Municipal Fines and Fees Reporting Act

Identifying When Fines and Fees are Abused to Generate Municipal Revenue

Most municipalities allow law or code enforcement officers to cite residents for various violations that may result in fines. Unfortunately, some municipalities use this enforcement power to generate revenue rather than solely to protect public safety and property. Frequently, this burden falls unequally on lower-income residents.

“Taxation by citation” threatens community trust in local governments, which can have disastrous consequences. Following the 2014 death of Michael Brown in Ferguson, Missouri, the U.S. Department of Justice found the city targeted minorities to raise revenue. This led to general “distrust and resentment” of government that ultimately led to the unrest that caused personal injuries and $5 million in property damage.

Abusing fines and fees for revenue is widespread—a Governing report identified nearly 600 jurisdictions where fines and fees accounted for more than 10% of general-fund revenues. Moreover, it distorts law enforcement priorities and exploits the least fortunate, risking stoking the flames of civil unrest.

The first step in curbing municipal taxation by citation is data. Well-informed state legislators are better equipped to develop the most efficient remedies.

What can state legislators do?

The Institute for Justice offers the Municipal Fines and Fees Reporting Act, a reporting bill that allows municipal and state lawmakers to better understand the use of fines and fees. This model combines the best practices of several states to create a reporting system that gives state legislatures a full picture of municipal fines and fees activity. It also requires each municipality to compile a yearly Municipal Financial Report, which includes the revenues (including fines and fees), expenditures, assets, and debts of all a municipality’s funds and agencies. This information, which is provided to legislators and made publicly available, allows the state to track of municipal fines and fees activity.

The model also gives legislators and the public access to neatly compiled state court information. Under the Act, each court in a state will submit caseload data, which will enable analysis of trends over time in the types of cases, courts and final dispositions that generate revenue.

Model Legislation


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