By Fiona Ortiz
(Reuters) - A year after Ferguson, Missouri, was torn by unrest over a white policeman's fatal shooting of unarmed black teenager Michael Brown, the town that became a symbol of racial inequality in America faces a significant financial toll.
Several businesses that were looted or vandalized during riots in Ferguson are gone and its budget deficit has grown as costs, including overtime pay for the police force, have increased. Revenue from sources such as traffic fines, long used to pad municipal finances, has dropped and job cuts for city employees could follow.
For the 21,000 residents of the mostly black community of Ferguson, the year since the Aug. 9 killing of 18-year-old Brown, which sparked months of unrest and racial tensions, has been one of slow recovery.
Economic strains are showing in a town that, even before the protests, never fully recovered from the 2008 financial crisis.
“People have seen the images of a city out of control," said Brian Fletcher, a city council member and chair of a committee that has raised money for local businesses hit by the riots.
"It has been so difficult for the image of Ferguson this past year. It has been damaging to the economy,” he said.
With an annual operating budget of around $14 million, Ferguson's deficit is forecast to increase to $3.2 million in the fiscal year ending in June 2016. That is up from $3 million the previous year and less than $1 million two years ago.
"We can't stay in deficit forever, we may have to start laying off employees," said Fletcher, a former mayor.
He said that could include cuts in the police department, since public safety accounts for about 60 percent of the St. Louis suburb's spending. The department is down to about 50 police officers instead of the 54 budgeted for, which means some savings, but overtime pay in the final five months of last year went $222,000 over budget; another $500,000 has been allocated to overhaul the department.
What's more, Ferguson has begun talks with the U.S. Justice Department over police reforms - which could cost millions - following a scathing report by the agency last spring. In it, the Justice Department said the mostly white police force routinely targeted blacks and showed a pattern of excessive force and illegal arrests.
TICKETS AND TAXES
The outrage triggered by the shooting of Brown, whose body was left laying in the street for hours after he was killed, threw Ferguson into the spotlight and helped spark a nationwide debate about race and policing and the use of lethal force against minorities.
Data kept by the state attorney general's office since 2000 shows that Ferguson police have been disproportionately stopping African-American motorists for years. In 2014, 82 percent of traffic stops were of blacks, who represent 63 percent of the population, and the arrest rate of blacks after traffic stops was three times that of whites.
About nine months after Brown's death, in a measure widely seen as directly linked to the protests over his shooting, the Missouri legislature passed a bill that sharply limited the amount of revenue municipalities can collect from traffic tickets and fines.
The move was hailed by some as a victory on the long road to police and judicial reform. But the cap, combined with a moratorium on red-light traffic tickets, has caused Ferguson's income from traffic fines to drop to about $1 million in the projected 2015-2016 budget, about half the level it was two years ago.
For now, Ferguson's city government is covering its deficit by tapping reserves, which are forecast to fall by two-thirds from before Brown's death to $2.7 million next year.
"The city is going to have to tighten its belt. There's going to be decreased revenue, but Ferguson is still a very viable city," said city council member Wesley Bell.
To offset declining revenue, officials are banking in part on economic development to broaden Ferguson's tax base. A small-business relief fund put together by a coalition of banks, the St. Louis Regional Chamber and the state has allocated $735,000 in interest-free loans to 73 businesses to recover from lost business or damage during the unrest.
The town's largest property tax payers have stayed put, including manufacturer Emerson Electric, retailers Sam's Club, Walmart, and Home Depot, and a shopping mall: Crossing at Halls Ferry. Emerson is expanding, and Centene managed care is building a new claims center in town.
"The businesses are hopeful, and that's why they're still there," said Erica Henderson, Ferguson point person on the St. Louis Economic Development Partnership. She was referring specifically to those businesses in the hard-hit West Florissant Street area of town that have used loans and grants to stay open after last year's protests.
"But they still feel the impact," Henderson added. "People drive through as if it's a shrine. The drivers don't get out of their car and spend money."
(Additional reporting by Carey Gillam and Edward McAllister; Editing by Tom Brown)