Preemption of Municipal Regulation

Respect Texans’ private property rights and economic freedom

The Issue

Home rule cities threaten the Texas Model with aggressive regulation. City governments are moving from a governing model that is based on respect for private property—the fundamental institution of a market economy—to a model based on centralized city planning.

Government regulations may be warranted when they are narrowly tailored to advance public safety and order, but too often cities do not sufficiently examine the costs and benefits of a given regulation to justify intrusions on individual liberty. Nor do cities narrow the scope of proposed regulations in order to preserve liberty and property rights to the greatest extent possible. Examples of city malfeasance abound in tree-cutting ordinances, onerous local land use regulations and local permitting delays, attempts to squelch the sharing economy, and interventions into employment contracts by mandating benefits like paid sick leave.

So far, Texas has zealously guarded against the worst of these abuses with a “rifle shot” approach. Given the aggressiveness of Texas’ home rule cities, however, the state should shift to a broader preemption approach in order to better safeguard Texans’ liberties and preserve the Texas Model.

Cities’ economic regulations negatively impact the Texas Model in two primary ways: in eroding Texans’ use and enjoyment of their private property, and in eroding Texans’ freedom of enterprise—their right to start a business, work for the employer of their choice, or otherwise pursue their livelihood.

Under the broad police power granted to them by the Texas Constitution, home rule cities have the authority to regulate broadly, subject to express constitutional and statutory limits. However, federal and Texas court cases have diluted those protections by deferring to cities’ own judgment as to the scope of their police power. It is therefore the duty of the Texas legislative and executive branches to enact broad-based reform of municipal regulatory authority and thereby protect Texans’ individual liberties.

In 1995, Texas passed the Private Real Property Preservation Act, which attempted to protect Texans’ property rights against state and local regulations. Unfortunately, the law’s sweeping exceptions mitigate its effectiveness. For example, the law’s section concerning regulatory takings is limited to when the regulation devalues a Texan’s property by 25 percent or greater. Worse, the law exempts municipalities— the most important actor from the standpoint of local land use regulations–from the compensation requirements.

Recommendations

  • Strengthen the Texas Private Real Property Preservation Act by ending the exemption of municipalities from compensation requirements, except in cases where the restriction is a proper exercise of the government’s authority to advance public safety, as established by a preponderance of the evidence. Further, remove the threshold requirement before compensation
    is due. Any loss in value, whether 5 percent or 50 percent, should entitle the property owner to compensation.
  • Restore the freedom of enterprise that is the right of every Texan by enacting the Right to Earn a Living Act, a model act promoted by the Goldwater Institute. This law would specify that any ordinance or rule that limits entry or competition in a business or profession “shall
    be limited to those demonstrably necessary and carefully tailored to fulfill legitimate public health, safety, or welfare objectives.”

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