Law, Political Economy and Municipal Finance in Keilee Fant v. City of Ferguson, Missouri

Teaching Law and Political Economy through Keilee Fant v. City of Ferguson, Missouri Part IV

Angela Harris – 

There’s yet one more way I try to get students to see the mutually entangled systems of capitalism and racism presented by Fant v. Ferguson. In its 2015 report on policing in Ferguson following the killing of Michael Brown, the Civil Rights Division of the United States Justice Department concluded: “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.”

Ferguson’s reliance on law enforcement as a revenue-generating tool, however, is not unique; dependence on municipal fines and fees to fund police and court services was widespread at the time in the northern St Louis suburbs. For example, in Edmondton, where nearly one-fifth of the population lives below the poverty level, ticketing was such an important part of the city budget – comprising almost 35 percent of general revenues – that in April, 2014 the mayor put a note in some police officers’ paychecks observing a ‘marked downturn’ in the number of tickets being written, and reminding them, “the tickets that you write do add to the revenue on which the P.D. budget is established and will directly affect pay adjustments at budget time.”

Nor are the northern Missouri suburbs unique. A 2010 report by the ACLU examined so-called “legal financial obligations” (LFOs) across the country. The authors concluded, “Courts nationwide have assessed LFOs in ways that clearly reflect their increasing reliance on funding from some of the poorest defendants who appear before them. . . . Because many court and criminal justice systems are inadequately funded, judges view LFOs as a critical revenue stream. In New Orleans, for example, LFOs account for almost two-thirds of the criminal court’s general operating budget. One town in Ohio with a population of 60 collected more than $400,000 in one year in LFOs assessed in its mayor’s court.”

What are these LFO’s? Legal scholar Neil Sobol explains:

Monetary charges now exist at all stages of the criminal justice process, including pre-conviction, sentencing, incarceration, probation, and parole. Fees have expanded to include a wide variety of charges purportedly to reimburse the costs of state and local entities. The fees even cover constitutionally required services such as public defenders. The system of using fees has been labeled an ‘offender-funded’ system. Offender funding has grown over the years, and several states now outsource prison, probation, monitoring, and collection services to private companies. These companies may assess and collect fees, using the threat of incarceration for failure to pay.

The ACLU adds:

Poor defendants who are re-arrested and incarcerated for failing to pay their LFOs face added costs, such as warrant fees, as well as booking and jail ‘pay-to-stay’ fees. Some states and counties have particularly insidious penalties reserved for the poor: To make up for budget shortfalls, some counties in Georgia aggressively pursue fines and fees in their traffic courts, and refer those defendants who cannot immediately pay to private probation supervision companies, which charge monthly fees that often double or triple the amount of money a probationer would have paid had he or she been able to afford the fine. In Washington State, all unpaid legal debts are subject to 12 percent interest. Since most Washington defendants who have been convicted of a felony cannot afford to pay their legal debts in full, and must resort to making small periodic payments, this interest penalty can turn what starts as a modest fine into a lifetime debt: a criminal defendant who is assessed the average LFO for a felony and who makes a typical monthly payment on that LFO would still have a legal debt, and would remain ensnared in the criminal justice system and under threat of imprisonment, 30 years after his conviction.

Why did Ferguson and other northern St Louis suburbs end up depending on their criminal justice systems for the revenues necessary to run a city?

One reason has to do with direct legal restrictions. 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. Walter Johnson explains in The Atlantic, “[A]ccording to the Ferguson city budget, sales taxes account for the largest share of the city’s revenues. Next come municipal court fines. And after that franchise taxes—taxes on telecommunications, natural gas, and electricity usage. Only after that comes revenue from property taxes. This means Ferguson extracts more revenue from African American renters seeking to heat their homes in the winter, light them after dark, and talk on their cell phones than it does from those who own the homes themselves. Taken together, these regressive taxes account for almost 60 percent of the city’s revenue. . . .The vast wealth of the city, scarcely taxed at all, is locked up in property that African Americans were prevented from buying for most of its history.”

Lacking the political will to raise taxes, Missouri cities rely on other mechanisms for revenue, such as tax increment financing (TIF). Declaring a neighborhood or region a “TIF district” permits the city to raise money for infrastructure and improvements by selling municipal bonds. These bonds, however, are bundled, bought and sold in a secondary market, much the way that mortgages were bundled in the run-up to the subprime mortgage crisis. Because the buyers of these bonds get the legal status of first-paid creditors, Ferguson and other suburbs must pay their Wall Street investors before fixing potholes or building schools. And should revenue on the bonds fall short of projections, it’s on the taxpayers to foot the bill. Johnson argues:

“Under Missouri laws, TIF district plans are limited to areas that have been designated “blighted” by that municipality. They were designed to bring the benefits of capitalist development to areas that would otherwise be regarded as inhospitable to investment. . . .In the event, however, these tools have often been turned inside out: used to generalize the risk of investment to the entire population of a city while concentrating their financial benefits in small tracts of development.”

In the meantime, we get what Michelle Anderson calls “the new minimal cities.” Anderson argues that there should be a legal right to a certain level of municipal services for residents of a city, and that both government and private industry have potential roles to play in providing such services. In Ferguson, this is starting to happen. Emerson Electric, one of the largest companies in the area, recently announced a program of support for early childhood education, jobs for young people, college scholarships for students from surrounding high schools to study engineering at the University of Missouri–St. Louis, and outreach to North County entrepreneurs in need of advice about business plans. Yet, as Johnson argues, these well-meaning initiatives do not get to the roots of the problems in northern Missouri: the underlying structures of segregation and disinvestment. Nor is it plausible that a corporation would take on such a task anyway; that’s the job of government. But, as Martha McCluskey has written, the idea that economic privation should be addressed through “personal responsibility,” not government action, has become generally accepted in many policy quarters. (We explored this in my second post on the case.)

The risk of teaching about structural inequality is that students will be left confused and despairing. The benefit of diving deeply into Fant v Ferguson, however, is the possibility of seeing how the everyday, seemingly common-sense divisions between equality and efficiency, public and private, race and class, “business” and “social justice,” prevent us from clearly seeing inequality, thereby protecting it. And although our casebook may be out of print, today the APPEAL project has rescued many teaching materials on law and political economy. Through series like this, we hope that this blog will also contribute useful pedagogical materials.

Law in liberal societies performs a fundamental boundary-drawing function, one that I describe as “structural liberalism.” Through legal norms and rhetorical systems – ubiquitous but seldom explicit – competing dynamics of power are preserved and restrained, their tensions and contradictions muted. Structural liberalism manages assemblages of power and mutes their contradictions by parceling them out into separate spheres. Sometimes these separate spheres are geographically determined: think state and municipal borders. Sometimes the separate spheres operate in abstract space, as in rules of jurisdiction, preemption, and norms of federalism and separation of powers. Most implicitly, rhetorical distinctions deeply embedded in legal doctrine divide “state” institutions of governance from “market” institutions, separating the “private” from the “public.” A similar operation of doctrine distinguishes “civil” rights from “economic” rights, ensuring that anti-discrimination violations never produce community economic reparations. The exciting promise of terms like “law and political economy” and “racial capitalism” is the ability to break through silo walls, recognizing how the political, the economic, the legal, and the racial are mutually imbricated in inequality. Teaching cases like Fant v Ferguson in the way I have outlined it in these posts is challenging because it violates the conventions of legal fields: Does the case belong in Criminal Procedure? State and Local Government? Consumer Finance? Public Benefits? Family Law? But it is also fun – and, I hope, illuminating — for that very reason.

Angela Harris is the Distinguished Professor of Law, Boochever and Bird Endowed Chair for the Study and Teaching of Freedom of Equality at UC Davis School of Law.