Andrew Wimer
Andrew Wimer · April 30, 2020

Arlington, Va.—Cities and towns nationwide use their power to enforce traffic, property code and other ordinances to raise revenue rather than solely to protect the public. Such “taxation by citation” is a perennial problem, but it could worsen in the coming months when many municipalities will find themselves facing budget shortfalls due to the COVID-19 crisis. A new Institute for Justice (IJ) report finds, a wide range of state laws may enable or even encourage this abusive behavior.

During the 2008 recession, many cash-strapped cities and towns saw taxation by citation as the solution to their fiscal woes and ramped up their fines and fees activity accordingly. To the extent they do the same amid the current economic slowdown, ordinary Americans—many of whom may already be struggling with illness or unemployment—will likely pay the price. Some already are: Earlier this month, the Marshall Project reported jurisdictions across the country are continuing to pursue court debt and even issuing new fines during the COVID-19 shutdown.

Released today, IJ’s new report, “Municipal Fines and Fees: A 50-State Survey of State Laws,” is the first comprehensive accounting of state laws relating to municipal fines and fees. It uses 52 legal factors to rank the 50 states according to how likely their laws, as of 2017, are to contribute to taxation by citation. The rankings offer a systematic way to diagnose possible relationships between state laws and municipal behavior—and to identify potential policy solutions.

“Regardless of what municipalities need or what state laws allow, cities should use code enforcement only to protect the public, not to shore up their finances,” said IJ Senior Attorney Bill Maurer, who is lead attorney on several IJ challenges to municipal taxation by citation schemes. “Until municipalities across the country commit to reform, IJ’s new report suggests state policymakers have a crucial role to play in shutting down municipal fines and fees abuse.”

Georgia ranks worst as the state whose laws appear most conducive to municipal taxation by citation. Georgia cities and towns enjoy broad authority to enact codes and enforce them in their own courts, and the state’s laws provide people with few protections against unjust convictions for ordinance violations or the fines, fees and other penalties that may come with them. Consequently, municipalities in Georgia may be more likely than municipalities in other states to pursue fines and fees revenue.

Georgia’s ranking is consistent with a 2017 U.S. Commission on Civil Rights report that found Georgia cities were disproportionately represented in the top 10 of all U.S. cities in fines and fees revenue as a percent of all revenue. Three of those cities were the subject of another IJ study, 2019’s “The Price of Taxation by Citation,” which found heavy reliance on fines and fees revenue puts citizens’ rights and community trust at risk.

Ranking best, North Carolina’s legal environment appears least hospitable to municipal fines and fees abuse, largely because the state does not allow municipalities to operate their own courts. The state also prohibits jailing people or suspending their driver’s licenses when they cannot pay fines and fees unless that failure was willful. As a result, cities and towns in North Carolina may find it more difficult to chase revenue through code enforcement. And, indeed, no North Carolina municipality appeared among the 840 jurisdictions reported by Governing magazine to derive more than 10% of their revenues from fines and fees or to collect more than $100 in fines and fees per adult resident. However, some observers report fines and fees abuse still occurs in the state.

The report’s rankings reflect how likely states’ laws are to contribute to municipal fines and fees abuse relative to other states’ laws, not actual municipal behavior. Municipal courts—the primary purpose of which is to process citations—are a major driver of the rankings. Such courts are present in 28 states. Not only are these courts often susceptible to municipal pressure to convict and impose fines on people, but their presence can also open the door to other provisions and practices that facilitate municipal taxation by citation.

Other key findings from “Municipal Fines and Fees” include:

  • Very few states meaningfully restrain municipalities’ financial incentive to pursue fines and fees. Only two—Kentucky and Missouri—cap municipal fines and fees revenue, and no state with municipal courts requires municipalities to send all court revenue to a neutral, non-municipal fund.
  • In line with U.S. Supreme Court precedent, 35 states have laws barring courts from incarcerating people only because they cannot pay fines and fees. However, a sizable minority—15—fail to provide this or other critical safeguards to help poor people stay out of jail.
  • Few states protect people from driver’s license suspensions for failure to pay fines and fees in traffic cases—one of the harshest means courts can use to try to force payment. Only three states—Hawaii, Nebraska and North Carolina—bar courts from suspending people’s licenses when they cannot pay court debts.

“Our results indicate the laws of too many states give cities and towns ample incentive and means to pursue fines and fees for financial gain,” said Dr. Dick Carpenter, a director of strategic research at IJ and co-author of the report. “Whether municipalities engage in taxation by citation is ultimately a matter of local policy, but state policymakers should take a hard look at how state laws may be contributing to the problem. Our rankings can provide greater insight and may point the way to reforms.”

The Institute for Justice, which litigates property rights cases nationwide, has challenged unconstitutional fines and fees across the country. In February of last year, IJ won a victory before the U.S. Supreme Court, in which the Court held that the Eighth Amendment’s prohibition of excessive fines applies to state governments, not just the federal government. And in 2018, IJ secured a consent decree in Pagedale, Missouri, in which the city agreed to widespread reforms of its unconstitutional ticketing scheme. IJ is currently suing Chicago over its abusive car impound system and Doraville, Georgia, over its use of code enforcement to raise revenue.

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