Wednesday, November 01, 2006

Prop 90: A Reluctant NO On This Mixed Bag

Proposition 90 is a great example of why the initiative process is a poor tool for policy-making. On its surface, Prop 90 is a response to the horrendous US Supreme Court decision in Kelo vs. New London, which eviscerated constitutional limits on government's eminent domain power. In short, SCOTUS said that a city or state could take property from one private party and give it to another for the flimsiest of "public benefit" excuses. That was a travesty, and part of Prop 90 would make reasonable amendments to the state constitution to prevent such outrages from occurring in California.

Had the authors of Prop 90 stopped there, it would have been a no-brainer. Unfortunately, they didn't. Under cover of a "Kelo correction" amendment, they also slipped in a radical new proposal that would require governments to compensate property owners for any hypothetical economic damages caused by any new government laws or regulations. As one example, if my city enacted a new zoning rule that prohibited structures in my residential neighborhood from exceeding 2 stories in height (where no such restriction existed before), even though my neighborhood is entirely one and two-story houses, I could claim damages since my right to knock down my house and build a 27-story office building has been taken away, and I could sue the city for the hypothetical value of the 27-story office building that I can no longer build.

Personally, I think it's an intriguing idea with strong libertarian appeal, going straight to philosophical beliefs about fundamental property rights. But there is no doubt that the impact to all levels of government will be sweeping, and that this radical change will have unforeseeable, unintended, and likely undesirable consequences. Oregon is the only place such a thing has been tried, and it's really too early to tell how it's going there (though see here and here for some perspectives). This idea needs to be explored more thoughtfully and openly, not slipped in under the radar.

What's worse, the language in this particular proposition is broad, apparently applying to any governmental action (not just land-use-related regulations) and to any tangible or intangible property (not just real estate), and leaves many questions open to interpretation. (See a good neutral discussion here.) Enacting this as an initiative constitutional amendment is the worst possible way to take on such an experiment. Later, when consequences are better understood, and inevitable corrections are needed, this will be embedded in the Constitution where it can't be fixed without another initiative constitutional amendment. That's a foolish way to conduct a radical policy experiment.

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