Taxpayers have standing to challenge public management of federal funds used to repair a church; but preliminary injunction vacated because success unlikely on merits of claim that Compelled Support Clause of the Vermont Constitution is violated by public funding for physical repairs to a place of worship used also for secular purposes.

Taylor v. Town of Cabot, 2017 VT 92 [filed 10/6/2017]


ROBINSON, J. This case involves a challenge under the Compelled Support Clause of the Vermont Constitution to the Town of Cabot’s grant of federally derived but municipally managed funds for the purpose of repairs to a historic church. On interlocutory appeal, we consider whether plaintiffs have standing to pursue their claims and whether the trial court erred in issuing a preliminary injunction prohibiting the Town from paying the grant funds pending further order of the court. We conclude that plaintiffs do have municipal taxpayer standing, but vacate the trial court’s award of a preliminary injunction and remand for further proceedings to resolve the case on the merits.

Municipal taxpayer standing under our law encompasses claims that municipal assets have been improperly wasted, and the record in this case supports the conclusion that the grant funds here are municipal assets notwithstanding the fact that the funds originated from the U.S. Treasury. The Town has held part or all of the former federal grant funds with no requirement for accounting to HUD regarding the Town's use of the funds, and subject only to the limitation that the Town use the funds for a broad range of purposes that may supplant municipal general fund expenditures. Under these circumstances, the funds are municipal assets for the purpose of municipal taxpayer standing.

The trial court here rightly identified the main factors guiding its review under Vermont law: (1) the threat of irreparable harm to the movant; (2) the potential harm to the other parties; (3) the likelihood of success on the merits; and (4) the public interest. In re J.G., 160 Vt. 250, 255 n.2, 627 A.2d 362, 365 n.2 (1993). We do not adopt the federal test of "sufficiently serious questions as to the merits plus a balance of hardships that tips decidedly in their favor." While we affirm the preliminary injunction standard applied by the trial court, we conclude that the trial court erred in awarding the preliminary injunction because it overestimated the plaintiffs' likelihood of success on the merits, and erred in concluding that plaintiffs would suffer irreparable injury in the absence of an injunction.

Our analysis is framed by the Compelled Support Clause of Chapter I, Article Three of the Vermont Constitution and our caselaw thereunder, limitations arising from the Free Exercise Clause of the First Amendment to the U.S. Constitution, and the record in this case. In light of these considerations, plaintiffs face strong headwinds in arguing that the Compelled Support Clause embodies a categorical prohibition against any public funding for physical repairs to a place of worship, and plaintiffs have not yet presented sufficient evidence to demonstrate a high likelihood of success on a narrower claim.

The focus of the Compelled Support Clause is the support for "worship" itself. The fact that the recipient of government support is a religious organization is not itself determinative under the Compelled Support Clause; whether the funds are used to support religious worship is the critical question. The grant funds in this case were undisputedly allocated for the purpose of maintenance and repairs to a building that serves as a place of worship, is available for many nonsectarian community events and gatherings, and is an important and historic building in the town. Where funding is available on a neutral and non-discriminatory basis to a broad and diverse group of potential recipients in order to promote a squarely secular goal of the broader community, there is no indication that the funds are intended to or do advantage religious organizations or activity, and the funds are used for structural repairs rather than, for example, erecting religious symbols, we cannot conclude that such funds support worship within the meaning of Article Three.

We affirm the trial court’s denial of the Town’s motion to dismiss on standing grounds, and vacate the preliminary injunction in this case. Affirmed in part, vacated in part, and remanded for further proceedings.