Search
(Photos by David Kidd)

Addicted to Fines: A Special Report

Hundreds of small cities and towns throughout the country rely significantly on fines to fund their budgets.
by | August 21, 2019 AT 5:00 PM

All throughout the country, select cities and towns generate substantial fines and other court revenues that fund sizable portions of their budgets. Some are known for issuing lots of speeding tickets. Others raise revenues from parking citations, municipal ordinance violations or traffic cameras.

Five years ago, the issue of excessive fines and fees gained national attention following the civil unrest in Ferguson, Mo., and reports that many St. Louis area municipalities prioritized generating revenues from their courts. No reliable national data quantifying fine revenues for individual governments exists, however.

To better understand the extent to which local governments rely on fines, Governing conducted the largest analysis of fine revenues to date, constructing a database from thousands of annual financial audits and reports filed to state agencies. We found that for hundreds of mostly small cities and towns, fines are a critical source of funding, at times accounting for more than half of all general revenues.

Court revenues make up only a small portion of funding for the vast majority of governments. For the cities and towns relying heavily on fines, though, multiple headwinds could pose problems. Mounting legal and political movements are targeting cuts to fines and court fees. The eventual proliferation of autonomous vehicles and improvements in driver technology could further one day drastically reduce traffic fines. For these and other reasons, it’s an open question as to whether the financial viability of governments most dependent on fines could be threatened over the long term.

Continue to magazine story

Summary of Major Findings

Our analysis of financial statements found the following for all cities, towns and counties reporting fines and other court revenues of at least $100,000:

Large Share of General Revenues: Fines and forfeitures account for more than 10 percent of general fund revenues for nearly 600 jurisdictions. In at least 284 of those, the share exceeded 20 percent, the threshold set by Missouri in its post-Ferguson reforms. Another 80 governments reported even higher fines accounting for more than half of general revenues.

High Fines Per Capita: When fine and forfeiture revenues in all governmental funds are considered, more than 720 localities reported annual revenues exceeding $100 for every adult resident, while 363 exceeded $200 per adult.

Top States: A select group of states are home to the majority of localities with relatively high fine revenues, while they're mostly absent elsewhere. We found they're most common in Arkansas, Georgia, Louisiana, New York, Oklahoma and Texas. (See state totals.)

Exceeding State Revenue Caps: Laws in a few states limit revenues that localities generate from fines. But we found some governments still exceeded revenues caps in Georgia and Missouri.

Poorer Cities and Towns: Jurisdictions relying more on fines to fund their budgets have often sustained decades of economic decline, leaving them with weak tax bases. Those where fines and forfeitures accounted for more than 20 percent of general fund revenues recorded a median household income of only $39,594. 

Out-of-Town Revenues: Research suggests police favor local residents when writing traffic tickets. At least 124 jurisdictions we reviewed recorded annual fine revenues exceeding $500 per capita, suggesting out-of-towners are likely funding much of the budgets. 

Fine and Forfeiture Revenue Data

There’s no national standard for fine revenues, and states with revenue limits set varying caps for their local governments. One common metric is fines as a percentage of total general fund revenues, which excludes utility services and other activities unrelated to general operations. Some governments allocate fines outside their general funds, often into separate police or court funds. To account for this, we also consider per capita fine revenues.

The following map shows 840 jurisdictions with relatively high fine or court revenues compared to other localities. Each government met at least one of two criteria: fines and court revenues accounted for more than 10 percent of general revenues, or revenues exceeded $100 per adult resident. Most governments shown met both criteria.

 

Click a marker to view a jurisdiction's financial statement data. View methodology and notes for each state.

Interpreting the Data

Governments report fine revenues differently and, while similar, are not always comparable across jurisdictions. Some include fees and other court expenses, while others do not. Fine revenues shown in the map are listed as they are defined in each government’s financial statement. In some cases, governments may report fine revenue collected but not actually retained by the government. Cities may count portions of fines or fees remitted to state agencies, for instance, without subtracting them out in their financial statements. We attempted to note governments where revenues are likely reported this way, but financial statements generally make no distinction. (See note for each locality.)

It's helpful to consider both the general revenue share and per capita rate when assessing a government's court revenues. Some not relying much on fines recorded relatively high rates of fines per adult resident because of their very small populations, for instance. Also, note that the presented data is not intended to approximate numbers of traffic tickets or other citations issued. In California and other states, most money collected from fines and fees is routed to the state government rather than to the locality, for example. (Read methodology.)

What’s Included

We compiled financial data for cities, towns, counties and other general-purpose governments in every state. Information was recorded from the most recently completed annual financial audit or financial statement filed to state agencies as of this summer, typically FY 2018 or FY 2017. While our data should reflect the vast majority of all governments reporting at least $100,000 in fines that meet our revenue thresholds for reporting, they do not include all governments.

Our primary revenue measure is defined to include fines, punitive fees, other court revenues and forfeitures. The majority of governments simply report “fines” or “fines and forfeitures” line items in their financial statements. Others report line items that appear to be broader, such as “court revenues.” Non-punitive fees and charges for services were excluded.

What’s Not Included

Governments reporting less than $100,000 in fines or other court revenues were excluded from our analysis. Revenue data for some governments was unavailable as their financial statements didn’t report line items for fines or court revenues, or aggregated them with unrelated revenues. A number of additional governments without financial audits posted online did not respond to requests for information, including many in Alabama, Kentucky and Texas. For these reasons, our numbers of governments represent underestimates.

More Information

MORE FROM Finance

How Are Pensions Protected State-by-State?

Over the last century, states have adopted the idea that pensions are a form of deferred compensation and, along with that change, has come certain protections.


Addicted to Fines

Small towns in much of the country are dangerously dependent on punitive fines and fees.


Amid Concerns of a Recession, Pension Plan Returns Fall Short

After two straight years of beating expectations, pension investment earnings have slightly dipped thanks in part to fears of a trade war.


Leaning on the Land

More and more communities are considering reviving an old tax idea that’s been tried in only a few places.


The Long Road to Recovery After Years of Severe Budget Cuts

Eight years of state government atrophy may be coming to an end in Kansas. But it will take a long time, and quite a bit of pain.


Course Correction

Once-popular public golf courses have become a strain on many cities’ budgets. Are municipal greens still up to par?