Commentary: Taxpayers’ New Worry: Your Money or Your Land

By Geoffrey F. Segal and Benita M. Dodd

Long ago, Thomas Jefferson warned that “government big enough to supply everything you need is big enough to take everything you have … The course of history shows that as a government grows, liberty decreases.”

The recent U.S. Supreme Court ruling allowing government to seize unblemished private property for “economic development” is one indication of the myriad ways that government can grow. And no longer is it enough to limit government growth by closing taxpayers’ wallets.

The Georgia Public Policy Foundation joined the amicus curiae filing in the case of Kelo v. New London to highlight concerns about local governments’ abuse of eminent domain. The city of New London, Conn., had condemned homes and businesses to make way for an office building, swanky retail shops and luxury condos and apartments.

The officials’ argument was simple: that this development would generate more tax revenue than the existing buildings. The new buildings would generate a larger tax base, and thus more tax revenue. And this the Supreme Court approved as a “public use,” ruling against the property owners.

All of which means that the next time your local government is strapped for cash, there’s no need to fight a nasty tax battle. Officials can just take your home or your business for “economic development.” Thanks to the Supreme Court this simply means “raising additional tax revenues.” Yes, your home will be your castle – but only until government needs funds for new and expanding services.

Outrage in Georgia over the ruling has spurred a race to ration the hungry beast of government. A Senate study committee will determine “what state powers remain to protect the rights of private property owners.” Next year, the House could vote on a Senate-approved bill prohibiting the use of eminent domain for economic development purposes. Snellville became one of the first Georgia cities to pass a resolution to protect private rights. DeKalb County CEO Vernon Jones noted that “American government should not be in the business of wealth redistribution disguised as eminent domain” when he recently introduced a county commission resolution.

More needs to be done. If ever there was a need for serious spending reform (at every level of government), it is now. It is time to rethink just how the various levels of government interact with citizens, taxpayers and property owners. To borrow a term, government has “sprawled:” into new areas, new agencies and new services. “Vital” programs have been expanded or added to the list of “core” services provided by government. 

Policy-makers need to stop being big spenders and to show restraint or it becomes their fault when the bulldozer ends up at your doorstep to “improve” the neighborhood’s tax base so that government can get more to pay more for more programs and services.

Clearly, it’s now up to the Legislature to set the ground rules for appropriate eminent domain use, with appropriate safeguards for property owners. One possible disincentive for abuse would be to require compensation based on the appraised value of the land after rezoning. Commercial real estate is almost always more valuable than residential. Another is to require localities to pay a premium if eminent domain is used; perhaps 150 percent of assessed value.

Simultaneously, local government must re-evaluate its structure and the services it provides, scrutinizing programs and activities for effectiveness, efficiency and relevancy. Is this a proper role for government? Without scrutiny, without limiting and slowing the rate of growth of government, eminent domain will inevitably play a larger and more frightening role in future economic development plans.

In her stinging dissent, Justice Sandra Day O’Connor validated the danger when she wrote, “the specter of condemnation hangs over all property. Nothing is to prevent the state from replacing any Motel 6 with a Ritz-Carlton, any home with a shopping mall, or any farm with a factory.”

Action is needed, now. Our homes and businesses depend on it.

Geoffrey F. Segal is a visiting fellow at the Georgia Public Policy Foundation and the director of government reform at Reason Foundation. Benita M. Dodd is vice president of the Georgia Public Policy Foundation, an independent think tank that proposes practical, market-oriented approaches to public policy to improve the lives of Georgians. Nothing written here is to be construed as necessarily reflecting the views of the Georgia Public Policy Foundation or as an attempt to aid or hinder the passage of any bill before the U.S. Congress or the Georgia Legislature.

© Georgia Public Policy Foundation (July 22, 2005). Permission to reprint in whole or in part is hereby granted, provided the author and their affiliations are cited.