*1 EDMUND F. SHEEHY, CATHERINE N. SHEEHY, JUNIUS CHADWICK, LILLIAN and BEN
PAUL, on behalf of JOHNS, similarly themselves, and other situated taxpayers, Appellants, Plaintiffs and
v. PUBLIC EMPLOYEES RETIREMENT TEACHERS DIVISION, RETIREMENT DIVISION, DEPARTMENT OF ADMINISTRATION; STATE OF MONTANA; OF
DEPARTMENT REVENUE, STATE OF MONTANA, Respondents, Defendants v. ASSOCIATION OF MONTANA RETIRED
PUBLIC EMPLOYEES,
al.,
et
Respondents.
Defendants
No. 92-499.
April
Heard on
1993.
July 27,
Submitted on
1993.
Rehearing
Denied Dec.
1993.
Decided November
1993.
St.Rep.
1477.
For Defendants and Dep’t David W. of Revenue, R. Bruce (argued), Counsel, McGinnis Tax Brenda (argued), Dep’t Administration; Nordlund of Berry, Leo Browning, (Association Hoven, Kaleczyc, Berry & of Montana Retired Public Employees),Helena. Opinion
JUSTICE GRAYdelivered the of Court. grant summary is an of appeal judgment This from defen- to Court, dants the First Judicial District County. Lewis and Clark in part part. We affirm and reverse in following appeal:
We consider the issues on Did err concluding right 1. the District Court that no contractual in certain state existed retirees to continued from taxation benefits, 823,1991 Laws, ofstate retirement and that Ch. Mont. does II, not violate Article Sec. 31 of the Montana Constitution? Did the err in concluding 2. District Court provision Ch. 823, Laws, $3,600 phasing 1991 Mont. out the exemption does not violate U.S.C. 111? § concluding err in that the retirement
3. Did the District Court 823, Laws, contained Ch. 1991 Mont. does adjustment payment 111? violate 4 U.S.C. adjustment payment implemen- and related 4. Are retirement 823,1991 from Ch. Mont. Laws? tation severable many exempted of Montana from years, For the State income through paid all retirement benefits its various retirement taxation retirees, taxing systems government while teachers and state paid by In retirement benefits the United States to federal retirees. 1989, Supreme Michigan the United States Court decided Davis v. (1989), 1500, 109 S.Ct. 103 L.Ed.2d Dep’t Treasury U.S. determined that U.S.C. waives the Supreme 891. Court enjoy otherwise immunity employees retired federal would state a employ received as result their taxation of retirement benefits except to the extent such government, ment the federal state with on the of the source the retirement taxation discriminates basis tax issue favored retired state Michigan Because the at benefits. benefits, retirement employees on the source of their based intergov tax Supreme principles Court concluded that the violated Davis, 810, 817, at at immunity. 489 U.S. 109 S.Ct. ernmental tax 1505, 1509, 103 at 906. L.Ed.2d
Although during Montana’s 1989 Davis was decided response session, amend Montana’s tax laws in legislature did not result, adjourning. group a of federal retirees prior As Davis existing taxation declaratory judgment action to have the filed a unconstitutional; they sought also a retroactive declared scheme to a refund of taxes purposes of entitlement application of Davis for case this By the time that reached illegally collected the State. Court, adopted parties’ stipulation had court district 31,1988; only after December years beginning invalid for tax tax was Sheehy us. See application ofDavis was before the issue ofretroactive (1991), State, 250 Mont. 820 P.2d Dep’t Revenue v. 823,1991 legislature subsеquently passed The Montana title, which, restructures the income Laws, according Montana *4 pension of all by the taxation equalizing pension tax on benefits exemption from taxation extending In of total benefits. lieu income to federal retirement retirement to state previously available bring retirement Chapter 823 to all income, opted in legislature — — pensions within the including and federal state income both the first exempt from taxation Chapter does tax. 823 Montana income $3,600 annuity received, pension except of all income phased every out reduced or federal $2 $1 $30,000. addition, income in In adjusted gross excess section 5 residents, Chapter grants to state retirees are Montana who Davis, response who now were to be taxed annual retirement payment. Appellants, primarily who are federal retirees but who include one (hereafter or more state and teacher retirees Taxpayers), filed the declaratory judgment against instant action two state retirement divisions of the Montana Department Administration and the (hereafter Department State), Montana of Revenue challenging on grounds. a number of The Association of Montana Employees Retired Public was parties allowed to intervene. The agreed into an entered statement of facts and submitted the case the District Court on summary judgment. cross motions for granted summary
The District judgment Court to the State on Taxpayers issues. appeal portions from judgment. that
I Did the District Court in concluding err that no contractual right existed in certain state retirees continued exemption from benefits, taxation of state retirement and that Ch. 1991 Mont. Laws, II, does not violate Article Sec. of31 the Montana Constitution?
Taxpayers argue employees that as to state who retired on or before the effeсtive date of began 823 and receiving retire- ment benefits at fully a time when those exempt benefits were from taxation, Chapter II, 823 violates Article Section 31 of the 1972 Constitution, Montana prohibits legislature passing which from impairing obligation law of contracts. The thrust that, argument by taxing pensions, these retirees’ state impairs private rights contractual codified at 19-4-706 and §§ 19-3-105, (1989), MCA exempted their pensions from taxation.
The State pre-Chapter counters that the 823 statutes did not private rights, create right contractual and could not create state prohibited retirees never to surrendering be taxed because it is contracting away VIII, taxing power Article Section of the Thus, contends, II, 1972 Constitution. the State Article Section 31 is inapplicable here. correctly Wage
The District Court relied v. Appeal Board of (1984), Appeals Personnel 208 Mont. P.2d concluding 19-3-105, (1989), 19-4-706 and MCA §§ constituted current pol- *5 regarding public employment, rather than a contract icy statements In benefits would never be taxed. providing that state retirement pay challenged was on the basis that WageAppeal, plan a statewide it took effect. employment contracts entered into before impaired it We stated: fixing a Legislature enacts statute certain terms
[WJhen employment, compensa- as salaries and public conditions of such tion, it is that the statute does not create contractual presumed merely policy pursued a until rights, but is intended declare Legislature declares otherwise. (citations omitted). recognizing WageAppeal, 676 P.2d at While language WageAppeal, Taxpayers rely on additional “presumption” language therein: statute, rights language
If are to contractual be created legislative must manifest a the statute and the circumstances private rights of a nature enforceаble intent to create contractual against the State. omitted). (citations
Wage Taxpayers P.2d at 199 assert Appeal, 676 (1989), 19-3-105, clearly MCA 19-4-706 §§ private rights intent create contractual manifest disagree. against enforceable the State. We clearly legis- Notwithstanding their bald assertion of manifested intent, analysis support of the statutes to Taxpayers offer no lative 19-4-706, Thus, necessary only point out that § it is assertion. (1989), exempted retirement provides MCA that state benefits indicates that the present The tense “are” from state tax. use regarding public employment. policy a ofcurrent statute is statement legislative intent to create no manifestation of statute contains Wage as rights contemplated and enforceable contractual private regarding ongoing or promises it or Appeal’, imply nor does make Taxpayers benefits. have treatment of state retiremеnt future tax WageAppeal. under met their burden (1948), Moreover, on Clarke v. Ireland Taxpayers’ reliance (1977), 965, v. State P.2d and State ex rel. Sullivan Mont. theory that 19- support for their §§ 571 P.2d 174 Mont. right 19-3-105, (1989), to continued created a contract MCA 4-706 misplaced. retirement benefits from taxation state deny plaintiffs therein actual an effort to Both cases involved Act at the Retirement provided by Teachers’ retirement benefit sys- the teachers’ retirement became members of plaintiffs time the tem; rights our conclusions in Clarke and Sullivan that contract existed based on those were facts.
Here, concerning deny we have no issue efforts to limit or state The question retirees’ actual retirement benefits. before us relates to provision entirely separate pro- taxation from state retirement grams Furthermore, and entitlements thereunder. the taxation char- distinguishes acteristic which case from this Clarke and Sullivan also VIII, brings Constitution, Article 2 of play into Section the 1972 which surrendering state prohibits contracting away power to tax. cannot provision, Under constitutional the state promise *6 any taxpayers that group of it will never tax them.
We that correctly hold the District Court that concluded state employees retiring prior to the effective date of did 823 not right have a contractual continued from of taxation their basis, state On retirementbenefits. that the correctly District Court also determined that 823 II, does not violate Article Section 31 of the Montana Constitution.
II Did the District Court err in that concluding provision the Laws, Ch. phasing $3,600 1991 Mont. out the exemption does not 4 violate U.S.C. 111? § (the adoption
Prior to of the Salary Act), Public Tax Act of 1939 compensation of both state and federal employees generally was thought exempt to be from sovereign taxation another under the intergovernmental doctrine of immunity. tax purpose the Act was to impose federal income tax the on salaries of all state local government In employees. order to ensure that federal employees did not remain immune from state taxation state employees while were being required pay taxes, federal Congress income enacted 4 of — — the Act now 4 111 waiving immunity U.S.C. might which employees taxation, otherwise have shielded federal from state but immunity retaining discriminatory taxation based on the source of the income:
The United pay compensation States consents to the taxation of or personal States, service or employee officer the United territory thereof, a possession political or or gov- subdivision the Columbia, agency ernment the District of or an or instrumen- tality or foregoing, by duly of one more the taxing constituted authority having jurisdiction, the taxation does not discriminate if
against employee pay because the or or source of officer compensation. added). (emphasis U.S.C. § Davis, Supreme In the United Court decided which States system discriminating Michigan income tax in favor of involved a only retirees state against exempting state retirees and federal Supreme determined retirement benefits from taxation. The Court discriminatory tax the source ofthe retirement was based on by significant justified and was not differences between benefits 817,109 1509,103 Davis, U.S. at S.Ct. at two classes of retirees. L.Ed.2d at 906. decided, clear that Montana’s income
When Davis was it became also regarding state versus federal retirement benefits tax statutes restructuring In to Davis and responding violated federal law. legislature pension taxation of benefits Montana retirees; $3,600 exemp- exemption from taxation to provided a $30,000 phased beginning Taxpayers out at the income level. tion by discriminating phase-out violates U.S.C. § contend that on the of their incоme. This against federal retirees based source so, they contend, larger state pensions because federal than result, and, as a federal retirees will lose all pensions phase-out exemption treats exemption. The State contends pensions equally and that difference is and federal retirees’ state amount, source, not of income. based above, controlling pro- As federal statute does discussed pensions. in state taxation of state and federal hibit all differences *7 Rather, against federal which discriminates precludes it taxation Here, 4 111. pension. ofthe source U.S.C. § retirees because face; applies to all exemption taxpayers is neutral on its it phase-out on and state retirees is based Any impact difference federal equally. tax- entirely the amount of income received each individual on of that income. regard to source payer, without tacitly differences Indeed, approved Court in Davis Supreme exemption before us: phase-out in taxation such as the for differences truly A intended to account taxation on the basis of benefits would not discriminate retirement rather, on the ...; it would discriminate source of those benefits by individual retirees. of benefits received basis the amount at 906 Davis, at 103 L.Ed.2d U.S. 109 S.Ct. at added). Chapter phase-out exemption contained (emphasis in the differences differently retirees based on treats individual Taxpayers’ amount of retirement income received. strained interpretation that because pensions generally larger federal and, thus, pensions phase-out than state discriminates as amount, simply with Davis. square source rather than does not We the phase-out exemption conclude that does not discriminate Therefore, as to source of income. we hold that the District Court correctly provision Chapter concluded that the phasing out the $3,600 exemption does violate U.S.C.
Ill Did the err concluding District Court that the retirement ad- justment payment 823,1991 Laws, contained in Ch. Mont. does not violate 4 U.S.C. §111? Davis does not limit the State’s
Observing that
ability
to set the
terms and conditions of public employment,
the District Court con-
adjustment
cluded that the
a legitimate
constitutes
increased retire-
ment benefit to state retirees.
on Clark v. United
primarily
It relied
(7th
States
1982),
Cir.
Taxpayers adjustment part is of the taxation impermissibly scheme and that it against They discriminates them. that Clark argue also inapplicable. The State contends that Clark, that, pursuant unrelated to the tax and isit a valid retirement benefit.
Davis requires two-pronged analysis legislation ofthe at issue here: 1) Does discriminatory against it constitute taxation federal retirees or 2) in favor of state retirees on the so, basis of source of If incоme? and “directly to, the different treatment justified by, related ‘significant Davis, 816,109 differences between the two classes’”? 489 U.S. at S.Ct. (citation omitted). 1508,103 at L.Ed.2d at 905 Application Davis us the case before mandates our adjust- conclusion that the retirement (hereafter payment adjustment) ment contained in section 5 of 823 violates U.S.C. 111. revenue,
It is clear equalization provi- sions of 823 are of a parts comprehensive related income tax program encompassing pension all income. The were bill, originally included in and the same introduced as Senate legislature. bill, Bill 226 in the 1991 Montana The title of the sub- sequently enacted pertinent reads in part: An Act to Restructure the Income Tax Pension Benefits Equalizing Benefits; the Taxation of All Pension To Provide an $3,600 Federal, State, Exemption of from Taxation of Benefits from *8 Retirement, Pension, Annuity, Plans and Private Endowment Amount Exemption That of Systems; To Provide the the be Adjusted Incоme by Every for of Federal Gross $2 $1 Reduced $30,000; an by the in Excess of To Provide for Taxpayer Received State, Local, to and Teacher Adjustment Payment Retirees of Systems Who are Montana Residents.... Retirement of bill Reading purpose makes it clear that the overall this the title in manner that not pensions tax and federal does violate was to state comply Rather than interpreted 111 as Davis. with § U.S.C. by extending exemption from income U.S.C. the total state § granted previously to state retirement benefits include taxation benefits, legislature equalize the chose to the federal retirement benefits, subject phase-out to the by taxing all retirement burden enactment, Within the same exemption discussed above. payment to retirees legislature provided adjustment for an state argument the two are Montana residents. The State’s who logic. of the bill are not related defies portions Moreovеr, equalization the tax relationship between retirees, bill, negative impacts on state and the with their up, part, equalization intended to make cannot adjustment — adjustment purporting while to be an gainsaid. adjustment — is, fact, adjustment an to the state retirement benefits the first sections of 823. This equalization achieved via in, inescapable given adjustment inclusion of the conclusion of, interpretation equalization program. tax No other and as duty comports with our portions these two in a reasonable manner. construe statutes legitimate adjustment is not an actual It clear that benefit, pension If it were a the State or retirement benefit. pension recognition years its retirees in oftheir provided have it to would just living those in Montana. There was service rather than public adjustment purpose so the sole was no need to do because living they in Montana for the tax recompense state retirees partially equalizing provisions Chapter must under the pay now increased actual Further evidence that employees is the fact that for retired state retirement benefit to the no resemblance funding of the section 5 bears adjustments previously retirement benefit funding of actual state by adjustments actual retirement legislature. Such enacted System at Employees’ Retirement in the Public those contained System at 19- 19-3-1603, MCA, in the Retirement Teachers’ 20-713, MCA, produced funded investment income *9 up employee employer retirement fund made contributions. 19-20-712, Here, handing See 19-3-1602 and MCA. the for the §§ adjustment payment statutorily appropriated so-called retirement is — general pursuant from the fund to section of that is, taxpayers. money from the taxes collected from all Montana The adjustment goes funds, to the the pay never into state retirement but simply paid by boards, is the state treasurer the retirement to be by distributed the in provisions Chap- boards accordance with the ter 823. While this evidence is not conclusive as to the nature the here, adjustment at issue it notion adjustment undercuts that the legitimate is a increase in retirement benefits for state retirees. adjustment that the partial We conclude is a tax rebate denomi- in attempt nated otherwise an to evade requirements the of federal discriminatory aspect adjustment law. The of the adjust- is clear: the living ment favors state retirees in Montana solely based on the income; is, source of their retirement that living those retirees in receiving Montana and adjust- state retirement income receive the ment, living while federal in retirees Montana and receiving federal Thus, adjustment retirement income do not. the constitutes discrimi- natory solely taxation based on the source respective of the retiree’s income, in violation of 4 U.S.C. 111.
The State’s reliance on for the proposition adjust- Clark ment is an merely allowable increased retirement is benefit mis- placed. Clark cost-of-living adjustment involved a provided to all legitimate federal retirees as an actual and pension adjustment. Clark, Here, at adjustment provided 691 F.2d the was not to all retirees, only state but to state retirees who Montana residents. Further, adjustment the provided entirely in Clark independent was of, to, any Here, and unrelated tax provisions. it is part of tax equalization scheme mandated federal law.
Because the
contained
section 5 of
111,
disparate
violates 4
U.S.C.
tax treatment
state and
to,
justified only
“directly
federal retirement income is
it
if
is
related
”
justified by, ‘significant
differences
between
two classes.’
Davis,
1508,
clear that no scrutiny. regarding contention to made Davis The most obvious inducing the classes is the State’s interest differences between government position While this is retaining state workers. qualified here, argument it made the state of precisely not asserted justify treatment of its retired Michigan preferential in Davis rejected by Court: argument squarely the Davis employees, and is however, point, for it wholly beside the does argument This “significant differences nothing there are to demonstrate rather, themselves; merely it the two classes” demon- between discriminating a rational reason for strates that State has employees. groups of The State’s interest between two similar substantial, tax, discriminatory matter no how adopting inquiry irrelevant into the nаture two classes simply inconsistent treatment. receiving at L.Ed.2d at 905
Davis,
Moreover, argument no can be made that the reasonable (a) in to retain retired residents necessary is or intended ment to use provide people to a critical mass retired Montana in order important people; to retired or and facilities that are those services (b) arguments into the state. Such would people to other retired entice the similarities between people support all retired and would apply to establishing any significant rather than and federal retirees state the two classes. differences between Here, noted, attempt or to meet the the State does not address justify disparate the basis of that it treatment on requirement Davis the two classes retirees. reason significant differences between in the nature “adjustment” is not on difference clear: based is entirely is based disparate us. The treatment the two classes before to advantage those of provide continue to an the State’s desire to advantage namely, state retirees losing pra e-Davis its own retirees — subject are now pensions state in Montana whose who reside is under- Chapter 823. While the desire pursuant income tax laudable, insufficient under legally it is perhaps even standable against taxation which discriminates justification for Davis as a retirees. federal in 5 of adjustment contained section conclude that
We to, which is related discriminatory taxation 823 constitutes retirees. and federal between state by, significant differences justified determining that District We hold Court erred in that the retire- adjustment payment ment does not violate U.S.C. 111. IV adjustment payment Are the retirement implementa- and related 823,1991 provisions tion severable from Mont. Laws? Having that provision concluded contained section it necessary violates U.S.C. provision implementing provi- determine whether that and related be from Chapter entirety sions can severed or whether the Chapter 823 provi- must stricken. We conclude that the invalid sions can be severed. 20 of Chapter provides
Section if a part invalid, legislation is parts valid that are severable invalid part previously remain effect. We have concluded that the severability inclusion of a clause is an indication that the drafters judicial severability policy apply. desired Montana Automobile (1981), Greely 378, 399, Assoc. v. 193 Mont. Thus, 632 P.2d we our begin analysis legislative with favoring stated intent sever- ability. apply severability principles We then in determining whether invalid can be severed or whether the legislative entire act must be stricken:
If an invalid of a rest, statute is portion severable from the which is may constitutional stand while which is unconstitu- rejected.... tional is stricken out and destroyed A statute “is not toto of an improper provision, because such provision unless necessary to integrity of the statute or was inducement to If, enactment.”... when unconstitutional portion of an act is eliminated, the complete capable remainder itself and ofbeing intent, executed in accordance apparent with the it *11 must sustained. be (citations omitted). 311
Greely, 632 P.2d at Here, the tax provisions Chapter clearly income of 823 are not in destroyed by striking adjustment provisions toto the contained in 5; indeed, 4 they impacted any way. sections and are not in The income may imposed exemption may tax still the given and be effect adjustment living without for the state retirees in Montana. Nor was the adjustment enacting legislation; the inducement for the the Chapter 4 Supreme “inducement” for 823 was U.S.C. 111 and the Court’s Davis decision.
142 Chapter contained in 823 remain exemption
The income taxes and being in capable in themselves and of executed accordance comрlete intent, equalize was to taxes. with the overall which advantage Granted, legislature also intended to continue an the through But we adjustment. state retirees the where have certain 823, it is adjustment portion Chapter clear that the invalidated the through severability intended, clause it included legislature 823, parts. all preserve valid Chapter revenue, equalization and earlier determination that Our parts 823 a compre- are related provisions encompassing pension tax income does program hensive income severability. fact regarding here The that negate not our conclusion they standpoint are from the of whether can provisions related scrutiny they 4 and not that U.S.C. 111 Dae is does mean withstand not, be, separate independent severability and from a are and cannot it operational perspective, and standpoint. From administrative 5 from the tax and segregablе that 4 and are income is clear sections provisions. exemption returning legislature’s
Finally, again specific and intent that, severed, Chapter 823 be we note absent portions invalid that severability a clause: statute, against the mutilation a and that presumption
[T]he entirety. in its The except enacted it legislature would have [severability clause] a such section 20 incorporation provision contrary; namely, legislature presumption creates portions being the law without invalid have enacted would incorporated therein. (citation 256, 291, (1935), 47 P.2d v. Holmes Mont.
State omitted). (1990), 42, 49, Ingraham Champion v. Int'l Mont. also See support here in of the presumption operates 793 P.2d Chapter 823 the remainder of remains valid legislature’s intent that adjustment provisions are determined to be invalid. even where tax indicates intent and Nothing Chapter validity for state dependent on the are thus, Montana; inconsistency nо such a between living retirees clearly-stated severability clause exists contrary and the provision plain language depart us to from might require 823 which legislative history into the resolve and delve legislature used us. before the issue 5 are severable conclude sections
We that those sections severed hold Montana Laws. We
143 and, Chapter provi- with invalid and severed excised from 823 those 823,1991 Laws, Chapter sions Montana remains valid and excepted, in full and effect. force part part.
Affirmed in and reversed TURNAGE, ROBB, CHIEF sitting JUSTICE DISTRICT JUDGE HARRISON, WARNER,sitting for JUSTICE and DISTRICT JUDGE by in the seat vacated the retirement of JUSTICE McDONOUGH concur. concurring in specially
DISTRICT JUDGE RAPKOCH part. dissenting in I,
I majority opinion concur in the on employees Issue that state retiring Chapter 823, date before effective of 1991 of Laws Montana, not have right did a contractual to continued from taxation their state retirement benefits.
I agree also that the provision phasing 823 out the (1966). exemption does 4 111 $3600 not violate U.S.C. § disagree majority Nor do I with the that the сontained section 5 of discriminatory 823 constitutes taxation and (1966). 4 therefore 111§ violates U.S.C. is, however, my opinion
It that adjustment payment provision 823, therefore, is not severable the rest of I dissent majority’s from the opinion point. severability
Section of Chapter provision 20 823 is the here. The incorporation provision a presumption Legis raises lature have portions. would enacted law its without invalid (1929), 235, 241-42, Williams v. Standard Oil U.S. Co. 49 S.Ct. 115, 116-17, 73 287; (1935), 256, 291, L.Ed. State v. Mont. Holmes 636; 624, Ingraham (1990), 47 P.2d v. Champion 42, Int’l. 243 Mont. P.2d though, that; That is a and a presumption rebuttable weak one at by being rebuttable the nature its purpose statute considered: by provisions compared manifested before as severance to its manifested apparent provisions purpose, remaining after amputation. it after purpose surgery Can be said that the same as it was before? majority cites and quotes Montana Automobile Association v. (1981), 378, 399,
Greely 193 Mont. P.2d as follows: A destrоyed improper provision, statute “is not toto because of an provision necessary integrity unless such to the the statute or was If, portion inducement toits enactment.” when unconstitutional eliminated, complete the remainder is of an act itself apparent capable being executed in accordance with omitted; intent, emphasis [Citation added]. it must sustained. “Apparent legislative This cannot be done here. intent” must be language that intent manifested of the statute sever- before ance. It is true that neither the income tax nor *13 destroyed by or equalization parts are not themselves affected strik- former in be ing adjustment provisions. the But the cannot this case separate apart amputated adjustment pro- considered and from the right And is the word. What remains and will be “amputated” vision. majority opinion will not be what enforced under the the same as original the clearly appears Legislature to be the intent of the in not, 823, Legislature enacting Chapter The did in set out enactment. It equalize do no more the income tax on all retirees. on to than went out, provision, adjustment set to remove or lessen that and the impact resident Montana retirees. on severability the rule in an general Greely
The
of
is
statement
a
if:
accurate statement. Portions of statute are severable
(1)
statute;
necessary
integrity
invalid
is not
to the
ofthe
part
the
(2)
enactment;
not the inducement to
part
the invalid
was
(3)
itself;
(conjunctive)
complete
ofthe statute is
in
the remainder
(4)
being
is
of
executed
accordance with
capable
the remainder
legislative
Greely,
What above, capable being apparent executed in accordance with the cannot legislation intent. cut out a third We where changes completely third the effect of the whole enactment and say Legislature left what is is what the started with.
Greely point. purpose regulate is not on There the ofthe Act was to instance, lobbying. Legislature indulged by, The in overkill defin- ing proscribed practice person intelligence so a of normal could figure out what he could not do. Several sections were therefore void; others, subject held because the matter of some of the sections Initiative, contrary V, was not embraced the title of the to Article 3, Section Clause of the Montana Constitution.
This Court stated: Initiative, being while lengthy, basically amendatory in nature.
Its purpose expand Chapter was to Title Lobbying ofMontana’s Act, provide for the money spent disclosure of to influencе action public officials and to require elected officials to disclose their purpose business interests. This is not frustrated our limitations *14 excisions, 7, of the Initiative. Even after Chapter 5, our Title as by amended the Initiative is complete capable itself and of being executed in accordance people with the intention of the of Montana. [Emphasis added].
Greely,
823, parts meaningful only where the conjunction internal with each other. The Chapter whole of 823 was enacted as a unit. disagree
I must with the expressed legislative view intent 823, clearly expressed is in section which is the sever- ability clause, invalid, provides part that if a of the Act all is parts severable, invalid ofthe Act are parts and valid remain in effect. fact, legislative This is not the intent that is here. In it not relevant is legislative severable; the intent at all that the aсt is the intent is By Legislature the act is severable... use of the word “if’ the if severance, recognizes severability the fact that or declaration of act, judicial legislative. a If Legislature the had intended the statute, legislated severed it could and should and would have accordingly. earlier, presumption a may,
This as is stated and shown raise Legislature have enacted the law without its invalid the would is, believe, presumption I a being incorporated. But that portions Also, the inclusion of a sever- presumption, here rebutted. rebuttable effect, judicial given a act. Before it can be ability provision is to seek severing. do the judicial the branch must judiciary considering intent for the to look at in The relevant severability legislative provide severability, the intent to but is not statute, enacting purpose intent statute, portions The intent to make provisions. as indicated its intention, means, not the end. procedural is аn interim severable Court has stated: This severability in the is an indica-
The inclusion of a
clause
Initiative
judicial policy [the
desired this
tion that its drafters and
voters
[Emphasis added].
severability
applied
rule] to be
to the Initiative.
Greely,
Lastly, section reads follows: invalid, parts that are Severability. part [this act] If a valid part [this remain in effect. If a part from the invalid severable applications, more remains act] is invalid one or that are severable from the invalid applications in effect in all valid [Emphasis added]. applications. think, speaks physical I clear. That section not of language,
That apply To applications parts. It of those parts provisions. speaks apply is to adjustment portion without the equalization portions less, divergence degrees, at a of 180 more portions the former presently the act is Legislature intended application judiciary. severability appeal A clause is an constituted. is, therefore, 823 is invalid my opinion that whole It adjustment provisions are not severable. and the joins foregoing in the concurrence TRIEWEILER JUSTICE dissent. as follows: specially concurs and dissents
JUSTICE WEBER III dissent on issues majority, I and II ofthe but I concur with issues *15 concluding III if District Court erred Issue asks and IV. 823,1991 Mon- adjustment payment contained retirement I do not find such discrimination. Laws, U.S.C. 111. tana violates majority The states: revenue, equalization adjustment provi-
It is clear that the and parts sions of 823 are related of a comprehensive income program encompassing pension tax all income. agree comprehensive
I 823 is a program; income tax however, preclude this does not this statute from encompassing other majority The quotes “pertinent” part issues. verbatim the of the bill’s title. The restructuring plan first ofthe title ofthe indicates legislature attempted “equalize” to pensiоn the taxes on all Although, sequence, benefits. listed after this in provision indicating legislature’s provide adjustment intent to payment living to State retirees integral Montana is an part of the Act as wording: seen the title’s
.... To Adjustment Payment State, Provide for an to Retirees of Local, and Teacher Systems Retirement Who are Montana Resi- dents .... necessary rely
It is not upon to the title to determine the intent of legislature. chapter starts with the following list of seven WHEREAS’S, and with the exception of the taxation of benefits WHEREAS, referred into the first all remaining WHEREAS’s directly set forth an intent relating to the payment and the reasons for the payment: WHEREAS, federal, the State of Montana state, desires to tax and private retirement equally; benefits and WHEREAS, the State of Montana has in the past provided its employees employment with benefit of through system; its tax and WHEREAS, Legislature encourages desires and qualified em- ployees public sеrvice; to enter and remain in WHEREAS, policy it is the of the State of Montana encourage public employees superannuated who become incapacitated and, end, retire to that provide sufficient provide benefits to retirement; and
WHEREAS, Legislature encourage wishes to persons retired provide to remain within Montana to a critical mass of retired persons who use certain services and important facilities that are to retired persons may keep and that and perhaps entice other persons state; retired into the
WHEREAS, Legislature past granted has in the increases retirement benefits in a designed provide relatively manner greater increases to those employed during retirees who were years wages relatively small; of low and whose benefits are *16 WHEREAS, Legislature grants an increase in therefore benefits public employees who are the stаte to to its residents former encourage provide compensation to them to remain Montana. added.) (Emphasis legislature added
The above statement of intent was because the knew all pension that the Davis decisionmandated that holders must be taxed time, legislature The At the equally. Act does that. same knew that an in taxes State create a pensions such increase could situation many Acting through where retirees would leave the State. sovereign as a and legislature governor, employer Montana as provide a desire to an incentive for Montana retirees to expressed subterfuge any type legislature in the remain State. Without Unfortunately, openness appears this intent. to have declared been majority a basis for the to concludethere was discrimination. adjustment payment provided provided If the in the Act same were year, living, act in some future and denominated a cost of no another argument. even raise the discrimination I do not find a one would basis adjustment merely to condemn the because it is included with the tax. adjustment payment paid already The to State retirees who nothing I find receiving retirement benefits. the record which corresponding obligation by demonstrates a the State of Montana to to federal retirees retirement payment make some sort whose United States. I do understand paid benefits are not how to can lead a “clear” determina- payment by the State its retirees discrimination, compared as to a federal increase to federal tion of such discrimination. retirees which would get fact that federal retirees do not this is not The given is not discrimination as to source. The same private retirees either. That
The intent of 4 U.S.C. has been lost. intent is § basic and State retire- taxation of Montana should tax fеderal the income The An increase in ment benefits at the same rates. Act does that. remain in the state is not discrimi- pay encourage State retirees to stay in 111.An incentive to is not discrimi- contemplated nation as recognition legisla- on the nation as to source. There is might public employee pensions tax on Montana ture that new recognition, up Such a stated front cause them to leave the State. majority the discrimination that open, equal in the does not characterizes as “clear.” general comes from the fund is adjustment payment
The fact that this public increase for State Any living other cost of consequence. also of no adjustment payment the same source. This is no employees comes from employer right other the State as an has a different than benefit which group to offer a of its retirees. 19-20-713, MCA, majority provides refers to which a cost of
The System. living increase for teachers the Teachers’ Retirement only title of 658 of Montana Laws 1985 shows that “certain” system teachers the retirees from this would be benefitted within majority I do not understand condemns the increase. how yet it made “certain” applicable 1991 Act because retirees Act nondiscriminatory refers to the Teachers’ Retirement where it *17 only also benefits “certain” teacher retirees. addition,
In the Teachers’ “general Retirement Act uses the fund” the source of funds to pay with which teachers who retired from University System schools, the various units of the and other stating: instruction, If employer superintendent public public the is the a Montana, institution of the state of a unit of the Montana univer- sity system, blind, the Montana state school for the deaf and the legislature appropriate employer shall to the an adequate amount payment employer’s added.) to allow the contribution. (Emphasis 19-20-605(3), annuity type system, Section amended MCA With this employers’ part living the of the cost of increase for “certain” retirees is paid by present the State of Montana. How is that different from the Act?
I conclude there is no discrimination “as to source” within the 1991 policy, provides Act. As matter Montana its own retirees any “incentive” an intention without to discriminate manner. The Davis test of significant differences between the classes is not only here. significant even reached One has to determine the differ- Here, discrimination ence classes if between has occurred. there is no only agreement appropriate as to even what the classes are. The pertinent classes that are to 4 UCS 111 are “state retirees” equally “federal retirees.” Both of these classes are taxed under this only segment the Act. It is of State retirees that receive the benefit. majority merely the mentions the discrimination While “adjustment” go explain “clear” it does not on to how the “incentive” or Davis discriminatory. the explain quote applies Nor does it how us: what we have before of a heavier tax burden on precedents, imposition “[t]he
Under our sovereign] imposed [those [those deal with one than who who justified by significant other] the must be differences deal with added.) (Emphasis the between two classes.” Davis, 815-816,109 have U.S. at S.Ct. at 1508.The federal retirees no State “tax burden” than do State retirees. The tax burden on both heavier $3,600 is identical as are exemption and federal retirees is identical. The range at applicable tax rates to both State and federal retirees. The the $30,000 begins is State and federal retirees. which the both given only difference is that State retirees who reside Montana stay them and from employed an “incentive”to within the State that has point I out here that the “incentive”is рensions whom their are derived. any rates as amounts received the retirees. subject still to tax at same adjustment of a part The District Court determined that the was I employees. of the State toward its would policy decision on analysis. acting employer The State as an has affirm the court on this sovereign legislature and the every right to act concert with stay public employees an incentive to retired within provide years. policy has their home for This decision does State that been against any the retirees of other sover- not constitute discrimination case, sovereign’s group other of retirees. In this other eign or identically sovereign. the State I retirees are taxed with those of condemning legislature governor and the conclude that instead of Act, enacting they be commended for openness for their should forthright way in which this was done. disagree I with the conclusion that the is sevеrable also Act. the title and the statement of intent make it from the Both stay in is an or incentive to Montana obvious that incentive, public fact that upon this Act. The based integral part of *18 mandatory receiving money less because of the retirees will now be taxation, plan plan the tax itself. The tax should not be divorced from incen- granting State of Montana is this explains why employer granting additional monies I the intention of some tive. do not believe applies to the retiree benefits from the taxation which can be divorced clearly in the WHEREAS adjustment. As demonstrated Act, granting the taxation and the beginning at the clauses majority action of the are not severable. The nature, eliminating taxing equally all benefits while punitive under the Act. additional benefit awarded Judge Rapkoch’s concurrence portion I also concur in the adjustment payment is not he concludes that dissent which rest of severable from the