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A local story published this week about Brookside, Alabama, a tiny town that gets half its municipal revenue from fines and fees, grabbed national attention. Brookside uses “policing for profit” that can trap people in a “black hole” of poverty, debt and criminal offenses, sources told the news outlet.
For years, academics, activists, and policymakers have been warning about the harms of predatory fines and fees, particularly since the 2014 shooting death of Black teenager Michael Brown in Ferguson, Missouri. When fines and fees are used to balance a municipal budget, it can set up a perverse set of incentives: it’s good when citizens do things that are wrong.
Perhaps more important, such a regime typically also disproportionately impacts lower-income families, people of color, and those who are generally more vulnerable. And because fines and fees can be compounded over time, especially if the offenders can’t pay, such “black holes” can be found across the country.
Now, a new proposal is attempting to bring some equity and accountability to how municipalities employ fines and fees. The idea, from a group called the Government Finance Officers Association, is simple, yet significant: tie those charges to an offender’s ability to pay.
See: When fines and fees ruin lives
And: Nearly every state uses speeding-ticket fines and fees to fund its justice system
The idea, called “segmented pricing,” can do what fines and fees are designed to do: punish people who’ve broken a law or rule. But it also proposes to do it more fairly. “The essence of segmented pricing is to charge the citizen the price they can afford — no more, no less,” the GFOA writes.
The GFOA’s look at fines and fees is part of a broader examination of all aspects of how local governments raise money. Earlier coverage of that work can be found here.
Importantly, the report doesn’t advocate for fines and fees to be easy to pay. But as research (hereand here and here) has shown, what may seem like a modest charge can be a “financial shock” that devastates poorer Americans, making it harder for those people to afford essentials. If one fee isn’t paid and it compounds, it can condemn people to a life of poverty, keeping them from being able to drive to work, apply for credit or jobs, and so on.
“The ethics of public service commits public officials to treat people fairly and produce good results for the community,” the report notes, rather than creating situations that “can lead to a poverty trap.” Yet “the typical one-size-fits-all structure of fines means that low-income people pay proportionately more. That means the punishment is greater for low-income people. This is not fair.”
What’s more, segmented pricing can bring a better revenue outcome to governments that employ it. “The math is simple,” the report says. “If the government maintains the price for the low-income person at 100% of its one-size-fits-all price, then the government will get $0.” Put another way, if a resident can’t pay a fine, the city can’t collect it.
As with many ideas, the devil here is in the details. The GFOA offers recommendations for governments considering implementing a segmented pricing approach. For example, a pricing structure for a resident might be determined by considering whether they have any existing debt with the local government, and taking into account the median income of their neighborhood and whether they participate in other need-based government programs like Medicaid.
Ultimately, the report concludes, a consideration of segmented pricing represents an “opportunity” for governments and the people they represent.
