In April 2013, when California resident Derick Neal rolled through a red light, it was no surprise that he received a ticket. What did surprise Neal was how much his mistake would cost him. While the base rate for his infraction was $100, he ultimately was on the hook for nearly $500  by the time state assessment fees ($100), county assessment fees ($70), court construction fees ($50), emergency medical-services fees ($20), and more got tacked on.
Neal’s ticket was no isolated incident. Local governments increasingly are using tickets, fines and fees to generate income, rather than to deter crime or enhance public safety. The funds derived from these sources are treated as part of the annual revenue base, and sometimes even built into governments’ budget baselines. This phenomenon, which has been dubbed “taxation by citation,” has troubling implications. While most citizens understand that penalties and fines are key components of effective law enforcement and public-safety protocols, few are likely aware that governments use citations as a means to enact stealth tax increases.
Examples abound of communities generating immense revenues from tickets and other fines. In Colorado , numerous towns generate anywhere from 30 percent to 90 percent of their yearly revenue from tickets and court fees. Similarly, multiple towns in South Carolina  rely on traffic fines for more than 60 percent of their annual budget. Washington, D.C.  collects more than $200 per-capita in annual law-enforcement-related fees and has floated proposals  to increase certain traffic penalties to $1,000.
According to surveys , 90 percent of U.S. mayors are seeking new revenue from sources other than traditional taxes, and 65 percent are looking to increase municipal fees for services. The attractiveness of tickets and fines as revenue generators is underscored by the fact that most people who receive tickets simply pay the fine and move on. Few are motivated enough—or possess the requisite time, patience and resources—to challenge tickets in court. For those who do, the process in many local jurisdictions can be so time-consuming and convoluted  that they simply give up and pay the fine even if they feel they did nothing wrong.
Though traffic tickets have often been suspected of serving revenue purposes, the practice seems to be becoming systemic. In 2006, Nashville  Mayor Bill Purcell worked a 33 percent increase in traffic-ticket revenue into the city’s proposed budget: the revenue boost was intended to help the city spend an extra $60 million on various projects and initiatives. Similarly, a 2011 bill  introduced in the South Carolina Legislature attracted widespread attention for proposing to direct money from certain traffic tickets into the state’s general fund.
Traffic tickets issued by police officers are not the only type of fine that can be used for revenue generation. Red-light and speeding cameras long have been criticized for their revenue-generating functions, and some municipalities have turned to ordinance violations  to gin up more revenue.
Fees for particular government services and operations have gained popularity as well. Many court systems have raised court fees for hearings, and some municipalities have even introduced trash and ambulance fees. The city of Winter Haven, Florida , for example, introduced an accident-response fee, leading to shock among residents when they began receiving $300 bills in the mail weeks after an ambulance was called. And in Northwoods, Missouri , residents were told that they either had to begin paying a $20 trash pickup fee or risk the possibility of layoffs in the city police department.
Some fee-for-service systems can be justified under a beneficiary-pays principle, which holds that the beneficiary of a particular government service should foot the cost. But effective user-fee systems require transparency and clarity about which services are funded by fees. The beneficiary-pays model is undermined when governments start using fees from one service to cross-subsidize another service, rather than simply to recoup direct costs. While many local governments maintain they use fines and fees only for legitimate law-enforcement goals, mounting evidence points to the contrary.
For one, the pace with which localities are issuing tickets suggests that revenue, rather than public safety, is increasingly the true driver of ticketing and fines. In St. Ann, a suburb of St. Louis , the issuance of speeding tickets increased almost threefold in the span of five years—all at a time when the local population was falling. Similarly, New Miami Village, Ohio , with a population of just over 2,000, issued 45,000 tickets in a 15-month span before a judge intervened and ordered a portion of the citation revenue returned to local citizens.
In an article  for the Journal of Law and Economics, economists Thomas Garrett and Gary Wagner analyzed ticketing data from North Carolina countries over a 14-year period, controlling for demographic, economic and law-enforcement factors. They found a statistically significant increase in the number of traffic tickets issued by localities in the year following a decline in local government revenue. In other words, local governments that saw a dip in revenue from traditional sources, such as property taxes, were more likely to respond by increasing the number of tickets they issued.
Additionally, the lack of a public-safety rationale is exposed by tracing where the money from fines and fees goes. When traffic-ticket revenues go to the local police department, it’s possible to argue that they have a nexus with law-enforcement goals. When the money goes to an unrelated government project or to the general fund, any such nexus disappears. As a former St. Louis County police chief quipped , “you’re not supposed to be able to buy chairs for the mayor’s office with traffic-ticket fines.”
Using tickets as a form of stealth taxation also has significant drawbacks in terms of local budgeting policy. Whereas property taxes generally create a stable revenue base—mostly because housing prices generally don’t change rapidly over time—fines and ticketing are notoriously unstable. Further, taxation by citation is tremendously regressive. Because tickets and fees are high-variance, low-probability events, it is difficult to plan for them, and this uncertainty is especially problematic for those with limited resources. At a time when only 37 percent of Americans  say that they have the savings needed to cover a $500 car repair bill, it’s unsurprising that low-income citizens are hit the hardest by large, one-time fines.
Worse still, taxation by citation undermines the ability of citizens to hold public officials accountable for taxing and spending decisions. Traditional tax increases are usually transparent and heavily debated; increases in fines are opaque and clandestine. Most residents are wholly unaware of how much a speeding ticket or a fine for a municipal code violation will cost, as localities rarely post fine and fee schedules online or in other easily accessible formats. Taxation by citation thus allows governments to use revenue from fines to avoid politically sensitive fiscal decisions, such as cutting spending or reforming public-sector pensions.
Given the significant problems posed by taxation by citation, steps should be taken to curtail its further growth. Missouri recently enacted statewide legislation capping how much revenue municipalities could generate from tickets, fines and fees. Under the most recent iteration of the law, municipalities can raise no more than 20 percent of their annual revenue from tickets and fees. The law also caps the maximum dollar amount that cities can charge for minor traffic violations and other infractions.
Another option is to limit the ability of local government to direct revenues derived from fees and fines to their general fund or to cross-subsidize unrelated government services. Beneficiary-pays models may be appropriate for certain government-provided services—such as a monthly fee for local trash pickup—but localities should be transparent about how the collected funds will be used.
Finally, law enforcement should be encouraged to prioritize basic policing over generating revenues. The Dallas police chief recently reassigned  traffic patrols to more pressing issues in the city, which led to traffic-ticket issuances falling from 495,000 in 2007 to fewer than 212,000 in 2013—all without a rise in traffic accidents. “The purpose of traffic enforcement is to improve traffic safety, not to raise revenue,” the chief said.
Residents deserve a voice in the budgeting decisions of their local governments, and the taxation-by-citation trend works to prevent effective citizen oversight. Local governments are supposed to be the most responsive level of government in our federalist system. Until they are honest with their citizens about how they use citations to generate revenue, they will continue to fall far short of that ideal.
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- “nearly $500”: http://cironline.org/reports/california-drives-traffic-fines-fees-earmarked-projects-5223
- “Colorado”: http://www.9news.com/news/investigations/citation-nation-taxation-through-tickets/132597341
- “South Carolina”: http://www.thestate.com/news/local/article14354078.html
- “Washington, D.C.”: http://www.forbes.com/sites/chuckdevore/2016/10/26/police-collected-fines-fees-and-forfeitures-how-does-your-city-rank/#207a140674ce
- “floated proposals”: http://www.currentnewspapers.com/admin/uploadfiles/NW%2002-08-2017.pdf
- “surveys”: http://www.prnewswire.com/news-releases/stealth-taxes-making-americas-mayors-the-bad-guys-134360018.html
- “convoluted”: http://www.thepublicdiscourse.com/2017/01/18093/
- “Nashville”: https://www.thenewspaper.com/news/11/1154.asp
- “bill”: http://www.scstatehouse.gov/sess119_2011-2012/bills/3157.htm
- “ordinance violations”: http://www.forbes.com/sites/instituteforjustice/2016/08/11/los-angeles-county-suspended-thousands-of-drivers-licenses-for-people-too-poor-to-pay-court-fines/#12e65b284503
- “Winter Haven, Florida”: http://www.nytimes.com/2009/04/11/business/11fees.html
- “Northwoods, Missouri”: http://www.stltoday.com/news/local/crime-and-courts/cities-face-tough-choices-if-bill-limiting-ticket-revenue-becomes/article_5e922e15-3a01-5795-87bc-d132992e4576.html
- “St. Louis”: http://www.wsj.com/articles/taxation-by-citation-undermines-trust-between-cops-and-citizens-1438987412
- “New Miami Village, Ohio”: http://www.theblaze.com/news/2017/02/24/regulation-madness-ohio-town-pop-2249-issued-45000-speeding-tickets-then-a-judge-stepped-in/
- “article”: http://www.jstor.org/stable/10.1086/589702?seq=1#page_scan_tab_contents
- “quipped”: http://news.stlpublicradio.org/post/debate-begins-traffic-revenue-limits-missouri-legislature#stream/0
- “37 percent of Americans”: http://blogs.wsj.com/economics/2016/01/06/a-500-car-repair-bill-would-send-most-americans-scrambling/
- “Missouri ”: http://bigstory.ap.org/article/3bc014ab624949849bd36c2b711732a8/nixon-signs-bill-limit-missouri-cities-profit-fines
- “reassigned”: http://www.forbes.com/sites/chuckdevore/2016/10/26/police-collected-fines-fees-and-forfeitures-how-does-your-city-rank/2/#4c09d18e60ce
- “bikeriderlondon”: https://www.shutterstock.com/g/bikeriderlondon