DILLON’S LAW
We’ve saved the best for last! “Dillon’s Law” is an Iowa state judicial ruling, issued by, of all people, Judge John Dillon in 1868.17 The decision is easily the most important single judicial decision affecting sub-state economic development. Dillon’s Law remains substantially in effect today.
According to Dillon’s Law, states are preeminent over local government in that, in the American Constitution, states and federal government alone possess sovereignty or the inherent legal right of existence. The American Constitution did not mention cities, except to leave them to the states. Cities, counties and towns must be created and empowered by the state if they are to exist and function.18 Dillon’s Law reflects a 500-year tradition that harkens back to London, England. Augmented by subsequent judicial interpretation, sub-state units of government lack sovereignty and are mere sub-divisions of the higher government (states). Previous to Dillon’s decision, states, and state constitutions, dealt with sub-state entities by either issuing “special” charters for each jurisdiction or a general charter specific to population levels. Included in each charter were key elements of the municipal corporation such as form of government, types of taxes allowed and a number of fiscal and governance processes. Through state charters the weak mayor–Jeffersonian government became the default municipal government of newly admitted states and newly created cities.
The decision by Iowa Justice Charles Dillon (John’s nephew) was subsequently adopted by other states, and over time hardened into an informal national precedent. Dillon’s Law was explicitly confirmed by a 1907 federal Supreme Court decision, Hunter v. Pittsburgh, which stated that it was binding on all states and cities unless the state enacted specific legislation to modify Dillon’s Law. The Hunter ruling succinctly upheld that sub-state jurisdictions, no matter their size, are merely “creatures of the state.” Thirty-nine states have since incorporated Dillon’s Law into their state constitution.
Dillon’s Law applied a very wide definition of state powers over sub-state governments. According to Dillon’s Law any delegated powers to a sub-state unit of government must be expressed literally in words or “fairly applied or indispensable to powers expressly granted.” Sub-state jurisdictions, as a sweeping generalization, could not assume the right to take action in any matter without the state expressly allowing it. The city could not approve structural reform of its government without state legislative approval; nor could it create many types of EDO and many ED programs and tools. Understanding this fundamental state/sub-state relationship will explain a great deal of Chapter 4’s description of “home rule,” individual city “charter reform” and the late nineteenth-century struggle to change the form of municipal government. It will also help us understand why state governments are constantly an important factor in local programs and initiatives such as streetcars, utility franchises and subways.
The rise of the industrial city imposed substantial change upon municipal governments, but to cope, they were required to secure state approvals, which were not always forthcoming. How cities dealt with this consumes many future pages. Dillon’s Law, in that it makes change so difficult, time-consuming and costly, and requires unwanted compromises, makes evident why structures and structural relationships are so enduring, retaining for centuries the values and philosophy of bygone civilizations—not so gone with the wind. Dillon’s Law can perpetuate medieval governance traditions, merely substituting state government for the King of England. It also explains how our 50 states developed their own unique ED sub-state policy systems.
Dillon’s Law provided the legal foundation for the state’s dominance over the sub-state ED policy systems. States will define, approve and implement various economic development structures, strategies and tools in their own distinctive ways, reflecting their own configurations of political culture and the politics du jour— ensuring there is indeed no single goal or nationwide one size fits all economic development approach. Identically named economic development structures, such as an industrial development agency, will have different powers and tasks and different relationships with other actors because of state-created variation.
Ron W. Coan 