Report: Fine revenue exceeds 50% of general revenue in 42 cities across the country

Eleven cities collected more revenue from fines than from taxes and other general revenue sources, and seven of the 10 most reliant cities are in Louisiana.

Local governments across the country have come to depend on fines and forfeitures to fund their operations, according to a new Reason Foundation report that reviewed audited financial statements from 10,532 cities and counties. Across the 7,441 cities and counties for which fines and forfeitures revenue was identified, local governments reported a combined total of $5.5 billion in fines and forfeitures in fiscal year 2023. This figure reflects only those governments for which relevant line items were identified in audited financial statements and should not be interpreted as a national total.

The report measures fiscal reliance as the ratio of fines and forfeitures to general revenue. This measure reflects how much enforcement revenue a government collects from fines relative to its conventional tax-derived and unrestricted revenue. Because fines and forfeitures are not counted as general revenue under government accounting standards, this ratio can exceed 100% when a government collects more from fines than all of its general revenue combined. By this measure, reliance is concentrated in a relatively small number of jurisdictions, overwhelmingly in the South and South-Central United States, with the densest cluster in Louisiana.

Why measure reliance against general revenue rather than a city’s total budget? General revenue captures the money a government raises to fund its core operations at its own discretion, mainly taxes and unrestricted transfers. It leaves out money tied to self-sustaining operations like water and sewer utilities, which pay for their own services and don’t underwrite general government. Measuring fines against total revenue would let a city hide heavy reliance on enforcement behind a large utility fund. General revenue isolates the discretionary base that cities rely on for general operations.

Across the dataset, 275 local governments in 25 states reported fines and forfeitures exceeding 10% of general revenue (that is,10 cents in fines for every $1 of general revenue). Of those, 42 cities exceeded 50%, and 13 cities reported ratios at or above 100%, meaning fine revenue surpassed their entire general revenue base.

Two Louisiana cities top the list. McNary (291%) and Port Vincent (275%) each generate nearly three times as much in fines and forfeitures than they can collect in general revenue.

Eleven more cities take in more in fines and forfeitures than general revenue: Kilbourne, Louisiana (195%); Gadsden, Tennessee (192%); Turkey Creek, Louisiana (188%); Dodson, Louisiana (172%); Henderson, Louisiana (133%); Poulan, Georgia (131%); Woodworth, Louisiana (115%); Webb, Alabama (113%); Orient, Illinois (110%); Seat Pleasant, Maryland (109%); and Urania, Louisiana (101%).

High reliance is concentrated in a handful of states. Louisiana, Georgia, Tennessee, Illinois, and Oklahoma together account for nearly three-quarters of the cities exceeding the 10% threshold.

Per-capita figures normalize collections across governments of different sizes and offer another way to compare jurisdictions, though they do not by themselves indicate budget reliance. By this measure, 41 cities collected more than $500 per resident in fines and forfeitures, and 15 collected more than $1,000 per resident.

Linndale, Ohio, is the national per-resident leader and the most extreme outlier, at $8,885 per resident—nearly three times the next-highest figure. Linndale reports fines alongside permitting fees, contributing to its outlier status. Robeline, Louisiana ($2,987), Ocean Beach, New York ($2,970), and Georgetown, Louisiana ($2,933) are the only other cities above $2,900 per resident. Louisiana cities account for four of the top 10 by per-resident collections.

No state relies on fines and forfeitures as heavily as Louisiana. Seven of the 10 most reliant cities in the country are in Louisiana, including the two that top the national list. The state alone accounts for 57 of the 238 cities that collect more than 10% of general revenue from fines and forfeitures.

Part of the explanation lies in how Louisiana structures its local courts. In many of the state’s small towns, the mayor personally serves as judge of the municipal court under the state’s mayor’s court system, placing the authority to preside over the town’s court in the hands of the same official responsible for its budget. Henderson, Louisiana, illustrates the result and is profiled as a case study in the report. In fiscal year 2023, the town collected $1.5 million in fines and forfeitures, equal to 133% of its general revenue and roughly $847 for every resident, while bringing in just $9 per resident in property taxes. The Louisiana Judicial College recommends that mayors appoint a separate magistrate once court revenue exceeds 10% of a town’s revenue, but many towns, including Henderson, have declined to do so.

High reliance is far less common among counties than cities. Across the dataset, 8 counties collected more than 20% of general revenue from fines and forfeitures, and 5 exceeded 30%. The most reliant counties are concentrated in Illinois, Georgia, Texas, and South Carolina.

In per-capita terms, county collections are highest in Georgia, Texas, and South Carolina. Taliaferro County, Georgia, leads all counties at $762 per resident, followed by Turner County, Georgia ($515), and Lee County, South Carolina ($484). Note that Lee County, South Carolina, reports revenue from Licenses, Permits, Fines, and Fees jointly. Georgia accounts for five of the top 10 counties by per-resident collections. Turner County is profiled as a case study in the report.

The full report, Taxation by Citation: A 50-State Data and Policy Report on Local Government Fines and Forfeitures, is available here.

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Source: https://reason.org/commentary/fine-revenue-exceeds-50-percent-general-revenue-42-cities/