Monday, April 27, 2015

Ferguson: An Extreme Example of Our Misplaced Economic Priorities

The Atlantic:
Outwardly, at least, the City of Ferguson would appear to occupy an enviable position. It is home to a Fortune 500 firm [Emerson Electric]. It has successfully revitalized a commercial corridor through its downtown. It hosts an office park filled with corporate tenants. Its coffers should be overflowing with tax dollars.
Instead, the cash-starved municipality relies on its cops and its courts to extract millions in fines and fees from its poorest residents, issuing thousands of citations each year. Those tickets plug a financial hole created by the ways in which the city, the county, and the state have chosen to apportion the costs of public services. A century or more of public-policy choices protect the wallets of largely white business and property owners and pass the bills along to disproportionately black renters and local residents. It's easy to see the drama of a fatal police shooting, but harder to understand the complexities of municipal finances that created many thousands of hostile encounters, one of which turned fatal.....How can all this be happening in a community that is home to a Fortune 500 company? Why is the city government filling out its budget with municipal court fines when Emerson Electric is doing $24 billion a year in business out of its headquarters on West Florissant Avenue?...
But Ferguson is extraordinarily constrained in its ability to pay for the services that its residents require. Municipal tax revenue is limited by the Missouri constitution. In 1980, Representative Mel Hancock—the founder of a group called the Taxpayer Survival Association—wrote an amendment that required any increase of local taxes, licenses, or fees to be approved by a citywide referendum, with very few exceptions. Along with gun-license fees, which are explicitly exempted from the provisions of the “Hancock Amendment,” municipal fines provide Missouri cities with one of the few sources of revenue they can expand without a referendum.
The Hancock Amendment, like similar laws in other states, radically constrains the possibilities of municipal governance. Unable to raise tax rates, many municipal governments have only one tool at their disposal: lowering them. They cannot raise money, but they can give it away.
Take Emerson Electric. On July 27, 2009, Emerson opened a brand-new $50 million flagship data center on its Ferguson campus. Subsequent press reports about the data center were filled with numbers: 100 dignitaries at the ribbon cutting, including Missouri Governor Jay Nixon; 35,000 square feet; 550 solar panels; $100,000 in annual energy savings for the company; ability to withstand an 8.0 magnitude earthquake. They noted how many people Emerson employed globally, nationally, and in the St. Louis metropolitan area, although the number of people who might eventually be employed in the new data center itself was hard to find.
In fact, a state-of-the art data center might eventually employ about two dozen people, none of whom were guaranteed to live in (or anywhere near) Ferguson...
In 2014, the assessed valuation of real and personal property on Emerson’s entire 152-acre, seven-building campus was roughly $15 million. That value has gone up and down over the last five years as Emerson has sold off some buildings and built others, but it has not exceeded $15 million in the period since the data center was completed. So what happened to that brand-new $50 million dollar building?
One explanation would be if Emerson had received a Chapter 353 “local real property tax abatement” to support the construction of the building....Even after a 2013 property tax increase (from $0.65 to the state-maximum $1 per $100 of assessed value), Ferguson received an estimated $68,000 in property taxes from the corporate headquarters that occupies 152 acres of its tax base—not even enough to pay the municipal judge and his clerk to hand out the fines and sign the arrest warrants.
Read the entire article.  The massive efforts to keep communities segregated, the giveaways to corporations, developers and other monied interests, the shifting of the tax burden onto the poorest members of the community: they are all just extreme examples of how our society has been structured to benefit the wealthy at the expense of the poor.  I really thought that the Great Recession would make it clear to everybody that these policies had to end.  I believed it would be obvious that a consumption-based economy wouldn't function when consumers couldn't afford to keep consuming.  I was wrong.  In the face of obvious signs that we'd been doing almost everything wrong in our economy for 30 years, conservatives, who somehow managed to take control of more of the state and local governments than they had when they drove the economy into the ground (mainly because the wealthy, the elderly and rural whites vote much more frequently than urban dwellers, the young and minorities) have doubled down on the failed policies that increased inequality and eroded the middle class.  Ferguson, St. Louis County and Missouri are extreme examples of what happens when these failed policies are given free rein, but they are by no means the only examples.  Any state with a Republican governor and a Republican-controlled legislature is putting similar policies in place: handing our corporate welfare, cutting income taxes and increasing sales taxes and other regressive forms of revenue, such as fines and fees.  Spending on education is capped, or funneled to privately-run charter schools and well-off suburban schools at the expense of urban and rural districts.  Infrastructure spending is put off.  Public worker pensions are underfunded and starved to the point of insolvency.  Programs supporting the ever-growing cadre of poor citizens are cut. But income taxes can always be cut (which always return the largest amounts to the wealthiest citizens who have no need for it), and tax giveaways are always available for "economic development."  These policies will continue to lead to greater inequality, and will continue to trigger demonstrations and riots, like we saw last year in Ferguson, and today in Baltimore.  Our government for the rich at the expense of the poor is reaching the breaking point.  Can we change the system before it gets burned down?

1 comment:

  1. A more macro look at some of what you were talking about.