Taxpayers for Mich. Constitutional Gov't v. State

508 Mich. 48

972 N.W.2d 738

TAXPAYERS FOR MICHIGAN CONSTITUTIONAL GOVERNMENT, Steve Duchane, Randall Blum, and Sara Kandel, Plaintiffs-Appellants,

v.State of Michigan, DEPARTMENT OF TECHNOLOGY, MANAGEMENT AND BUDGET, and Office of Auditor General, Defendants-Appellees.

Taxpayers for Michigan Constitutional Government, Steve Duchane, Randall Blum, and Sara Kandel, Plaintiffs-Appellees,

v.State of Michigan, Department of Technology, Management and Budget, and Office of Auditor General, Defendants-Appellants.

Docket No. 160658

Docket No. 160660

Calendar No. 4

Supreme Court of Michigan.

Argued March 4, 2021

Decided July 28, 2021

Sugar Law Center for Economic and Social Justice (by John C. Philo, Detroit), John E. Mogk, and Tracy A. Peters PLLC (by Tracy A. Peters) for plaintiffs.

Dana Nessel, Attorney General, Fadwa A. Hammoud, Solicitor General, and Matthew B. Hodges, David W. Thompson, and Michael S. Hill, Assistant Attorneys General, for defendants.

Rosati Schultz Joppich & Amtsbuechler PC, Farmington Hills (by Thomas R. Schultz, Carol A. Rosati, Elizabeth Saarela, and Steven P. Joppich ) for the Michigan Municipal League, the Government Law Section of the State Bar of Michigan, the Michigan Townships Association, and the Michigan Association of Counties, amici curiae.

Andrew A. Paterson for the Taxpayers United Michigan Foundation, amicus curiae.

Dykema Gossett PLLC (by Leonard C. Wolfe, Lansing, Courtney F. Kissel, Bloomfield Hills, and Kyle M. Asher, Lansing) for the Michigan Association of Public School Academies and the Michigan Council of Charter School Authorizers, amici curiae.

Dykema Gossett PLLC (by Steven C. Liedel and Lauren E. Fitzsimons, Lansing), Hassan Beydoun, and William R. Stone, Troy, for the Michigan House of Representatives and the Michigan Senate, amici curiae.

BEFORE THE ENTIRE BENCH

Cavanagh, J.

I. INTRODUCTION

At issue in this case is a dispute over what monies should be included in calculating "total state spending paid to all units of Local Government" under § 30 of the Headlee Amendment, Const. 1963, art. 9, § 30. Plaintiffs argue that the state is shortchanging units of local government by improperly inflating that figure. Specifically, plaintiffs allege that "Proposal A" payments that the state directs to school districts pursuant to Const. 1963, art. 9, § 11 should not be counted and that neither should state spending for state-mandated local services and activities under Const. 1963, art. 9, § 29. We disagree. Both are properly counted as part of total state spending paid to units of local government for purposes of the Headlee Amendment. Accordingly, we affirm Part III(B) and reverse Part III(D) of the Court of Appeals opinion. Plaintiffs also argue that state aid to public school academies (PSAs)¹ should not be counted as part of the total state spending paid to units of local government under § 30. The Court of Appeals rejected this argument, concluding that PSAs are "school districts," a type of "Local Government" specified in § 33, and, therefore, that their state funding is properly counted as part of "total state spending paid to all units of Local Government." We conclude, however, that the panel erred when it held that PSAs are "school districts" as the term is used in the Headlee Amendment. We further hold that PSAs are themselves not a "political subdivision of the state" as voters would have understood the term when the Headlee Amendment was ratified. It is unclear, however, whether the fact that a PSA's authorizing body, such as a school district, intermediate school district, or community college, might be an entity considered a "Local Government" changes that general conclusion. Therefore, we reverse the conclusion reached in Part III(C) of the Court of Appeals opinion that PSAs are "school districts" and remand to the Court of Appeals for its reconsideration of this issue. Finally, we vacate the panel's grant of mandamus in Part III(E) and direct the Court of Appeals to provide further explanation of its decision to grant this extraordinary remedy.

II. THE HEADLEE AMENDMENT

We begin with a brief overview of the constitutional framework at issue. In 1978, Michigan voters approved an amendment of our state Constitution; that amendment is popularly known as the Headlee Amendment. See Const. 1963, art. 9, § 6 and §§ 25 to 34.² The Headlee Amendment was born out of a nationwide "taxpayers revolt" and was meant to limit legislative expansion of requirements placed on local government, put a freeze on what had been perceived as excessive government spending, and lower taxes at both the local and state levels. Bolt v. Lansing , 459 Mich. 152, 161, 587 N.W.2d 264 (1998). To accomplish this, the Headlee Amendment sets forth "a fairly complex system of revenue and tax limits." Durant v. Michigan , 456 Mich. 175, 182, 566 N.W.2d 272 (1997).

Although the Headlee Amendment has been the focus of much litigation since its inception, relatively little attention has been paid to § 30—the centerpiece of the instant case. Section 30 provides in full:

The proportion of total state spending paid to all units of Local Government, taken as a group, shall not be reduced below that proportion in effect in fiscal year 1978-79. [ Const. 1963, art. 9, § 30.]

The parties agree that to maintain 1978–1979 levels of state spending to units of local government as required by § 30, at least 48.97% of state spending must be paid to "units of Local Government."³ This Court has explained that the phrase "taken as a group" in § 30 requires only that the "overall percentage allotment of the state budget for local units of government must remain at 1978 levels." Durant v. State Bd. of Ed. , 424 Mich. 364, 393, 381 N.W.2d 662 (1985). This means that neither specific individual units of local government (e.g., the city of Lansing) nor classes of units of local government (e.g., cities) are entitled to the same proportion of the allotment for units of local government as they received in 1978–1979.

III. FACTUAL BACKGROUND & PROCEDURAL HISTORY

Plaintiffs, Taxpayers for Michigan Constitutional Government and certain individual taxpayers, filed this original action⁴ in the Court of Appeals, seeking declaratory, injunctive, and mandamus relief against the state of Michigan; the Department of Technology, Management and Budget (DTMB); and the Office of the Auditor General (collectively, "the state" or "the state defendants"). The basis of these claims is plaintiffs’ belief that the state is violating and evading the Headlee Amendment in the way that it counts and classifies monies paid to units of local government. There are three specific counts of plaintiffs’ complaint at issue in this appeal. First, in Count I, plaintiffs allege that the state defendants violated §§ 25 and 30 by classifying monies paid to school districts pursuant to Proposal A, Const. 1963, art. 9, § 11, as state spending paid to units of local government. Second, in Count II, plaintiffs allege that the state defendants violated those same provisions by classifying monies paid to PSAs as state spending to units of local government. Third, in plaintiffs’ Count IV,⁵ they allege that funds directed to units of local government for state mandates pursuant to § 29 of the Headlee Amendment should not be counted toward calculating state funding under § 30.

Following discovery and motion practice, both plaintiffs and defendants moved for summary disposition pursuant to MCR 2.116(C)(10) (no genuine issue of material fact). In a published decision on reconsideration, the Court of Appeals granted the state defendants summary disposition on Count I, holding that Proposal A spending is properly categorized as state funding to a unit of local government. Taxpayers for Mich. Constitutional Gov't v. Michigan (On Reconsideration) , 330 Mich. App. 295, 310, 948 N.W.2d 91 (2019) (opinion by SHAPIRO , J.); id. at 332, 948 N.W.2d 91 ( METER , J., concurring in part and dissenting in part); id. at 337, 948 N.W.2d 91 ( BORRELLO , P.J., concurring in part and dissenting in part). The panel majority also granted summary disposition to the state defendants on Count II, over a partial dissent from Judge METER , holding that state aid to PSAs falls within the scope of state spending to units of local government under § 30. Id. at 311, 948 N.W.2d 91 (opinion by SHAPIRO , J.); id. at 337, 948 N.W.2d 91 ( BORRELLO , P.J., concurring in part and dissenting in part). The panel majority granted plaintiffs’ motion for summary disposition on Count IV, over a partial dissent from Judge BORRELLO , holding that state spending to fund state-mandated local services as required by § 29 should not be included in the state's calculation of the proportion of total state spending under § 30. Id. at 314, 948 N.W.2d 91 (opinion by SHAPIRO , J.); id. at 332, 948 N.W.2d 91 ( METER , J., concurring in part and dissenting in part). Finally, the panel granted plaintiffs mandamus relief and directed the state to comply with reporting requirements found in MCL 21.235(3) and MCL 21.241. Id. at 319-320, 948 N.W.2d 91 (opinion by SHAPIRO , J.); id. at 332, 948 N.W.2d 91 ( METER , J., concurring in part and dissenting in part); id. at 333, 948 N.W.2d 91 ( BORRELLO , P.J., concurring in part and dissenting in part).

Both plaintiffs and defendants, left unsatisfied by various aspects of the Court of Appeals’ decision, filed separate applications for leave to appeal in this Court. We granted both parties’ applications for leave to appeal and directed them to address the issues discussed herein. Taxpayers for Mich. Constitutional Gov't v. Michigan , 505 Mich. 1136, 944 N.W.2d 718 (2020).

IV. STANDARD OF REVIEW

"The interpretation of a constitutional provision is a question of law, which we review de novo." Paquin v. St. Ignace , 504 Mich. 124, 129, 934 N.W.2d 650 (2019). This Court's primary objective is to "realize the intent of the people by whom and for whom the constitution was ratified." Id. at 129-130, 934...