Amount of revenue from traffic tickets in Ferrelview violates state statute

FERRELVIEW, Mo. — Derrick Hayes thought he would remember Oct. 17, 2015 because of the Kansas City Royals win against the Toronto Blue Jays in Game 2 of the American League Championship Series.

Instead, that Saturday night now serves as a reminder of why he continues to seek action from the Village of Ferrelview. Hayes encountered village police chief Daniel Clayton for the first time that night, pulled over for a faulty license plate light.

Hayes was taken to the Platte County detention center following the stop. He allegedly overheard Platte County deputies tell Clayton that they couldn’t detain Hayes for a traffic citation, at which point Hayes was released.

The experience prompted the Olathe, Kan. resident to launch a “crusade” against Clayton.

Over the next eight months, Clayton filed nine total citations against Hayes — five from the first traffic stop and four during a second stop. Information obtained from the village’s records shows Hayes is one of many who have been caught up in an apparent ticket system, a system that shows Ferrelview likely has been in violation and continues to be in violation of state statute for an excess amount of money collected from fines and court fees.

“Most people in this area just pay their ticket and move on,” Hayes said, “and that’s what the village wants them to do.”

Many Ferrelview residents have expressed concern with Clayton’s alleged misuse of power, but the bigger issue might be the sheer amount of tickets being filed in Ferrelview Municipal Court. The police department for a village of 451 people filed over 400 tickets in 2015.

A Missouri state statute commonly known as Macks Creek Law went into place in 1995 and sought to govern revenue collected from traffic fines and court fees. Although recently replaced by Senate Bill 5, the laws serve to keep municipalities from funding services through the issuance of tickets to citizens.

However, options to hold the municipality accountable for a violation have often been difficult for citizens to access.

The controversy began with the wording of Macks Creek Law, which originally limited the amount of money collected from traffic fines to 45 percent of the city’s general operating revenue. In 2014, that number decreased to 35 percent and then dropped to 30 percent in 2015.

Senate Bill 5 lowers the number to 20 percent, starting with the 2016 fiscal year for Missouri municipalities.

Data from Better Together, a non-profit, community research group, shows that if the 20 percent cap on traffic tickets had been in place in 2014, the Missouri Department of Revenue could have collected $7.6 million in excess revenue from municipalities. 

An investigation of Ferrelview’s financial records indicates the village came close to violating the existing state statute in 2014 while breaking a different portion of the law. In 2015, the village was in violation. With the number of traffic tickets filed so far for 2016, Ferrelview would more than double its revenue from fines and court fees this year compared to 2015 — potentially putting the village in gross violation of Senate Bill 5 and its lowered percentage.

However, issues with vague definitions of “general operating revenue” and a lack of oversight have often prevented the statute from being enforced.

Signed into law in August of 2015, Senate Bill 5 sought to put the necessary mechanisms into place to hold municipalities accountable. Missouri Sen. Eric Schmitt, Glendale-R, authored the bill, seeking to close Macks Creek’s loopholes, provide a better reporting system and lower the allowable percentage collected from fines and fees to 20 percent.

Municipalities annually submit a financial report to the Missouri State Auditor’s Office, which would include money collected from traffic fines. However, The Citizen learned in interviews with various state agencies that no one actually checked those numbers to verify accuracy or verify compliance with Macks Creek Law.

“The previous version of the law (active in 2014) did not have a clear enforcement mechanism,” director of communications for the state auditor’s office Gena Terlizzi wrote in an email to The Citizen, suggesting that Missouri legislators were to blame for the law’s lack of oversight.

Obtaining a definitive answer for how a municipality would have been found in violation of Macks Creek Law proved difficult.

The only viable option would appear to be for the state auditor’s office to conduct a full audit of municipality’s finances, which would necessitate action from citizens. Nine-year Ferrelview resident Theresa Wilson recently started a petition for an audit of the village. She has already collected 54 of the necessary 64 signatures, although the Platte County Board of Elections would have to verify the names once she reaches the necessary number before advancing the petition to the state.

In a previous interview with The Citizen, Wilson claimed that the state auditor’s office representative she spoke with noticed “multiple red flags” in Ferrelview’s financial reports. However, that representative was unable to confirm his concerns to The Citizen for confidentiality reasons.

Although Wilson’s petition seeks information unrelated to traffic fines, the full audit could turn up bad news for Ferrelview.

Many municipalities submitted external audits to the state in lieu of a financial report prior to Senate Bill 5. However, Ferrelview filled out the state form in 2014, and a review of that document turns up an obvious discrepancy.

Prepared by village treasurer Dora Morgan, lines on the form for sections “fines and court costs from traffic violations” and “general operating revenue” were left blank. That also left the percentage of revenue collected as zero, making the submitted information incomplete.

Since Ferrelview failed to submit the “accurate and timely information” mandated by the law, the village could have suffered “an immediate loss of jurisdiction of the municipal court” — the penalty for failure to comply. That’s before taking into account potential criminal wrongdoing on Morgan’s part if she knowingly filled out a false report.

But that loss of jurisdiction never took effect. In fact, no obvious penalties were enacted.

When asked what could be done about the missing information, Terlizzi recommended contacting the village board about the discrepancy. The board has not responded to multiple requests for comment from The Citizen during the past month.

Calculations based on 2014 financial documents show Ferrelview would have narrowly been in compliance with the 35 percent requirement of Macks Creek Law, by about $700.

In creating Senate Bill 5, Schmitt’s office worked with Better Together to produce a list of communities in Missouri, comparing their operating revenues to their traffic ticket revenues. According to that data, the highest offender of the law for 2014 was Foristell, Mo., a city of 509 near St. Louis. The city reportedly received 83.4 percent of its budget from traffic tickets and court fines.

In addition, 56 municipalities out of the 448 surveyed were potentially above Senate Bill 5’s proposed 20 percent mark in 2014, although the lack of legal standards for how financial reports are filed forced the researchers to use some numbers from 2013.

The 56 municipalities combined to create the $7.6 million figure for excess revenue that under Macks Creek Law would have went back to the municipality’s local school district. Based on the numbers available, the Platte County R-3 and Park Hill school districts could have benefited from nearly $45,000 that year — the majority coming from excessive revenue in Ferrelview — if Senate Bill 5 were in place at the time.

Senate Bill 5 also added another layer of enforcement — an addendum to a municipality’s annual financial report submitted to the state auditor. That addendum would lay out the amount of money collected from traffic tickets and court fines and, once again, that number as a percentage of general operating revenue.

Although accuracy of those figures could not be verified without an audit, the addendum creates an easy check for the department of revenue to determine noncompliance.

Senate Bill 5 also provides stricter punishments for violations. A municipality in violation would not only forfeit jurisdiction of its municipal court, but money from local sales tax and county sales tax shares would be forfeited until excess revenue had been remitted to the state.

Even if a municipality made monetary atonement for noncompliance, the law also orders a mandatory vote for disincorporation, which would require 60 percent in favor to dissolve the municipality.

For the 2015 fiscal year, the number for compliance remains at 30 percent. Ferrelview’s fiscal year ended Dec. 31, 2015, and the village has until Thursday, June 30 to file its financial report and mandated addendum to the state.

As of press time the evening Tuesday, June 28, the document was not listed as “submitted” on the state auditor’s website. Neglecting to present the information in a timely manner can prove impactful — simply failing to turn the documents in on time could enact Senate Bill 5’s penalties, according to the law.

However, working with court documents and budgets requested from the village, The Citizen has already determined the percent that should be listed on Ferrelview’s 2015 addendum: 32 percent. According to documents The Citizen reviewed, that percentage would be the highest among municipal police departments in Platte County.

Weston with a population of 1,703, reported collections of $42,000 in traffic tickets and court fines — only $12,000 more than Ferrelview with a population of about 450.

Weston and Platte City both reported traffic ticket to operating revenue percentages below 5 percent.

The City of Platte Woods (population of 396) reported collections of more than $100,000 in traffic tickets and court fines for 2015 — 26.5 percent of their revenue. However, Platte Woods — split between Interstate 29 in central Platte County — works with a much larger general operating revenue than Ferrelview.

To stay in compliance with Senate Bill 5, the city may lose some revenue from their police department, according to Platte Woods Municipal Court clerk Kimberly Mensch. If the city ends up collecting excess revenue in future years, the plan would be to simply remit the excess to the state in accordance with the law.

“We’ve never had a profitable police department,” Mensch said, arguing that traffic tickets in the city aren’t padding the general budget. “We always take more out than we get back from police revenue.”

Ferrelview employs five police officers, including chief Clayton. The board has not responded to a request to determine how the village would deal with the loss of excess revenues collected, although the money collected over 20 percent would have to go to the department of revenue for the village to remain in compliance.

The amount going to the state for 2016 could be significant.

According to a previous report from The Citizen, Clayton has filed increasingly more tickets during his 11-month tenure. Ferrelview officers filed an average of 36 tickets a month during 2015, while officers filed more than 56 tickets monthly in the first five months of 2016. 

Clayton accounted for an average of 52 tickets per month during that time frame.

Using averages from January to May 2016, Ferrelview’s estimated revenue from traffic fines and court fees for 2016 would be $47,604.60. Using the village’s recently released projected 2016 budget, the village would be receiving 42.5 percent of revenue from traffic tickets and court fees compared to its general operating revenue, more than double the legal limit of 20 percent for 2016.

Despite past violations and the likelihood of nearly doubling its percentage this year, the state auditor’s office has already said they won’t enforce that law.

The Cole County circuit court ruled Senate Bill 5 unconstitutional in May 2016, arguing that the law was an unfunded mandate, pointing out that the law limits essential funding for communities without providing an alternate finance source.

The current litigation with Senate Bill 5 has already taken an impact on how municipalities and state offices interpret the law, says Michelle Gleba, director of communications for the department of revenue. To inform municipalities of non-compliance, the department of revenue sends informal letters to areas that are in violation of the statute. Beginning in February 2016, Gleba said that the department of revenue mailed 248 letters of non-compliance.

However, since the law was ruled unconstitutional by a circuit court, the department of revenue has its hands tied.

“The current litigation puts into question the department (of revenue)’s ability to enforce this provision,” Gleba wrote in an email to The Citizen, although she also pointed out that “the department of revenue will continue to receive and process any excess payments that are submitted.”

The legal battle surrounding Senate Bill 5 is far from over. That leaves a lot of uncertainty for municipalities like Ferrelview, which might be required to pay back excess revenue from 2015 once the appeals process finishes.

“The Missouri Attorney General’s office is looking to take the case to the (Missouri) Supreme Court” Panik said, “and we’re fairly confident that the law will be ruled constitutional.”

In a letter to the editor published in The St. Louis Post-Dispatch in 2015, Schmitt argued that his law is intended to protect citizens from “speed-trap cities.” Other small municipal police forces have disbanded in recent years as the state law ratchets down on the allowable amount of revenue collected from traffic fines and violations.

Incidentally, those cities include Randolph and Mosby, two previous employers of Clayton.

While Macks Creek Law seemingly existed only to encourage willful compliance, Senate Bill 5 offers a more refined system of enforcement that seemingly targets small municipalities operating on money improperly collected from citizens through minor traffic violation fines.

In his letter to the editor, Schmitt contends that speed traps disproportionately affect low-income individuals.

“This abusive system has predominantly hurt the poor, who may not immediately have means to pay the cost of a ticket or fine,” Schmitt wrote in the letter titled ‘Taxpayers Are Not ATMs for Municipalities.’ “(The practice) has damaged the relationship between local citizens and law enforcement.”

For some in Ferrelview, that relationship is seemingly irreparable. After Hayes’ encounter with Clayton, he sought out others in the area who endured similar negative experiences with the police chief.

These instances weren’t hard to find.

A community meeting held earlier this month sought to organize those questioning Clayton’s practices. Attempts to voice frustrations with the police department created contentious Ferrelview Board of Trustees meetings each of the past two months, although members of the board have continued to express support for the embattled police chief.

“I started talking to other people who had gotten tickets, and I was just amazed how many there were,” Hayes said. “There were so many people who had concerns just like me.”

For the Village of Ferrelview, many questions remain unanswered: did the board knowingly violate Macks Creek Law and fail to remit excess revenues to the state? Will there ever be a penalty for non-compliance? Is the village in violation of other state laws if the state does end up conducting an audit?

The village could be forced to pay for a state audit, which might take four to six months to even start after the petition is received, in addition to excess revenues collected for fiscal years 2015 and 2016. How this affects the village’s budget remains to be seen.

Despite the uncertainty, Hayes says he is hopeful that the village and its residents will get what they deserve.

“Eventually, something is going to break,” Hayes says. “Hopefully, it doesn’t have to end in violence.

“All I want is justice for people and the Village of Ferrelview.”