American cities are struggling to pay the bills. Chicago, for one, is facing an $838 million budget deficit. Los Angeles’s budget director predicts an upcoming budget deficit of $200 million to $400 million. Over the next two years, San Francisco expects to be roughly $420 million in the hole. About 600 miles north, the city of Salem, Oregon is more than $16 million short of what it needs.
Twenty-five years ago, Washington was debt-ridden and needed a federal bailout to avoid going broke. By 2017, it was running an annual surplus of more than $100 million, with $2.4 billion in reserves, or roughly triple the District’s deficit in 1995.
Part of the reason behind the reversal in Washington’s fortunes comes from taxes. Few cities levy property, income, and sales taxes together, according to Michael A. Pagano, dean of the College of Urban Planning and Public Affairs at the University of Illinois at Chicago. Washington does. Another part comes courtesy of something else altogether: fines.
Every five years, the US Census collects revenues and expenditures data from every state and local government. The most recent data is for 2017, and it was released in October 2019. The data show how much money every municipality gets from sources like property taxes, tobacco sales taxes and lottery revenue. Among the revenue categories is “Fines and Forfeits,” which is typically money the municipality received from penalties like speeding tickets and parking violations. Quartz analyzed the amount of “fines and forfeits” as a proportion of each municipalities population and found that among cities with over 200,000 people, Washington was an outlier, generating $261 per person in fines and fees. This is more than double New York City, the number two city in fines per person at $118. Not every city reported revenue data for 2017, including large cities like Austin, Texas and Detroit. Prior years data show those cities have had much lower rates of fines.
In Washington’s budget, it reports even higher numbers for “fines and forfeits” than in they do to the US Census. (Sometimes, the numbers differ because of different ways of categorizing revenues.) The city reports collecting $164 million from fines and forfeits in 2018. The city plans to continue to get a large, but shrinking amount of money from fines over the next several years, planning for $148 million in fines as far out as 2023. The city appears to know it should be weaning itself off this revenue source, but it plans to do it very slowly.
Some believe that anticipating future revenue from fines is unconstitutional. The libertarian Institute for Justice (IFJ) is suing the city of Doraville, Georgia over the practice. Specifically, IFJ wants Doraville to stop predicting future revenue it expects to earn from fines. This, said IFJ attorney Joshua House, gives police, prosecutors, and the municipal court system “responsibility for providing income for the city or else the city goes bankrupt.” Last year, according to local news reports, Doraville’s budget anticipated approximately $2.5 million from fines and forfeitures. By comparison, the neighboring city of Chamblee, which is triple the size of Doraville, budgeted about $2.2 million for fines.
A 2014 audit by the DC inspector general described the District as a sort of “Wild West of traffic enforcement when compared with neighboring jurisdictions and the states,” according to the Washington Post.
“One of the beauties of parking, it’s like the [Internal Revenue Service],” the report quoted an anonymous senior DC official as saying. “If you get a parking ticket, you are guilty until you have proven yourself innocent… And that’s worked well for us.”
But 46% of Washington’s residents are African-American, and as a 2019 study found, cities with larger black populations levy more fines against their residents than do whiter ones.
Of course, raising revenues through fines rather than taxation only works if you can collect the money.
“Because the burden of these penalties falls disproportionately on people who can’t afford to pay, jurisdictions collect far less than expected and waste resources chasing down payments that won’t materialize,” Anne Kim of the Progressive Policy Institute explained in a 2018 op-ed. “In California, increased fines and fees have resulted not in a treasury flush with cash but in $12.3 billion in uncollected court debt as of 2016. A 2014 study of Alabama court costs also found abysmal collection rates—under 10 percent on average—despite countless hours spent by staff pursuing payment.”