So, Now the Door is Wide Open! Arizona's Tax Benefit for Religious Schools

So, in probably at least half of the U.S. state legislatures today, a legislative aide got busy writing up a private school tuition tax credit program. While these programs might or might not be constitutionally legal ... it doesn't really matter as they are not subject to review by the Courts (for all intents and purposes). But, worse, next week that same legislative aide is going to sit down with a cup of coffee and ponder all the ways in which tax credits can be used to circumvent the Constitution (at least the Supreme Court's historical interpretation thereof ... hello Abortion!). 

Today the Supreme Court created, for lack of a better term, a Constitutional loophole.  

In a 5-4 decision, the Supreme Court denied standing to Arizona taxpayers seeking to challenge the tuition tax credit program which mainly benefits religious schools. Mark Walsh, as always, rocks the details. Taxpayer standing, which is always a complex issue, is not generally permitted for challenges to governmental spending. There must be a more substantial harm than just disagreement with how the government is spending your tax dollars (or in this case, the tax dollars of those choosing to provide the scholarships and thus receive the credit). One harm articulated in the past has been First Amendment violations, but the Court in this case explicitly exempted tax credit programs from such review. 

Okay, to the analysis ...

First, I got to give props to the designers of this legislation in Arizona. At this point, you can argue a lot of things about this legislation, but you can't argue the creativity and genius of the program's design. It has withstood multiple challenges and has now been functioning for over a decade. Even if it does eventually fall, the legislation's authors have more than proved their worth. 

Second, let me just be honest, I really dislike this law. It is a back-door policy to get public money into private schools. Arizona tried other routes toward that end in the past, and fundamentally it is hard for me to see this any differently. This is just a very, very cleverly constructed voucher program that takes advantage of a constitutional loophole in that it moves the money into private schools before it is even officially in the government's possession. Thus, instead of calling it a voucher, it can be called a tuition tax credit. But, rest assured, the intention of the law is not that far removed from the intention of the voucher law. I don't think most reasonable people would even argue that point. 

Third, here is Scott's post at oral argument. While he got the prediction wrong, the issue is right on point.

Fourth, Bruce Baker asks ... so, who can sue? Well, short answer, no one. The long answer is not much different, either. Individual suits against individual harms are still permitted (such as suits against the private schools for violating constitutional rights). Plus, as Scott pointed out in a phone call, state constitutional claims may still be a viable (and better) angle. While the Arizona Supreme Court has already blocked this angle, it would still have to be litigated in other states - and other states have more restrictive state aid to private school provisions. Now, just me personally, I feel there might be some claim available by a private school against the program, if the private school (think Montessori) were denied authorization under the program and some religious schools were not. If, for instance, Arizona just approves a whole diocese worth of Catholic schools and there is no similar option for an individual private school, there might be a claim that could get to the Establishment issue, but, even then, the remedy would not be striking down the whole program but just approving the challenging school.

Thus, as Scott pointed out on the phone tonight "it would take impossibility after impossibility after impossibility" to get a viable, justiciable, individual harm from which to challenge the entirety of the program under the Establishment Clause.

So, there we have it. If you want a more complex legal analysis of the taxpayer standing and Flast exception issue, some law professors will go there with you (2) (3) (just search Google Blogs).

What this means for schools? In the near term, not that much. Arizona was a test case and it will take several years for these to populate around the country. Over the longer term, I'm sure we'll see some more of these policies across the states, but I don't think schools will really feel too much of the pinch because their appropriations per student are unlikely to change that much. It might convince a few more students to attend private school than would have otherwise, but I sort of doubt it will create a flood of students leaving the public schools. It will keep per pupil allocations perhaps a little lower than they otherwise would have been, but since the school never had those dollars in the first place, I doubt they will miss it that much.

But, from a legal standpoint, it was an important day as the Court solidified a pretty gaping Constitutional loophole. That's my greater concern. What new ways will legislatures will use this loophole to circumvent the Constitution? ... Well, we are going to find out, it seems.  

Update: Scott sent over this blog post by Chris Lund, which thinks the credit exemption is quite a bit narrower than most are reading it. It is worth considering. Especially since it is coming from Kennedy ... who likes to draw such almost incomprehensibly fine distinctions (see Parents Involved). 

Comments

[Stuart Buck]

This is just a very, very cleverly constructed voucher program that takes advantage of a constitutional loophole in that it moves the money into private schools before it is even officially in the government's possession.

No loophole needed, though: vouchers are constitutional in and of themselves. The reason Arizona did this, as I recall was because of their state constitution's Blaine amendment (borne from KKK-era anti-Catholic bigotry) that blocks vouchers from being implemented directly.

[Justin B.]

Federally, yes, although another term for President Obama (and the possible Supreme Court replacements that might entail) could mean otherwise if the case is raised again, since Zelman was 5-4. But, under state law, not so much (depending on the state). So, yes, a pure voucher system is not constitutional in Arizona, Florida, etc. Whether or not the Blaine Amendments were well intentioned, they are part of many state constitutions. One could say the same thing about all the defense of marriage amendments, poor intentions but the law nonetheless. So, barring constitutional action to get rid of the Blaine amendments, then an alternative route was needed ... and Arizona seems to have found one (to their credit). It is a way to avoid ever having to decide the constitutionality on the merits - and, thus, I do feel that loophole is the proper terminology. That they found a way to do it, and got it passed by the Arizona legislature, is impressive. Of course, I personally don't like the policy, but I respect their efforts.