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Lawyers and judges who deal with municipal law are perpetually puzzled by the distinction between “governmental” and “proprietary” powers of local governments. The distinction is murky, inconsistent between jurisdictions, inconsistent within jurisdictions, and of limited use in predicting how courts will rule. Critics have launched convincing attacks on the division of municipal powers into these two categories. Most articles have focused on problems with the distinction in specific areas of municipal law. In contrast, this article provides a comprehensive analysis of the governmental/proprietary distinction in seven specific doctrinal areas: legislative grants of municipal authority, government contracts, torts, eminent domain, adverse possession, zoning, and taxation. The article concludes that confusion with the governmental/proprietary distinction will be materially reduced if local government powers are conceptually realigned. Instead of completely jettisoning the distinction, as some have proposed, the “governmental” category should be split in two, with coercive and policy-making powers like the police power, law enforcement, and the powers of taxation, eminent domain and budgeting constituting a “governmental sovereign powers” category. General services that constitute public goods should be detached from the governmental sovereign powers and regrouped with proprietary services like municipal utilities to create a category of “governmental service activities.” The article evaluates the new groupings within the context of each of seven substantive areas of law where the governmental/proprietary distinction has been used. The article concludes that realigning local government powers will reduce analytical confusion and help legislators and judges when they make key choices in both the law-making and litigation context.

Realigning the Governmental/Proprietary Distinction in Municipal Law