HELENA – Four labor unions and another group have filed a lawsuit that seeks to remove from the 2012 ballot a referendum that calls for credits to Montana taxpayers if state revenue comes in higher than lawmakers expected.
The MEA-MFT, the Montana AFL-CIO, Montana Public Employees Association, Montana Association of Area Agencies on Aging and the state council of the American Federation of State, County and Municipal Employees filed the lawsuit Wednesday in District Court in Helena.
If passed, the referendum would require the state Revenue Department to refund taxpayers 50 percent of whatever amount of revenue exceeds 125 percent of the state’s budgeted general fund for a two-year period. The amount would have to exceed $5 million before the tax credits would kick in.
The groups’ attorney, former state Auditor John Morrison, argues Legislative Referendum 123 is unconstitutional because it appropriates money by referendum and delegates legislative authority to the legislative fiscal analyst and the departments of Administration and Revenue.
The referendum empowers the legislative fiscal analyst and others to make calculations that would lead to tax credits to Montanans, the lawsuit argues. It says the Legislature cannot delegate those duties to the fiscal analyst.
Sen. Joe Balyeat, R-Bozeman, sponsor of the legislation that put the referendum on the ballot, said legislative legal staff found that the referendum does not constitute an appropriation, but a credit.
The Revenue Department “constantly issues tax-refund checks and tax credits,” Balyeat said. “These have never been found to be unconstitutional appropriations because the money hasn’t gone to the state treasury yet.”
Balyeat argues the issue is all about money.
“The government union bosses aren’t satisfied with keeping more than half of unanticipated tax revenue. They want to keep 100 percent of it to expand government,” he said.
MEA-MFT president Eric Feaver said voters “should not be encumbered with consideration of acts that cannot stand a constitutional test. We think the courts will agree.”
The MEA-MFT and others have been successful in challenging ballot issues in court.
In 2006, they successfully invalidated three initiatives, including one that would have limited the rate of future growth of state government spending to an index based on population growth and inflation.
The union also led a legal challenge to a constitutional initiative that would have required people to vote on any tax or fee increase. The Montana Supreme Court struck down the measure in 1999 after voters adopted it. Balyeat was involved in both measures.