Following the Money on Fines and Fees: The Misaligned Fiscal Incentives in Speeding Tickets\

By Aravind Boddupalli and Livia Mucciolo

State and local governments collected $16 billion in fiscal year 2019 from financial penalties imposed on people who had contact with the justice system, according to US Census Bureau data. These penalties included speeding tickets (including those from automated traffic cameras), parking tickets, court-imposed administrative fees, and forfeitures or seizures of property believed by law enforcement officials to be connected to crimes. In total, fines, fees, and forfeitures account for less than 1 percent of total state and local general revenue, but the way they are enforced can create unjust burdens. These financial penalties often disproportionately fall on low-income people of color, particularly Black people (O’Neill, Kennedy, and Harris 2021; Sances and You 2017). In addition, consequences for those unable to pay can be severe (Menendez et al. 2019). Reliance on fines, fees, and forfeitures as a revenue source can also engender conflicts of interest for government officials. For example, states and localities have ramped up speeding ticket enforcement and arrests for various violations in response to budgetary shortfalls and political pressures (Makowsky, Stratmann, and Tabarrok 2019). In this report, we first examine how much states and localities report collecting from fines, fees, and forfeitures, highlighting the states and localities most reliant on them as a revenue source. While the average state and local share of revenue from fines, fees, and forfeitures is relatively small, these shares are larger for some local governments, especially small cities. We then explore how revenue from some fines and fees (we exclude forfeitures from this analysis) are allocated in each of the 50 states, the District of Columbia, and a handful of cities. We specifically focus on speeding tickets as an illustrative example. Overall, we find that in at least 43 states, some portion of speeding ticket revenue is allocated toward a court or law enforcement fund. This finding reveals the potential for conflicts of interest and misaligned fiscal incentives. That is, police officers and judges might levy fines and fees with the intent of funding their respective agencies, as was demonstrated by the 2015 US Department of Justice investigation into Ferguson, Missouri’s police department (US Department of Justice 2015). We additionally find that many states use fines and fees to fund general government services unrelated to cost recovery for the justice system, such as special funds for health care or highway initiatives.

Washington, DC: The Urban Institute, 2022. 39p.