Imposed Fee and Fine Use by Local Governments

Imposed Fee and Fine Use by Local Governments

A local government’s revenue system needs to treat people fairly to maintain the public’s trust. GFOA’s Code of Ethics requires that finance officers support equitable provision of services and call out unfair discrimination. But some local governments use and rely on revenue from imposed fees and fines that make socioeconomic and racial inequities worse.

Are Your Financial Policies Ethical?

Fines and imposed fees should not be used as revenue raising or cost-recovery tools. Using them this way can worsen problems that governments services are meant to solve.  For example, unpaid fees can hurt a citizen’s credit score, which makes it harder for that person to find housing, get a job, or apply for credit. In another example, studies have found that local governments can end up spending more on collecting court fees than they raise in revenues, given the cost of jail time for nonpayment.

GFOA has released a new research report that provides tools for local government finance officers to use in evaluating their own existing policies, along with guidance and policy templates for drafting new policies. Trust is a government’s most valuable asset, and finance officers play a big role in safeguarding this by promoting transparency and accountability. Finance officers also need to ensure equity and fairness.

GFOA challenges all GFOA members to better understand the implications of misused fees and imposed fines, including their connection to systemic racism, lack of trust in government, and the potential to seriously harm the lives of disadvantaged citizens.

Financial Policies for Imposed Fees, Fines, and Asset Forfeitures

Trust is needed for local government to help communities become better places to live, work, and play over the long term for all citizens.

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Criteria for Charging a Fine

Fines are often effective for dissuading people from undesirable behaviors, like breaking the speed limit while driving a vehicle. However, fines may be ineffective or counterproductive in other circumstances. Here are considerations that might be included in a policy to guide when a fine is or is not appropriate.

1. Is the person who violates the rule being punished in another way besides the fine?

2. Does the fine discourage or prevent access to services that are important for the violator to use?

3. Is there a better way to achieve the intended result?

4. Can the fine be collected for an acceptable cost?

5. Are the fines being fairly enforced?

Guidance for Asset Forfeiture

Just because a government can legally seize someone’s assets doesn’t mean they should. There is precedent for local governments to set higher financial standards for themselves than is provided for in enabling state or federal legislation. Financial policies, in essence, are about local governments creating more well-defined, more stringent, and better rules for themselves than can be found in enabling legislation. Here are examples of guidance that a policy could offer:

1. Assets seized will be held in escrow until a legal judgement is made

2. Define the minimum charges necessary to justify asset seizure

3. Prohibit seizing assets owned by people who are not being charged with any crime

4. The defendant must have counsel (appointed or private) in all forfeiture cases

5. The specific assets seized must have a direct connection to a convicted offense

GFOA Policy Templates

Imposed Fees

With Imposed fees the citizen does not have much, if any, discretion on when to use the service that generates the fee.

Fines

Fines are meant to punish transgressors and deter potential transgressors, not generate revenue..

Asset Forfeitures

Asset forfeitures are when a citizen's private property is confiscated and are used as a deterrent or punishment.

Financial Foundations Framework

Financial Policy Challenge

Are you revising your financial policies? Take the 2020 Financial Policy Challenge and submit your revised policies to GFOA.

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Ethics in Action - City of Austin, TX

The City of Austin recognizes the disproportionate impact that fines like this can have on residents. Learn how the Austin Transportation Department (ATD) simplified the on-street parking experience in the Texas capital.

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Other Research

Reforming Fine and Fee Policies in the Criminal Justice System

Read the report written by Paula R. Worthington that was published by the University of Chicago Harris School of Public Policy and PFM.

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Fines, Fees, Forfeitures and the Emerging Issue of Fairness

Read article by Girard Miller explaining how local governments have come to rely more and more on user charges to fund municipal operations. These charges are being challenged through the lens of equity and social justice, and they warrant a review.

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Fines and Forfeitures and Racial Disparities

Read article by Sarah Calame and Aravind Boddupalli and published by the Tax Policy Center, Urban Institute and Brookings Institution

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Time for Change: A Practical Approach to Rethinking Police Budgeting

Download GFOA's research report to understand how the Financial Foundations Framework can be used to improve police budgeting. The report also provides a set of questions that finance officers can use to start the discussion in your own community.

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GFOA Code of Ethics

GFOA’s recently adopted code of ethics calls on all finance officers to support equity in services provision and commit to calling out unfair discrimination of any kind.

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Trust and Ethics

Trust is an asset as important as any that can be found on our balance sheets.

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GFOA Code of Ethics

At GFOA, we recognize that Black lives matter, that racism unfortunately does still exist, and that we all have a responsibility to confront inequities.

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