Monday, April 27, 2015

Ferguson: Economic Violence 101

Charles Warren details in The Atlantic how Ferguson, Missouri spent years using its police as a taxation force, harassing the (mostly black) citizenry to raise money to run the local government despite Ferguson being the home of a $24 billion Fortune 500 corporation.

Take a walk along West Florissant Avenue, in Ferguson, Missouri. Head south of the burned-out Quik Trip and the famous McDonalds, south of the intersection with Chambers, south almost to the city limit, to the corner of Ferguson Avenue and West Florissant. There, last August, Emerson Electric announced third-quarter sales of $6.3 billion. Just over half a mile to the northeast, four days later, Officer Darren Wilson killed Michael Brown. The 12 shots fired by Officer Wilson were probably audible in the company lunchroom. 
Outwardly, at least, the City of Ferguson would appear to occupy an enviable position. It is home to a Fortune 500 firm. 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.

The familiar convention of the true-crime story turns out to be utterly inadequate for describing the social, economic, and legal subjection of black people in Ferguson, or anywhere in America. Understanding this requires looking beyond the 90-second drama to the 90 years of entrenched white supremacy and black disadvantage that preceded it.

The key to Ferguson's plight is nothing less than decades of a regressive "race to the bottom" taxation system designed exclusively to benefit white property owners and businesses at the expense of black tenants and renters.

Like most of the rest of St. Louis Country, mid-century Ferguson was defended by exclusionary zoning codes and whites-only collusion in the real estate market. In the 1960s Ferguson was known as a “sun-down” community: African Americans, mostly from neighboring Kinloch, came in to work in the houses of wealthy whites in Ferguson during the day, but were expected to be out of town by the time the sun set. To this day, the adjacent cities are joined by only two through streets, the Ferguson city line runs down a neutral zone lined on either side with mirror-image three-way intersections. If you have been to St. Louis, you likely landed in Kinloch. Over the last three decades, the vast majority of that city’s black residents have been displaced to accommodate the expansion of Lambert-St. Louis Airport. Over the same period of time, a small number of African American homeowners and a much larger number of African American renters have gradually replaced whites in Ferguson. Ferguson, which was almost entirely white in 1970, today has a black majority. 
In 1981, a federal judge in Missouri declared that the “severe” residential segregation of the St. Louis metropolitan area had produced a constitutionally impermissible degree of segregation in the region’s schools. The court tasked the East-West Gateway Government Council and the Missouri Housing Development Commission with developing a plan to desegregate the metropolitan area, but they simply ignored the ruling. At the turn of the 21st century, almost one-half of St. Louis County’s 90-odd municipalities had black populations under 5 percent.

And that brings us to Emerson Electric.

For tax purposes, Emerson’s Ferguson campus is appraised according to its “fair market value.” That means a $50 million dollar solar-powered data center is only worth what another firm would be willing to pay for it. “Our location in Ferguson affects the fair market value of the entire campus,” Polzin explained. By this reasoning, the condition of West Florissant Avenue explains the low valuation of the company’s headquarters. 
In fact, the opposite is true: The rock-bottom assessment value of the Ferguson campus helps ensure that West Florissant Avenue remains in its current condition, year after year. It severely limits the tax money Emerson contributes to the Ferguson-Florissant district’s struggling schools (Michael Brown graduated from nearby Normandy High School, a nearly 100 percent African American school that has been operating without state accreditation for the last two years), and to the government of St. Louis County more generally. On the 25 parcels Emerson owns all around St. Louis County, it pays the county $1.3m in property taxes. Ferguson itself receives far less. 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. 
St. Louis County doesn’t just assess Emerson a low market value. It then divides that number in three—so its final property value, for tax purposes, ends up being one third of its already low appraised value. In some states, Ferguson would be able to offset this write-down by raising its own percentage tax rate. Voters would even be able to decide which services needed the most help and raise property taxes for specific reasons. But Missouri sets a limit for such levies: $1 per $100 of property. As Joseph Pulitzer wrote of St. Louis during the first Gilded Age, “millions and millions of property in this city escape all taxation."

A $24 billion company generates just $68,000 in taxes for the city in which it resides.  One percent of assessed value.  Put the $50 billion data center in a place like Ferguson and it becomes nearly worthless to tax.

America is broken.

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