CHICAGO — Missouri Gov. Jay Nixon wants an economic injury disaster declaration for Ferguson to secure low-interest loans from the U.S. Small Business Administration to aid businesses hurt by the large protests that followed a fatal police shooting of an unarmed black teen.
"Businesses impacted by recent events in the Ferguson area are in need of assistance to help them recover," Nixon said in a statement Aug. 29. Economic injury disaster loans provide working capital until normal business operations resume.
The program makes loans available to small businesses and certain private, non-profit organizations to meet their ordinary and necessary financial obligations that cannot be met as a direct result of the event. Nixon formally requested that St. Louis County, which includes Ferguson, be designated as the primary county of designation with St. Charles, Franklin, Jefferson, and the city of St. Louis be designated as "contiguous" counties and areas.
The declaration request followed Nixon and state Treasurer Clint Zweifel's announcement that the state would provide up to $250,000 in loans. Support from public and private sector organizations will boost the level to $1 million. The additional support would come from the St. Louis Regional Chamber, the St. Louis Economic Development Partnership, North County Inc., and local lending institutions. State funding will be utilized for zero-interest loans to meet the immediate needs of businesses impacted.
The shooting to death of Michael Brown Aug. 9 by a white Ferguson police officer prompted massive protests that drew national attention. The state highway patrol took over policing duties for a period and the state's National Guard was called in to aid local forces.
The economic impact on local and state governments is not clear as Ferguson businesses shut down and the city and other local governments face substantial police overtime costs.
The city also faces potentially steep litigation costs. Last week the group Black Lawyers for Justice filed a federal lawsuit in St. Louis on behalf of a group of plaintiffs against Ferguson, St. Louis County, and local police leaders and officers. It accuses them of excessive force, false arrest, and civil rights violations and seeks $41 million in damages.
St. Louis County police are investigating the shooting while the U.S. Department of Justice is conducting its own probe.
The city participates along with other local governments in an insurance trust called the St. Louis Area Insurance Trust to cover health, workers' compensation and general liability matters. It requires an annual premium payment to cover estimated claims payable and reserves for claims from each entity.
The city has a Aa3 rating on its general obligation bonds from Moody's Investors Service thanks to healthy fund balances.
The city last issued debt in January 2013 when it sold $9.1 million of certificates of participation. The COPs financed the acquisition of land and buildings for a new community center, and renovation and additions to its police department building.
The COPs were rated A1 by Moody's.
The city closed out 2013 with combined ending fund balances of $25.3 million, an increase of $4.6 million over the previous year. Its unassigned general fund balance was $10.3 million at the end of the year. The city carries a total debt load of $23.9 million. The city has fully funded its annual required contribution to fund its pensions over the last five years.
"Affirmation of the Aa3 general obligation rating is based on the city's moderately-sized tax base located within the St. Louis metro area; favorable financial operations marked by healthy reserves; and manageable debt position," Moody's wrote in its last review in early 2013. The city's finances are strained by a reliance on economically sensitive sales taxes and wealth levels below that of the state's and national medians.