No, it's fine for governments to fix externalities. I just believe they should do it at low levels.
I don't support Alberta meddling in local politics. I don't support the US federal or state governments doing this. If cities or neighborhoods want to come together and say "we want a blue community in this red state" or vice versa that's a just form of self-governance.
I actually believe this is how we make democracy work better. It has scale problems but remains the least-bad form of government so we should work to design systems that make it function well.
Letting people self-assort to live with others with their values under rules that reflect those within reason is good.