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  You Can’t Get From 37 To 90  
by Gary M. Galles [author, academic] 11/2/06

Proposition 90, the “Save Our Homes” initiative, leads in the polls, because reining in abuses of government eminent domain and regulatory powers sounds good to the potential victims—every property owner in the state.  So attacks, largely from those wielding such powers and their beneficiaries, are intensifying. 

Opponents assert Proposition 90 will decimate California’s ability to “preserve and protect” wildlife, open space, the coast, farmland, etc.  Then they bring in their lynchpin “proof” of its disastrous consequences—Oregon’s 2004 Proposition 37, the first such property protection initiative to pass.  They point to its “draconian” effects, and say that even worse consequences face California. QED. 

Gary M. Galles

Mr. Galles is a professor of economics at Pepperdine University. [go to Galles index]

Anti-90 partisans point to over 2,700 Measure 37 claims, involving the development of about 143,000 acres, which could require $4 billion in government compensation.  They give examples of owners trying to convert rural land into large-scale housing developments and even a gravel mine, and governments rolling back property “protections,” to complete the horror story.  If all that happened in Oregon since 2004, similar legislation would then surely cause a far more massive disaster in California. 

Unfortunately, the horror stories from Oregon arise from crucial differences between Proposition 37 and Proposition 90 (as well as strategic overstatement).  Those details, which anti-90 partisans ignore in their misleading attacks, destroy their supposed proof.   

The most important difference between the Oregon and California propositions is that Proposition 37 applied retroactively to whenever a property was purchased, while Proposition 90 exempts all current regulations, and only applies to the future.  

Proposition 37’s retroactive applicability explains the magnitude of its claims.  Oregon property owners can sue for compensation or reversal of regulations going back decades.  When combined with the fact that Oregon imposed America’s most stringent new property regulations over that time (yes, even more restrictive than in California), the many years of regulatory theft implies massive claims.  In addition, because of the many changes in land use regulations over a long time period, what were once not incompatible with previous surroundings, but now are, after years of development, “gravel pit next door” horror stories can result in Oregon.  But neither the magnitude of claims nor the horror stories translate to Proposition 90, which only applies to future regulatory changes. 

Adding to the faulty analogy is Proposition 37’s 2-year window to bring claims for previous takings.  That meant all the damages from the past had to be challenged by this year.  The resulting huge claims far overstate what claims for new regulatory burdens would cost yearly.  Yet those numbers are misleadingly cited as the basis for Proposition 90’s supposed annual costs.

Propositions 90 and 37 also exempt provisions that protect public health and safety or control nuisances--the traditional, defensible reasons for such regulations.  So all valid claims involve government overstepping what is in the general welfare.  Further, to the extent California governments act only in the public interest in the future, Proposition 90 would generate no financial claims.

Anti-90 partisans also exaggerate potential burdens by double-counting.  They use the billions in Oregon’s compensation claims (further hyped as the cost to taxpayers, not for how much theft would be made right), as if California claims will be proportionally larger.  Then they assert rollbacks of property restrictions as an additional burden.  However, claims for compensation in Oregon have almost all been settled by reinstating prior development rights, so a much smaller financial burden (as well as administrative cost) has actually been caused.  If California did the analogous thing by not imposing abusive new regulations, Proposition 90 would neither impose significant financial costs to taxpayers nor result in any rollbacks of current property “protections.”

Even if one believed that Proposition 37 was a disaster (property owners anticipating long-delayed restitution would disagree), it implies nothing of the sort about Proposition 90.  Any “analysis” omitting their crucial differences is uninformed or willingly misleading, and an unreliable basis for your vote in next week. CRO


copyright 2006 Gary M. Galles



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