More governors and state legislators across the United States are recognizing the need to prohibit cities and towns from passing ordinances and heavy-handed regulations that harm the economy.
The catalysts for states’ involvement in many cases are local rules that create barriers to employment and constrict the expansion of innovative companies like Uber, Lyft and Airbnb.
This is a positive development.
When Texas cities and towns were considering bans on hydraulic fracturing, for example, legislators in Austin responded by passing a statewide law preventing localities from shutting down natural gas extraction.
You might expect a bill halting efforts to shut down fracking would find a receptive audience in a major energy state with a Republican-controlled legislature. Yet some conservative lawmakers and pundits expressed hesitation because of their support for “local control.”
“I agree … that banning fracking is a bad idea,” said Mark Davis, a popular conservative radio host in Dallas, “but I also believe in local control. Shouldn’t local towns be able to do what they want?”
Responding to Davis, Tom Giovanetti, president of the Institute for Policy Innovation in Dallas, explained why lawmakers should not cite local control as some high-minded principle to follow blindly.
“Local governments are at least as capable as the feds of passing laws and ordinances that violate the presumption of liberty in the Constitution,” Giovanetti said. “Tyranny isn’t OK just because it is approved by a majority of your fellow townsfolk. Rule of law, not local control, must be the governing principle.”
Looking ahead to 2017, Tennessee lawmakers have talked about taking up legislation that preempts Nashville’s arbitrary cap on host permits for Airbnb, as well as other home-sharing services. Such preemption would block the enactment of a statewide patchwork of local home-sharing regulations. State legislators held a mid-September hearing to discuss the matter.
“We have somewhat of a hodgepodge across the state,” state Senator Jack Johnson (R-Franklin) told Nashville Public Radio in reference to local home-sharing laws in Tennessee. “Some cities ban the use of Airbnbs altogether. Others allow it in certain areas.”
Nashville’s ordinance – which was recently struck down in a legal challenge brought by the Beacon Center of Tennessee – imposed a 3 percent cap on non-owner-occupied short-term rental permits in a given neighborhood.
State preemption of local home-sharing restrictions, like that under consideration in Tennessee, can promote tourism by providing more lodging options, while allowing individuals and families to bring in additional income.
Wisconsin, like Texas, recently took action to overturn local laws undermining free enterprise. At the end of last year, Republican Governor Scott Walker signed legislation that prohibits cities and towns from imposing new occupational-licensing requirements.
Many policymakers and analysts across the political spectrum increasingly recognize that the growth of occupational-licensing requirements has created a slew of high barriers to employment by making it more difficult to enter the workforce and earn a living.
In the 1950s, fewer than 5 percent of American workers were covered by licensing laws. That figure jumped to 29 percent by 2006. Though occupational-licensing requirements are generally presented as benefiting public health and safety, the spike in licensing regulations over the past 60 years has also been pushed by businesses seeking to prevent competitors from entering their markets.
When competition is stifled by licensing requirements, the losers end up being the general public, particularly middle-income and low-income households, which face higher prices and fewer choices. One 2011 University of Minnesota study found that occupational-licensing requirements cost consumers more than $200 billion a year, and may have blocked the creation of 2.85 billion jobs.
Last year, the Obama White House issued a report, which echoed many arguments made by conservatives, highlighting the problems presented by the growth of occupational-licensing requirements.
A high-profile case calling for a state to preempt local laws is likely to again emerge in the Lone Star State. The Austin City Council this year imposed fingerprinting requirements for ride-sharing drivers, which forced Uber and Lyft to end operations in the city. That heavy-handed ordinance has created travel woes, eliminated a source of income for many and tarnished Austin’s reputation as an innovative tech hub.
Austin is a progressive city in a Republican-run state, and many Austinites take pride in living in “the blueberry in the tomato soup.” Yet it is up to conservative state legislators to save these left-leaning residents from their busybody city council. When Texas lawmakers start their new session in January, they are expected to take up legislation that would overturn Austin’s ride-sharing regulations and also preempt other cities and towns from enacting similar laws.
Last month, Hillsborough County, Florida, site of Tampa Bay, enacted Austin-style fingerprinting requirements for drivers contracting with Uber, Lyft and other ride-sharing services. When they return for session in January, Florida lawmakers should follow the lead of their Texas counterparts by introducing preemption legislation overturning that new local regulation.
Governors and lawmakers can make their states more attractive places to live and earn a living, as well as more conducive to economic growth, by passing legislation that prevents local governments from enacting harmful laws and regulations.
As more states take up bills next year to preempt economically destructive municipal policies, the sanctity of local control will continue to emerge as a myth that needs to be challenged.
(Grover G. Norquist is president of Americans for Tax Reform. Patrick Gleason is the organization’s director of state affairs.)