Opinion of the Court
tion 43–1089 provides a credit to taxpayers who contribute money to "school tuition organizations" (STOs). An STO is a nonprofit organization that directs moneys, in the form of scholarship grants, to students enrolled in private elementary or secondary schools. STOs must disburse as scholarship grants at least 90 percent of contributions received, may allow donors to direct scholarships to individual students, may not allow donors to name their own dependents, must designate at least two schools whose students will receive funds, and must not designate schools that "discriminate on the basis of race, color, handicap, familial status or national origin." See §§ 43–1089(D)–(F). STOs are not precluded by Arizona's statute from designating schools that provide religious instruction or that give admissions preference on the basis of religion or religious affiliation. When taxpayers donate money to a qualified STO, § 43–1089 allows them, in calculating their Arizona tax liability, to credit up to $500 of their donation (or $625 for a married couple filing jointly, § 43–1089(A)(2)).
In effect, § 43–1089 gives Arizona taxpayers an election. They may direct $500 (or, for joint return filers, $625) to an STO, or to the Arizona Department of Revenue. As long as donors do not give STOs more than their total tax liability, their $500 or $625 contributions are costless. The Arizona Supreme Court, by a 3 to 2 vote, rejected a facial challenge to § 43–1089 before the statute went into effect. Kotterman v. Killian, 193 Ariz. 273, 972 P. 2d 606 (1999) (en banc). That case took the form of a special discretionary action invoking the court's original jurisdiction. See id., at 277, 972 P. 2d, at 610. Kotterman, it is undisputed, has no preclusive effect on the instant as applied challenge to § 43–1089 brought by different plaintiffs.
Respondents' federal court complaint against the Director of Arizona's Department of Revenue (Director) alleged that § 43–1089 "authorizes the formation of agencies that have as their sole purpose the distribution of State funds to children of a particular religious denomination or to children attend-
