Report: Georgia Towns Too Reliant on Fines and Fees as a Revenue Generator



Connecting state and local government leaders

A new study analyzes three towns’ reliance on fines and fees for their annual budget, finding they represent between 14% and 25% of revenues.

Three Georgia towns collected between 14% and 25% of their annual revenues from fines and fees related to traffic and ordinance violations, far higher than the statewide average of 3%, an Institute for Justice study found.

Relying on traffic and code violation fines to generate such a high percentage of a town’s revenue can degrade the level of trust residents have in their local government, the study also found.

Cities’ reliance on fines and fees to generate revenue, and the degree to which the practice sows distrust among residents, came under scrutiny in the wake of unrest in Ferguson, Missouri following the fatal shooting of a black 18-year-old by a white police officer. Nearly 600 jurisdictions nationwide collect more than 10% of their general fund revenues from fines and fees, according to a recent Governing report.

The libertarian Institute for Justice reviewed the practices of three Georgia towns—Morrow, Riverdale and Clarkston—to understand similarities in how fines were assessed. All three towns were ranked in the top ten cities nationally in 2012 in terms of the portion of their annual revenues derived from fines and fees. 

Between 2012 and 2016, Morrow collected 17% of its revenue from fines and fees ($9.4 million), Riverdale collected 14% ($10.7 million), and Clarkston collected 25% ($5.5 million). Approximately $9 million of the fines were collected through the probation system.  

“When the cities are looking to create their budget for the next fiscal year, they are not treating fines and fees revenue as discretionary,” said Dick Carpenter, the director of strategic research at the Institute for Justice. “It creates a perverse financial incentive or structure.”

While the percentage that fines and fees constitute in the full budgets of the towns has decreased over time, they still remain the second largest revenue source after property taxes, the study found. The report concludes that the towns, which are less affluent than the average town in the state, may have relied on fines and fees as a way out of budget crunches following the Great Recession.

The report analyzed the type of violations for which fines were assessed, concluding that many of the citations issued had little to do with protecting public health and safety.

“On average, traffic violations posed only moderate risk, while property code violations were primarily for aesthetics,” the report said.

Robin Gomez, city manager for Clarkston, said the amount of money the town collects in fines and fees has dropped by more than half over the last few years. The town is expected to collect around $500,000 in fines this fiscal year out of a $6.3 million budget.

“There has been a significant change in the city’s enforcement,” he said. “In the last 10 months we’ve focused on issuing verbal and written warnings rather than fines.”

Gomez said he has not seen any evidence that the amount of citations issued in Clarkston has negatively impacted residents’ views of municipal government.

Representatives from the towns of Morrow and Riverside did not respond to requests for comment by deadline.

The Institute for Justice also surveyed 377 residents of the three towns about their level of trust in their local governments. The survey found that those residents who had received citations (about 10% of respondents) were slightly less likely to trust government officials.

“To the extent city leaders use code enforcement for reasons other than public safety, they should consider that they may be harming their communities,” the report said. “What they may gain in revenue, they may lose in trust and cooperation, the very foundations of a healthy community.”

The three towns were found to employ similar practices when it came to assessing fines. All three had their own municipal court systems, which are funded and operated by the towns. The towns also had few, if any, provisions on the books that protect residents from abusive fines and fees. For instance, none of the towns required their municipal courts to provide jury trials when requested by a defendant, or required courts to consider non-jail alternatives to fines and fees, such as community service, educational programs, or school or work attendance.

Georgia state law may contribute to the practice, the report found.

“Not only do the state’s laws do little to discourage reliance on fines and fees for revenue, but they also provide for the structures and mechanisms that allow such behavior to flourish,” the report states. “For example, Georgia law allows municipalities to operate their own courts and outsource fines and fees collections to private companies.”

Cities that generate a large percentage of revenues from fines and fees should evaluate why so much of their budget comes from those revenue sources and ensure fines are being issued to protect public health and safety, and not being used as a cash cow, Carpenter said. Because many of those who were fined are low-income residents, Carpenter said local governments should also consider holding court hearings to assess a person’s ability to pay rather than tacking on additional penalties.

Editor's note: This story was updated after publication to correct the spelling of the town Morrow.

Andrea Noble is a staff correspondent for Route Fifty.

NEXT STORY: Big City Finance Officials See Recession on the Horizon