A suit was filed in a Texas state trial court this week challenging a Magnolia, Texas ordinance imposing disproportionately higher water rates on non-profit institutions, including churches. The higher rates were intended to make up for the city’s inability under state law to collect property taxes from non-profit institutions. The complaint (full text) in Magnolia Bible Church v. City of Magnolia, (Montgomery Cty. Dist. Ct., filed 5/14/2019), contends that the city’s actions violate state law, including the Texas Religious Freedom Restoration Act:
The Institutional Water Rate is void for three independent reasons. First, the Institutional Water Rate is a thinly veiled property tax on a tax-exempt entity, and, as such, it is preempted by state law. Second, even were the Institutional Water Rate not a tax, it would nonetheless be void as a discriminatory, arbitrary utility rate. Finally, by nearly tripling the Churches’ water bills (a substantial burden on free exercise of religion) simply because the Churches do not pay property taxes (an irrational, non-tailored justification), the Institutional Water Rate violates the TRFRA.
First Liberty issued a press release announcing the filing of the lawsuit.