Ferguson seeks another tax hike to make up lost revenue

FERGUSON, Mo. -- Ferguson city leaders, struggling to balance a budget decimated by fallout from the unrest that followed the police shooting of 18-year-old Michael Brown will ask voters in August for a second tax increase, Mayor James Knowles III said Monday.

The Ferguson City Council, at a special meeting Sunday, voted to put on the Aug. 2 ballot a proposal to raise the city utility tax by 2 percent. Knowles said approval of the increase would generate about $700,000 annually. The proposal comes after voters in the St. Louis suburb in April approved a half-cent sales tax increase and narrowly defeated a property tax increase.

Brown, who was black and unarmed, was shot fatally by white officer Darren Wilson on Aug. 9, 2014. A St. Louis county grand jury and the U.S. Department of Justice cleared Wilson of wrongdoing.

The shooting led to unrest. Sales and property-tax revenue in Ferguson dropped sharply in the last 21 months, and legal fees have risen drastically.

The city also took a financial hit due to court reforms it put in place. The shooting raised awareness about a court system that generated revenue largely on the backs of poor and minority residents. Knowles said reforms were implemented within weeks of the shooting.

In March, the city agreed to more reforms as part of a settlement with the Justice Department. The pact aimed at eliminating racial bias and profiling in Ferguson's criminal justice system is expected to cost at least $2.3 million over the next three years.

But Knowles said it is the lost revenue, not the cost of the Justice Department agreement, that is behind the tax increase proposal.

"If we still had the revenue we used to have, doing the consent decree would not be a big deal," Knowles said. "We've had millions of dollars of revenue fall from sales tax, property tax and court revenue."

Ferguson's budget deficit reached nearly $3 million before the April tax was approved.