim the United States 

Supreme Court said: 

"It may be true that he does not receive the same 

amount of benefit from some or any of these taxes 

as do citizens living in the heart of the city. 

It probably is true * * * that his tax bears a 

very unjust relation to the benefits received as 

compared with its amount. But who can adjust 

with precise accuracy the amount which each 

individual in an organized civil community shall 

contribute to sustain it, or can insure in this 
respect absolute equality of burdens, and fairness 

in their distribution among those who must bear 

them? 

"Clearly, however, these are matters of detail 

within the discretion, and therefore the power, 

of the law-making body within whose jurisdiction 

the parties live. This court cannot say in such 

cases, however great the hardship or unequal the 

burden, that the tax collected for such purposes 

is taking the property of the taxpayer without due 

process of law." 

This general rule is summarized in Cooley on Taxation, 

V. 1, 4th Ed., S 89, P. 214: 

" * * * However, it is almost unanimously held 

that it is no defense to the collection of a tax 

for a special purpose that a person liable for 

the tax is not benefited by the expenditure of 

the proceeds of the tax or not as much benefited 

as others. * * * In other words, a general tax 

cannot be dissected to show that, as to certain 

constituent parts, the taxpayer receives no 

benefits." 

This is the rule we hold applicable to the tax questioned in the 

instant case. It is a general tax levied at the same rate on all 

property in the state. It is for the general state purpose of 

providing a statewide system of public schools. The fact Fallon 

County does not receive benefits directly in the amount of its 

contribution does not provide a defense to the collection of the 

taxes authorized by Chapter 355. 

This same conclusion has been reached by the courts of 

other states when called upon to determine the validity of a uniform property tax whose proceeds are distributed on a prorata 

basis to schools, even though there, as here, the amount contributed 

by an area in taxes exceeded in some instances the amount returned 

to the area for its schools. Sawyer v. Gilmore, 109 Me. 169, 83 

A. 673; Raynolds v. Swope, 28 N.M. 141, 207 P. 581; Miller v. Korns, 

107 Ohio St. 287, 140 N.E. 773; Board of Trustees, Etc. v. Board 

of County Com'rs, 83 Ida. 172, 359 P.2d 635. Some state courts have 
gone even further and held that uniform state taxation for 

school support is constitutionally required. Serrano v. Priest, 

96 Cal. Rptr. 601, 487 P.2d 1241; Sweetwater Co. Plan. Com. v. 

Hinkle, (Wyo. 1971) 491 P.2d 1234, 1237. 

The authority relied on by respondents to support the 

contention that Chapter 355 is invalid as a tax levied on one 

district for the benefit of another is not in point. The ~yoming 

case of Tennant v. Sinclair Oil and Gas. Co. (Wyo. 1960) 355 P.2d 

887, dealt with a tax which was levied only on specified school 

districts as opposed to the uniform levy of Chapter 355, and which 

arbitrarily awarded a part of the fund created by the tax to the 

other school districts which were not subject to the tax, as opposed 

to the provisions of Chapter 355 which specify that each district 

is to receive its share in total proceeds on a modified prorata 

basis. Our conclusion that this decision does not apply to tax such 

as that levied by Chapter 355, is reinforced by the subsequent 

decision of the Wyoming Court in Sweetwater in which it observed 

that equalization of taxes for school purposes is constitutionally 

required in that state. It then went on to state: 

"We see no manner in which ad valorem taxes for 

school purposes can be made equal and uniform 

unless it is done on a state-wide basis. In 

other words, all property owners within the state 

should be required to pay the same total mill 

levy for school purposes." 

This is precisely what has been done by Chapter 355, each 

property owner now pays the same basic mill levy for school purposes. Similarly, the Nebraska case cited by respondents, Peterson 

v. Hancock, 155 Neb. 801, 54 N.W.2d 85, can be distinguished on 

the grounds that while the tax was levied uniformly, certain 

school districts were arbitrarily denied a right to share on any 

basis in the proceeds. Under Chapter 355 all school districts 

and all counties share in proportion to their need. 
The second facet of respondents' claim that Chapter 355 

results in discrimination against the taxpayers of Fallon County 

relates to the manner in which the funds raised by Chapter 355 

are distributed. Respondents assert that various facts would 

reveal that some school districts are unable to provide educational offerings comparable to those which are provided in other districts. For example, respondents maintained that a comparison 

of curricula would demonstrate a wide disparity in the educational 

opportunities offered by different schools. No doubt this is true. 

No doubt other comparisons could be made which would show differences 

in educational opportunity. Respondents assert that these comparisons would conclusively demonstrate the foundation program itself 

is ill conceived in that it does not take into consideration to a 

sufficient degree the differences in schools resulting from differences in the number of pupils. It is argued that the foundation 

program of X dollars per pupil is itself arbitrary and lacking in 

uniformity. Further, that the 7% limitation on increases in school 

budgets has effectively locked those schools with substandard 

programs into a position of permanent inequality of educational 

opportunity. 

In this case, no assertions of substandard programs are 

made. The foundation program provides for accreditation and other 

standards. We do not here rule on the validity of the 7% limitation on budgets as provided in Chapter 355. Without the facts of 

a specific situation before us, we can only consider the constitutionality of the foundation program and the budget limitations of 

Chapter 355 on their face and not as applied. Certainly any 

reasonable person would grant that there are imperfections in the 

foundation formula, with its many iables. The constitutional fT 

test is not perfection, but rather whether when taken as a whole 

it is a rational method to accomplish the goal of equal educational 
opportunity for each person of the state. As the United States 

Supreme Court observed in San Antonio School District v. Rodriguez, 411 U.S. 1, 93 S.Ct. - , 36 L ed 2d 16, 48: 

"The very complexity of the problems of financing and managing a statewide public school 

system suggest that 'there will be more than one 

constitutionally permissible method of solving 

them,' and that, within the limits of rationality, 

'the legislature's efforts to tackle the problems' 

should be entitled to respect. Jefferson v. 

Hackney, 406 U.S. 535, 546-547, 32 L ed 2d 285, 

92 S.Ct. 1724 (1972) . " 

An on the face examination of the provisions of the foundation program dealing with the distribution of state educational 

funds reveals that such funds are distributed basically on a per 

student basis with the smaller schools receiving somewhat more 

per student than the larger schools. Provision is made for budget 

increases resulting from an increase in enrollment. Further, the 

trustees are empowered to increase the local budget through additional levies, if approved by the district's electors. It is 

difficult to visualize a method other than some system of cash 

grants through which the state could meet its constitutional obligation under Art. X, Sec. 1, Montana Constitution 1972, to provide 

for and fund a basic educational system while leaving the actual 

supervision and control of each school district in a board of 

trustees as required by Art. X, Sec. 8, Montana Constitution 1972. 

Accordingly, while not foreclosing a consideration of the foundation program and the budget limitations of Chapter 355 as applied, 

we hold that on its face the program is a rational method of providing the required basic public education. 

Because of the view we have taken of the other issues in 

the case, it is clear that the factual questions alluded to in 

the final issue raised by respondents, while real, are not relevant. 

We will not consider that issue further. 

This opinion constitutes a judgment that Chapter 355 is 
constitutionally valid on its face. Therefore, defendant Silver 

Roth, County Treasurer of Fallon County, is ordered to remit 

forthwith to the state those monies collected under authority of 

Chapter 355. Each party to bear its own costs of this proceeding. 

- -,,, &--------.&-- ------------ 

Justice 

We concur: -4 

Chief Justice