St. Louis, Missouri: Disparate Impacts & Municipal Debt


In St. Louis, the COVID-19 pandemic is not just threatening the city's inhabitants. It's also threatening the budget.

The St Louis Arch

On April 8, the St. Louis American reported that all twelve confirmed COVID-19 deaths in St. Louis city were African Americans. Ten more deaths were reported in the city over the following weekend, nine of which were African Americans.

As countless writers, journalists, and commentators asserted in recent weeks: The coronavirus was never the “great equalizer” many claimed it was; closer to its opposite. “When white America catches the novel coronavirus,” Keeanga-Yamahtta Taylor—professor of African American Studies at Princeton and public intellectual—wrote in the New Yorker, “black Americans die.” Her words play on the decades old saying, “When white America catches a cold, black America gets pneumonia.”

The statement can be scaled to communities and cities; and the more divided, the more force her words hold. Sociologist and Dean of Graduate Education at Washington University in St. Louis, William Tate flips another idiom under coronavirus. “Let’s be honest,” he says in a phone interview, “St. Louis has been ‘social distancing’ for some time now—it’s called residential segregation. The consequences will continue to be laid bare.”

When focusing only on risk factors for coronavirus complications, Tate notes, black St. Louisans have higher rates of asthma, hypertension, and diabetes. “The existence of those preconditions can be traced back to the experience itself of racism,” he continues. The CDC recently found 90 percent of Americans hospitalized in March with COVID-19 had at least one underlining health condition.

“The situation was deadly here in St. Louis prior to the coronavirus, so what we are witnessing now is this structural acceleration.” Furthering structural violence in St. Louis is twisting a knife in an open wound. “In the poorer areas, the predominantly African American areas,” Tate continues, “their businesses will be shuttered more quickly, their tax base will shrink, their property taxes will likely rise—and you’ll have people moving out, again, it’s likely underway now.”

Prior to the pandemic, two zip codes in the metro area, segregated by race and class, hold an 18-year gap in life expectancy: 85 years to 67 years. As Taylor also notes in her piece, the facts on the ground, especially in St. Louis, call on scholar Ruth Wilson Gilmore’s understanding of racism as a group differentiated vulnerability to premature death.

If the coronavirus is a “perfect storm” crisis, pre-existing health disparities constitute one devastating wave. The one cresting on its heels is the specter of massive state and city budget shortfalls—and the fight to save vital services from austerity.   

On April 9, the United States Federal Reserve System, the FED, announced it would purchase $500 billion in short-term municipal debt. The measure, called the Municipal Liquidity Facility (MLF),  was enacted to backstop a panic-stricken municipal bond market, as it was “imploding in real time”.

The move, caused by governments’ sudden loss of revenues under stay at home orders and a delayed tax collection date, is unprecedented. Even in the height of chaos during the Great Recession, the FED stuck to its practice of avoiding the municipal bond market. Instead, during crises, the FED has purchased U.S. Treasury notes. The FED, as the logic goes, steps in to buy the debt of the nation (in U.S. Treasury notes) to keep markets functioning and prevent an even deeper collapse. Treasury notes also hold the advantage of resemblance to each other.

The municipal market is different. Unlike U.S. Treasuries, municipal debt denotes the local decisions of governments across the county. The bonds were issued to fund anything from schools, city parks, hospitals, airports, and state operations.

The $500 billion put forth is a fraction of the $3.9 trillion in municipal debt held around the nation. Under the MLF program, the FED has abandoned its former impartial posture and taken the position of “picking winners and losers”. Said another way, in a climate where every city now needs help, only some will receive it.

Under the MLF’s initial population restrictions, none of the first 35 cities with the highest percentage of black residents qualified for relief. Following pushback, the FED expanded the program to include cities previously left out like St. Louis, Detroit, Cleveland, Atlanta, and Milwaukee.

Still, the FED says they will stick to purchasing “investment grade” debt, or cities with good credit ratings. Cities receive credit ratings much the same individuals do; and poorer cities, similarly, tend to have poorer credit scores. In this case, a bad credit score can disqualify a city from relief. St. Louis, despite having their credit score downgraded five times since 2013, will barely make the FED’s cut.

Imagine having a mountain of credit card debt, and then being issued a new credit card in order to pay off the former: the problem is not solved, rather delayed.

St. Louis city officials recently announced a budget shortfall projection of $40 million that could more than double depending on the length of the shutdown. In total, the city’s budget director Paul Payne said over zoom conference that the overall city revenue will be down 3% from last year. For comparison, he noted, the revenue dropped 2.1% in the worst year of the Great Recession.

“St. Louis’ overall fiscal position was not healthy prior to the virus,” says Gerry Connolly, a member of Team TIF, an activist oversight group that monitors city spending and corporate tax breaks. “Unfortunately, even in the midst of the crisis, the city is choosing to fund a $60 million development subsidy,” Connolly says, “for a development without any affordable housing available. We should, at the very least, be putting these subsidies on hold while we make it through this crisis.”

Money for the affordable housing trust fund, a citywide initiative, was initially slated for a 24% cut. The fund provides essential services for the unhoused in St. Louis, rental assistance, rehousing help, and tenant education among other things. After housing activists pushed back, Mayor Lyda Krewson, saved from her own instincts, shifted funding from the city reserves to avoid the cut.

The victory for St. Louisans was short-lived. The next day, April 29th, Krewson called on the mass eviction of a tent encampment of residents settled downtown. The move is at odds with the mayor’s own eviction moratorium put in place to weather the crisis. As Pulitzer Prize winning St. Louis journalist Tony Messenger observed: “Apparently, the only way to be evicted during a pandemic in the city is to be homeless.” The city has yet to present a viable plan for rehousing those evicted.

At the same time, despite years of organized efforts from activists, the city’s notorious debtor’s prison, the Workhouse, will remain open and be funded at $8.8 million this fiscal year. There are only around 100 people being held in the infamous jail, the vast majority are legally innocent and only unable to pay bail. The mayor refused a proposal to take money out of the Workhouse budget to cover the affordable housing trust fund.

At the state level, Republican Governor Mike Parsons oversees a super majority in the Missouri state legislature. The state is poised to receive around $2.4 billion in federal relief to fund state and local governments, including St. Louis. Parson created a “working group”, in response, to manage the distribution of the money.

“The task force was seven people in total,” Missouri state representative Rasheen Aldridge says in an interview, “but they were all Republicans, all white men.”

After outcry on the lack of representation, State Representative Karla May, an African American woman, was added to the group. Aldridge says that won’t be enough. “It really felt like the whole—I have one black friend conversation. And, even now, the space will continue to be a conservative white male dominated one.”

Aldridge, a former organizer in the Ferguson uprising and the Fight for $15, represents the 78th district—a large swath of St. Louis city. He now sits on the budget committee in the legislature. “It’s going to be a tough two years for us, at the very least,” he says. “This year alone we are looking at state budget cuts of around $700 million.”

When it comes to following that money, Aldridge says, “These are conversations we need to keep expanding—we are talking about decisions coming up to either double down on funding prisons and tough on crime initiatives or prioritizing education, health and human services, and affordable housing programs that we all need right now.”

In the lead up to the coronavirus crisis, Missouri lawmakers dropped the ball on preparing hospitals and health care access. Milkayla Allen, an organizer at Action St. Louis, reported in the St. Louis American that Missouri rejected federal aid and Medicaid expansion that led to the closure of 14 hospitals in Missouri between 2014 and 2019. Allen writes, “Additionally, over 172,000 people were purged from the Medicaid rolls since 2017, despite meeting all eligibility requirements.”

“From what I’ve seen so far,” Aldridge says, “we have a lack of leadership from the governor right now. We have mixed messages, and I’m not getting enough information to tell my constituents what to expect.” Governor Parson recently moved to open up the state—even greenlighting concerts, amusement parks, and other mass gatherings in the state after May 4th. In St. Louis, Mayor Krewson said in a statement that the city will keep in place its stay at home orders irregardless of state directions.

“We all know our city and our state is about to take a major hit when it comes to the budget,” Aldridge says. “But we can’t keep squeezing dry the ones who were struggling before the crisis hit.”

“So many in my district don’t know how they will make it through the next few weeks, the next few months. Let’s fund the programs that will keep the people afloat—that’s all I’m saying.”