Four Years Later, Ferguson Still Relies on the Poor to Pay its Debt

Last February, I wrote a story about how the lack of sidewalks in Ferguson, Missouri affects the people who live there. When researching the city’s budget, I found that this problem was symptomatic of the city's distorted fiscal priorities. While a significant amount of spending was allocated for debt service and for chasing growth via TIF (Tax Increment Financing), only minimal money was reserved for upkeep and providing sidewalks despite the 24% of people in Ferguson living in poverty.

But that wasn’t the only story the budget told. I also learned that Ferguson is still relying on so-called “fines and forfeitures” for a significant amount of its revenue, four years after the shooting of Michael Brown drew national attention to the city and to that issue in particular. Since 2015, when the Department of Justice wrote an explosive report accusing the Ferguson Police Department of disproportionately targeting black residents and focusing on “maximizing revenue” rather than administering justice, the city has gradually decreased its use of fines as revenue. The findings in the report also pushed Missouri’s Supreme Court to take control of Ferguson’s Municipal Court later that year.

The fines which accounted for over 16% of the budget in 2014 were slowly decreased, from generating $2,571,000 in 2013 to just $292,000 in 2018. But over the same timeframe, the city has significantly raised sales taxes to account for the decreased income, a strategy which fails over time and also disproportionately affects the poor.

And in the fiscal year 2019 budget, the city plans to increase expected fine revenue for the first time since the city began the downward trend, with $380,000 projected. The new budget comes several months after U.S. Attorney General Jeff Sessions rescinded U.S. Justice Department guidance meant to reform the city’s reliance on municipal courts.

St. Louis County (which operates independently of St. Louis City, which stands as its own county), has 88 separate municipalities. Each of those micro-cities comes with its own operating budget, police and fire department, and municipal court. Some municipalities, like Bella Vista and Norwood Court, occupy a space of just 0.1 square miles. Others, like Country Life Acres and Champ, have populations of under 100 residents. This regional fragmentation and redundancy mean that many municipalities find it difficult to fund services through their property tax base, and instead resort to other sources of revenue, such as fines.

All of this is to say: Ferguson is hardly the only city in the region relying on fines for revenue. Its neighbors—Pine Lawn, Florissant, and Hazelwood, along with several other municipalities in St. Louis County—continue to fine at even higher rates than Ferguson. In addition, the St. Louis County operating budget has its own item line for fine revenue. In the last available budget in 2017, the county continued to collect $1.7 million in fines and forfeitures, independently from its city courts.

A local nonprofit, Arch City Defenders, has continued to push for a consolidation of the municipal courts system to no avail. One report cited “racial disparity in traffic stops, excessive revenue generation, and excessive warrants and arrests” as a cause for major concern. It also noted that “these condemned practices are not unique to Ferguson. Rather, many St. Louis municipalities are demonstrably worse than Ferguson with respect to the highlighted factors.” The Arch City Defenders purport that consolidation of the 81 municipal court systems would not only address issues of discrimination but also save the region $7,000,000 to $9,000,000 in operational costs.

Chasing Revenue to Chase Short-Term Growth

The fragmentation of St. Louis County has another unfortunate side effect. Independent localities often compete with each other in chasing growth, and in turn, St. Louis City competes with each county municipality to subsidize new development.

This auto-oriented shopping center on the edge of town was funded through TIF. (Source: Google Maps)

This auto-oriented shopping center on the edge of town was funded through TIF. (Source: Google Maps)

A Brookings Report on TIF practices in Missouri found that “TIF has been used much more extensively in St. Louis by suburban areas with little need for assistance in the regional competition for tax-base.” It also concluded that “poorly targeted TIF laws may also contribute to sprawl by subsidizing greenfield development in high-tax-base suburban areas.”

Debt service in Ferguson accounted for $2 million in the 2018 fiscal year budget. The TIF district in Ferguson was used to fund an auto-oriented shopping district at the edge of the city, which is home to several low-wage-paying branches of major retail chains. It sits at the corner of where two major stroads meet the interstate. Despite several bus stops in the area, it is completely devoid of lined crosswalks for those who wish to visit another block of stores that sits across the five lanes of traffic. 

Strong Towns founder and president Charles Marohn's 2014 words still ring true in Ferguson:

What I see with Ferguson is a suburb deep into the decline phase of the Suburban Ponzi Scheme. We’re past the first cycle of new (low debt and low taxes), through the second cycle of stagnation (holding on with debt and slowly increasing taxes) and now into predictable decline. There isn’t the community wealth to fix all this stuff—and there never was—so it is all slowly falling apart.

While fragmentation into so many small municipalities may be a distinctive feature of the St. Louis region that may exacerbate reliance on fines, the problems of the Growth Ponzi Scheme are far more universal. Places like Ferguson—in physical and economic decline, and saddled with an unproductive development pattern—face incentives to generate revenue by increasingly desperate means.

Such places are all over North America, and the St. Louis region is far from alone in its use of municipal courts as a revenue source. Milwaukee has had its own battle with the practice. Two professors from University of Memphis and Vanderbilt University partnered on a study that found that cities with more black residents rely more heavily on fines.

What is perhaps most egregious about these practices is how little of the resulting revenue goes to serve the very residents on whom their burden falls most heavily.

(Top photo source: U.S. Air Force photo by Senior Airman Janiqua P. Robinson)