Esperanza is a non-profit cultural arts and education center that provides resources and space where the creation and presentation of the arts can reflect the culture of people in struggle, such as women, people of color, lesbians and gay men, the working class, and the poor. Esperanza sued the San Antonio City Council when it discontinued its funding, claiming that the city engaged in viewpoint discrimination by penalizing the center for the socio-political views expressed in its presentations. Esperanza had been the target of certain conservative groups who opposed its perceived advocacy of the “gay and lesbian lifestyle,” and it was the only arts organization whose funding was completely eliminated. Arts funding for the city was vetted through the Department of Arts and Cultural Affairs (DACA), which emphasized the goals of funding agencies that provide diverse programming and reach traditionally underserved groups, and used three criteria for evaluating arts funding applications: artistic excellence, audience development, and administrative capacity.

The Court stated that the government is not required to fund arts programs, but once it does, it must award grants in a scrupulously viewpoint-neutral manner. Although subjective discretion is part of the grant review process, to be constitutional the discretion must be based on the grant’s artistic merit and not on political or religious grounds. The Court noted the long-standing principle that the government may not regulate speech based on the message it conveys, and noted that viewpoint discrimination would clearly be present if the denial of government funding were based on one’s unpopular, controversial, or uncommon viewpoint.

Esperanza had to show that its conduct was constitutionally protected, and that the city council’s decision was motivated in part by a constitutionally impermissible motive. If Esperanza did this, the burden would then shift to the city council to prove that it would have made the same decision for other legitimate reasons.

In its analysis, the Court found that Esperanza’s activities regarding art was protected conduct. The Court next found that the city council’s decision was improperly motivated, as at least a majority of the council was motivated in the funding decision by a belief that Esperanza’s programming was too social and political. The Court found this to be viewpoint discrimination. To further support its conclusion that a discriminatory purpose was a motivating factor in the decision to cease Esperanza’s funding, the Court looked at how the impact of the decision fell only on Esperanza rather than on all arts groups, the history of the public campaign against Esperanza, and the departure from normal procedure, as Esperanza had met all procedural requirements as it had in past years when it had received funding. The Court thus concluded that Esperanza had carried its burden of showing that its conduct was constitutionally protected and that this conduct was a substantial or motivating factor in the city’s funding decision.

The burden shifted to the city council to show that it would have made the same decision in the absence of the protected conduct. The Court discredited the city council’s alleged reasons for the funding decision: their desire to implement a back-to-basics budget and their desire to reach consensus on annual budgets. The funds that would have gone to Esperanza were allocated to other arts groups rather than to basic services. Additionally, compromise proposals that would have cut all arts groups funding were rejected in favor of a plan cutting 100% of Esperanza’s budget.

The Court found that because the council’s action impinged upon Esperanza’s First Amendment rights, it could be justified only if the council could show that its funding decisions were necessary to serve a compelling government interest and if the decision were narrowly drawn to achieve that end. The Court found no evidence sufficient to establish a compelling government interest, and the council had not suggested one. Therefore, the Court ruled in favor of Esperanza.