Economists: Amendment 74 is risky, radical, and unsound
Open letter to the voters of Colorado
As economists that live and work in the great state of Colorado, we urge voters to reject Amendment 74 and avoid the unintended consequences it would bring to Colorado’s economy and the fiscal stability of our state and local governments.
Colorado is currently experiencing a high level of economic prosperity. Nearly 3 million people are employed, and our unemployment rate is the lowest it has been since 2000.Total wages and wages per employee continue to outpace the national average, and Colorado’s gross domestic product grew at 4.5%.
Amendment 74 will introduce an incredible amount of uncertainty and create a shock to Colorado’s economy, undermining the progress our state has made since the Great Recession.
Amendment 74 would embed a “regulatory takings” right in Colorado’s constitution. Whenever local, state, or quasi-governmental agencies enacted a code or statute, a person or entity could file a claim for the diminished value of their property – including projected future profits. In any governmental decision, there is always a winner and a loser no matter how trivial or important the decision. This includes basic decisions about zoning such as where to site pipelines or a strip club, where to zone commercial versus residential uses, or public health, air and water quality protections.
For instance, an oil and gas company could apply for a drilling permit to develop oil underneath someone’s property. If the permit was denied, the company could file a claim for lost revenue. If the permit was approved, the homeowner could file a claim for the diminished value of their home and ability to sell their property. No matter what decision a government entity made in this scenario, it would be vulnerable to a legal claim. This type of system could create utter chaos in how government operates and huge uncertainty in investments and the marketplace.
We only need to look at the experiment that voters approved in Oregon back in 2004. Oregon’s Measure 37 gave property owners the right to file claims against land use decisions. For the three years it was in effect, more than $19.8 billion in claims were filed. Local governments could not afford to pay all the claims and subsequently stopped enforcing land use codes. In 2007, voters rescinded the measure by a strong margin. The Oregon experiment was a clear failure.
Amendment 74 is actually much broader since it applies to both land use and general regulation at all levels of government. Local governments could become insolvent since they would be exposed to frivolous claims and lawsuits. Bonds approved by voters for infrastructure or school improvements could become high risk bets. Local and state governments could be hamstrung from making a decision to approve or deny a project for fear of liability from a takings claim. The very basic legal and physical infrastructure of our economy would be at risk.
Putting Colorado’s strong economy at risk to frivolous lawsuits and uncertainty makes no economic sense. We urge the people of Colorado to reject this radical and unsound measure.
Very sincerely,
Dr. Nicholas Flores
Professor of Economics & Department Chair
Department of Economics
University of Colorado Boulder
Douglas Jeavons
Economist
Managing Director, BBC Research & Consulting
Dr. Phyllis Resnick
Economist and Managing Director
R Squared Analysis, LLC
Jeff Romine
Urban/Regional Economist
Patricia Silverstein
President and Chief Economist
Development Research Partners
Chris Stiffler
Economist, Colorado Fiscal Policy Institute
Adjunct Professor, University of Denver
Dr. Jeffrey Zax
Professor of Economics & Associate Department Chair
Department of Economics
University of Colorado Boulder
