Most Americans don’t realize that one of the greatest economic development disasters of all time had anything to do with economic development at all. The near-collapse of civil society in Ferguson, Mo. in 2014 after the killing of Michael Brown by Ferguson police had its roots deep in the city’s economic development past.
Despite imposing the highest property tax rate allowed by the state, Ferguson was facing a fiscal crunch in the early 2010s, driven in part by massive corporate subsidy and tax abatement commitments that had built up over the years.
The highest-profile corporate subsidy recipient in Ferguson was Fortune 500 firm Emerson Electric, which is headquartered in the city. A 2015 investigation by The Atlantic reported that in 2014, the real and personal property on Emerson’s 152-acre, seven-building campus was assessed at just $15 million, despite a $50 million data center having been built there in 2009. Ferguson received just $68,000 in property taxes from Emerson’s operations in the city, The Atlantic estimated.
With tax abatements dramatically limiting the tax revenues generated by Emerson and other corporate property owners and with other taxes capped by state law, Ferguson’s elected officials turned to another revenue source: Their police department and municipal courts. By 2013, $2.57 million of the city’s $12.7 million General Fund budget came from fines and forfeitures generated by the police and municipal courts.
Turning the police and courts into the source of a fifth of the city’s operating revenues had traumatic results, poisoning the relationship between police and local residents to the point that the August 2014 fatal shooting of Michael Brown by Ferguson police sparked widespread civil unrest and launched the “Black Lives Matter” movement.
The U.S. Department of Justice’s 2015 report on the Ferguson Police Department found that in the pursuit of revenues, the city’s leaders had created an environment of “policing for profit” that turned officers into tax collectors instead of public servants:
“Ferguson’s law enforcement practices are shaped by the City’s focus on revenue rather than by public safety needs. This emphasis on revenue has compromised the institutional character of Ferguson’s police department, contributing to a pattern of unconstitutional policing, and has also shaped its municipal court, leading to procedures that raise due process concerns and inflict unnecessary harm on members of the Ferguson community.”
The DOJ report also noted that the practice wasn’t just limited to the police. Dangerously, it had spread to the municipal courts that were supposed to be serving as a check on police abuses:
“Ferguson has allowed its focus on revenue generation to fundamentally compromise the role of Ferguson’s municipal court. The municipal court does not act as a neutral arbiter of the law or a check on unlawful police conduct. Instead, the court primarily uses its judicial authority as the means to compel the payment of fines and fees that advance the City’s financial interests.”
Ferguson is far from alone in making poor economic development deals that carried long-term consequences. While much of the discussions in the wake of the 2014 protests and civil unrest focused on the relationship between the police and the community, not enough attention was paid to the role Ferguson’s economic development policies played in poisoning that relationship.