By Anjali Chainani, senior advisor at What Works Cities, and Priya Sarathy Jones, national policy & campaigns director at the Fines & Fees Justice Center

Every day across the country, traffic tickets, court fines and fees, and fees in jails and prisons generate revenue for local governments. In many jurisdictions, fines and fees are viewed as just another source of funds to keep government functioning. But there are large hidden costs associated with some of them. First of all, many fines and fees harm the economic prospects of vulnerable residents, disproportionately impacting people of color in ways that sustain or exacerbate inequality and poverty. It is important to note that fines and fees are different. And while a low-level fine may have some role in our adult systems, the only purpose of a fee is revenue to fund governments.

When faced with more aggressive enforcement measures — such as jail time or loss of a driver’s license for failure to pay court fines and fees — people who cannot afford to pay often resort to dire measures. A survey by Alabama Appleseed Center for Law and Justice of Alabamians with court debt experience found that 83 percent of people had given up necessities like food, car payments, and child support to pay court debt.

Of those surveyed, 38 percent admitted to having committed at least one crime to pay off their court debt. About 20 percent of those whose only previous offenses were traffic violations admitted to committing more serious offenses, including felonies, to pay off their traffic tickets.

Traffic tickets can have a multiplying effect on the financial health of poor drivers unable to pay tickets, one study found.

Enforcement costs burden local governments, making fines and fees an inefficient revenue source. A study of counties in Texas, New Mexico, and Florida found that governments spent more than 40 cents to collect $1 worth of fines or fees. That’s 121 times what it costs the IRS to collect tax revenue. “Even in non-COVID times, the vast majority of fines and fees are not collected,” says Joni Hirsch of the Fines & Fees Justice Center. When residents can’t pay, local governments use resources from court and police systems to support enforcement and collection efforts, resources that would be better spent on genuine public safety concerns.

“Ultimately, the reliance on fines and fees fuels a cycle of perpetual criminal justice and inequitable punishment,”

Hirsch told officials from cities participating in What Works Cities’ City Budgeting for Equity and Recovery program during a recent webinar. It all adds up to what one scholar has called “monetary myopia” — a short-sighted focus on revenue without regard for collateral damage.

But a growing number of local governments are gathering and analyzing data to see the true costs of fines and fees. In dialogue with impacted residents, local officials are designing and implementing data-driven reforms to make revenue sources more equitable, efficient, and sustainable.

What Change Looks Like

Last summer, as part of the Cities and Counties for Fines & Fees Justice initiative, the city of Durham, North Carolina, kicked off a project to reform fees negatively impacting low-income residents. The city followed a four-step change process over the following 12 months, says Erin Parish, a design performance manager in the Office of Performance and Innovation in Durham’s budget department.

1. Team creation: City staff, a city councilmember, and community members all joined the reform effort.
2. Assessment: Departmental and community assessments conducted.
3. Analysis: Reform proposals refined through data analysis and further community/internal stakeholder engagement.
4. Implementation: Policies recommended, pilots and projects implemented.

The department’s assessment process involved looking at the number of fines and fees the city’s transportation department parking division issued and that residents paid in a year, as well as the revenue budgeted and collected for those fines and fees. Parish’s team also assessed the city’s legal mandate for collecting fees. “If we had no legal discretion to change a fee, it wasn’t worth looking at,” Parish says.

Her team also conducted community assessments, surveying Durham residents about which fines and fees were the most difficult to pay. “By far, people said parking tickets were the most difficult to pay,” she says, noting that 80 percent of respondents were people of color.

The team’s data analysis, done in partnership with the parking division, involved four years of parking tickets and 65,000 entries in total. The big takeaway: Unpaid citations and those with late fees were disproportionately issued to residents who live in majority Black or Hispanic areas of the city. And 60 percent of these citations were in areas with low per capita income levels.

“We used this data to specifically guide the reforms that we collaboratively designed with the parking division,” Parish says.

Her team’s reform proposal for the transportation department: Waive late fees for first-time parking citations issued to low-income Durham residents, and create interest-free payment plan options for both city and non-Durham residents unable to pay a citation in full right away. The proposal, which details specific income eligibility requirements, is now being implemented by the parking division.

Durham is one of 10 local governments around the country receiving support from the Fines & Fees Justice Center and its partners to design and implement reforms. Others in this cohort include Seattle/King County, which is currently working to eliminate driver license suspensions for failure to pay court fees or failure to appear in court. City officials also want to make it easier for Seattle residents to be re-licensed. An analysis of license suspension data in a downtown Seattle zip code where 50 percent of residents are people of color found that almost half of driving-age adults have a suspended license.

Data points like this should prompt an important question, says Priya Sarathy Jones of the Fines & Fees Center:

“What is the purpose of these punitive systems?” Cities end up with lots of uncollected debt owed by low-income people whose earning power has been further hurt by an inability to drive to work.

Phoenix, Arizona’s driver’s license reinstatement program models a better approach. In 2016, the city reinstated about 8,000 licenses of drivers who signed up for income-adjusted payment plans and were then able to get higher-paying jobs. The result: an estimated $87 million in additional wages, and about $150 million in boosted GDP value.

Lessons Learned

There are many different fines, fees, and failure-to-pay policies that local governments can consider reforming to reduce racial and economic disparities while creating more efficient (and sustainable) revenue sources. Parking and camera/traffic tickets, jail phone call and commissary fees, booting/towing/storage fees, and court-imposed fees could be in the mix. Beyond those discussed above, reforms could include reducing or eliminating fines and fees, forgiving old or uncollectible debt, and better data tracking to illuminate how much money is spent on collection and enforcement efforts.

Whichever path you explore, consider these key points from local officials who have been in the trenches, prioritizing fines and fees reform:

• A department may be attached to the idea of generating revenue, even if the money doesn’t stay in that department. Getting people comfortable with change often takes relational work — so gather all relevant stakeholders around the table from the beginning.
• Statutory barriers to change may exist. Focus reform efforts on fines and fees the government has clear discretion to change.
• Involve affected residents in the reform process: They can be persuasive spokespeople for change and have innovative ideas for equitable solutions.
• Reform is not a zero-sum process, whereby governments simply lose revenue. Reducing or eliminating fines and fees that hurt vulnerable residents can provide economic benefits.
• Reforms can also support a local government’s fiscal health. For example, by offering residents more affordable payment plans and alternatives to fines and fees, local governments can increase the percentage of fine and fee-related debt they collect — and simultaneously avoid costly collection-related actions by courts, police and sheriff departments, administrators, and third-party agencies. More sustainable and reliable revenue streams can result, even when fines and fees are reduced.

An overarching goal of fines and fees reform work: Build a culture that believes revenue and racial equity aren’t mutually exclusive. As Parish says, looking back at her city’s reform efforts in recent years: “All of this work really builds on itself, creating an organizational culture that values and knows how to make sound financial decisions that further racial equity.”

Build equity into your budget with Tools from What Works Cities.

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Priya Sarathy Jones is national policy & campaigns director at the Fines & Fees Justice Center, a national organization that serves as a hub for the fines and fees reform movement.

Anjali Chainani, the former director of policy for the city of Philadelphia, is a senior advisor at What Works Cities helping to lead the City Budgeting for Equity & Recovery program.