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.
