Judge Halts Election On Limiting Tax Breaks
A St. Louis judge has temporarily halted a citywide vote on a proposal that would have prohibited tax breaks to big energy companies like Peabody.
Judge Robert Dierker ruled Tuesday that the so-called "Take Back St. Louis" initiative was unconstitutional because it directly conflicted with state law.
"The initiative proposition before the Court is facially unconstitutional for two reasons. First, it prohibits what relevant state statutes permit. Second, it is a patent denial of equal protection to those entities subject to its proscription of the granting of "public financial incentives.""
The charter amendment would have blocked the city from awarding economic development incentives to companies that extracted non-renewable resources. It also would have prevented any companies that did $1 million in business with those so-called "unsustainable energy providers" from receiving those incentives as well. In his ruling, Dierker said state law authorizing incentives like tax increment financing does not give cities the authority to limit who is eligible for those incentives.
It was Dierker's decision to address equal protection concerns that drew the ire of Missourians Organizing for Reform and Empowerment (MORE), one of the main backers of the charter change.
In his decision, Dierker explained that as long as the courts can divine a rational basis for lawmakers to have created certain classifications, then the courts must defer to the legislative body. But, he added, businesses cannot be denied basic rights thanks to the U.S. Supreme Court decision in Citizens United vs. FEC. That includes protection from "legislation that is designed to 'fence out' selected classes from the full rights of citizens," as Dierker argued the initiative would do.
The problem was not with defining "unsustainable energy producers," Dierker said. It was extending the denial of economic incentives to companies doing $1 million in business with the unsustainable energy producers.
"As the testimony at the hearing illustrated, under the definition of "unsustainable energy producers," the City is barred from granting a wide range of economic benefits (even if not basic services) to airlines, railroads, public utilities, law firms, automobile manufacturers, and a host of other enterprises--all of them lawful, and none of them (like gambling or alcoholic beverage enterprises) historically subject to special forms of regulation due to their inherent risks to the public health and welfare."
"Quoting Citizens United is an insult to home rule powers and our local democracy," MORE spokeswoman Arielle Klangsbrun said in a statement. "Saying that Peabody Energy has equal rights with public school students who lack supplies due to corporate tax breaks is what is a violation of our rights in our city." Klangsbrun called it "concerning" that two officials from Mayor Francis Slay's office had testified against the initiative in court. She said it showed Slay's office has more concern for corporations than for the right of voters.
A trial on the initiative is scheduled for March 31. But because the St. Louis election authority needed to start printing ballots this week, the ruling, if it stands, means a vote will not take place on April 8 as scheduled.
Initiative opponents were pleased with Dierker's ruling. Jane Dueker, an attorney who is also a former lobbyist for Peabody Energy, rejected the idea that the case was a political ploy designed to avoid a campaign. She said it was good news that taxpayers did not have to foot the bill for an illegal election. Klangsbrun with MORE said her group is still reviewing its legal options.
Follow Rachel Lippmann on Twitter: @rlippmann