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HELENA -- The state on Friday appealed to the Montana Supreme Court a lower court decision that struck from the ballot a legislative referendum providing for automatic tax refunds to taxpayers if certain fiscal conditions are met.

Attorney General Steve Bullock and an assistant attorney general, Andrew Huff, argued that voters should have a chance to vote on the ballot measure before a court determines its legality. They are representing Linda McCulloch, the state’s chief election official, in the case.

They appealed a June 5 decision by District Judge Jeffrey Sherlock of Helena that found Legislative Referendum 123 unconstitutional and ordered it removed from the November general election ballot.

The Republican-controlled 2011 Legislature put LR-123, by Sen. Joe Balyeat, R-Bozeman, on the ballot as a referendum to avoid a likely veto by Democratic Gov. Brian Schweitzer.

LR-123 would require the state Revenue Department to issue income tax credits -- dollar-for-dollar reductions in people’s income tax liabilities -- if certain fiscal triggers were met. They would kick in if the actual state general fund balance exceeded the legislative projection by a certain percentage and dollar amount.

Challenging the law were the MEA-MFT, Montana AFL-CIO, Montana Public Employees Association, Montana Association of Area Agencies on Aging and American Federation of State, County and Municipal Workers, Montana Council 9.

“The MEA complaint is a pre-election attempt to invalidate a ballot referendum,” the state said. “The complaint is not ripe and does not state claims that can be heard by Montana courts unless and until the electorate enacts LR-123 as law.”

If voters approve LR-123, it becomes law Jan. 1, 2013, the state attorneys said, and if they reject it, it will never become law.

“Whether the bill becomes law is a question that is contingent upon a future vote of the electorate,” they said. “As such any present challenge based on its validity necessarily rests on the uncertain outcome of the 2012 vote and is unripe for review.”

The state attorneys said that it has not been shown that LR-123 is “the rare ballot referendum that is unconstitutional on its face and cannot go to a vote of the people.”

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In finding that LR-123 unconstitutionally delegates legislative power to the legislative fiscal analyst, the District Court misconstrued the state’s factual evidence and misapplied the law, the state lawyers said.

“The state submitted evidence, via the affidavit of principal fiscal analyst Terry Johnson, that LR-123 does not vest unbounded legislative discretion in the LFA to manipulate numbers and determine whether the tax credit is triggered,” the state attorneys said. “Rather, LR-123 assigns to the LFA the administrative function of performing a math problem -- albeit a complex math problem -- using information already possessed and relied upon by the Legislature to adopt the state budget.”

In addition, it is the state Revenue Department, not the legislative fiscal division, that executes the tax credit and refund.

“LR-123 is not clearly unconstitutional and should proceed to a vote, consistent with judicial deference to the people’s authority in the referendum context,” Bullock and Huff wrote.

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