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Q&A

When Police Become Tax Collectors

Local governments that rely on criminal justice revenues to balance budgets undermine the relationship between law enforcement and communities.

A woman holds up a protest sign at an event for slain 18-year-old Michael Brown at the Greater Grace Church on Aug. 17, 2014 in Ferguson, Missouri. Brown's shooting led to a Department of Justice investigation that uncovered racial bias in Ferguson around the imposition of fines and fees. (Joe Raedle/Getty Images)

In 2014, following a wave of national protests after police officer Darren Wilson fatally shot 18-year-old Michael Brown in Ferguson, Missouri, the Department of Justice launched an investigation into local police practices. While the original focus was on police misconduct and systemic discrimination, the final report revealed a broader problem within the Ferguson Police Department. Agency efforts were aimed not only at public safety, but also at generating revenue.

More than 10 percent of the city’s general fund revenue was derived from criminal justice fines and fees. Fines often cost 10 times more than in peer cities — one nearby municipality issued a $5 fine for unmowed lawns while in Ferguson the cost ranged from $77 to $102.

Americans may be familiar with the cliche of the interstate-adjacent small town speed trap nabbing commuters and families on road trips, but Ferguson had gone much further than that. The city had essentially transformed its law enforcement officers into local tax collectors. And it wasn’t the only city.

Michael Makowsky, an associate professor of economics at Clemson University, describes this troubling landscape in his recent paper, Revenue-Motivated Law Enforcement: Evidence, Consequences, and Policy Solutions. In 2019, researchers found that more than 580 municipalities received at least 10 percent of their budget from fines, fees, and other court revenues. Eighty municipalities attributed more than half of their budget to criminal justice revenue. This informal tax system perverts the relationship between law enforcement officers and the communities they’re supposed to serve. As a result, researchers have found that trust in police is undermined and fewer crimes are solved. The dynamic also has a racial component: Criminal justice revenues increase with the size of the Black population, but this connection is weakened when Black representatives are elected to local office.

Makowsky discussed this system of criminal justice revenues at a December 2020 roundtable meeting. Arnold Ventures spoke with Makowsky about the topic. The interview was edited for length and readability.

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Arnold Ventures

Can you provide us with a synopsis of what you see as the main point of your paper, with regards to revenue-motivated law enforcement?

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Michael Makowsky

Over the last 50 years, law enforcement has gained the ability to put meaningful revenue into local budgets. These budgets are incredibly tight and have limited flexibility. All kinds of constitutional and political constraints make it difficult to generate traditional tax revenue. But it is easy for police officers to write one extra ticket a week. They can make an extra effort to enforce laws that can lead to the seizure of cash or cars. They can put one more person through a system that, even without convictions, generates revenue through court and jail fees. There's an inch-by-inch, year-by-year, steady increase in pressure from the higher levels of government, whether it's town aldermen, council members, or the mayor.

But then the rub is that — because there's always a catch — you raised X dollars last year, and we need you to raise 10 percent more this year. And that just keeps going in perpetuity. The expectation for self-funding and revenue generation gets a little larger, never so much that it radically changes the life of an individual officer all at once. But then they wake up one day and their entire local criminal justice system has been re-appropriated into a system of regressive taxation.

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Arnold Ventures

So what are the consequences with funding local governments through criminal justice fines and fees and other collections?

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Michael Makowsky

This system means the financial burden is borne by people at the very bottom of the income distribution, people who have the least political influence, and have been the most frequently disenfranchised either explicitly or implicitly.

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Arnold Ventures

Would a sliding-scale fine or a fine based on income — as is often applied in Europe — remedy the concerns you have here?

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Michael Makowsky

Beth Colgan, a professor at the UCLA School of Law, is the scholar who I most associate with means-tested punishments and systems of fines and fees. I think that her ideas are extremely promising because they remove one of the problems, which is that it is fiscally profitable to target the poorest citizens right now. Even though they have less money to pay these fines and fees, they also have the least resources to resist them, to challenge them.

If people become relatively less profitable to generate revenue from because they pay smaller fines and fees, then that weakens the incentive. However, if you used to get $10 per ticket, and now you only get $5, the immediate solution may not be to issue more jaywalking citations to middle-class citizens or start pursuing middle-class drug transactions. You may find it’s easier to just issue two citations to a person instead of one. For every solution, we have to consider the weaknesses and how the criminal justice system and the political actors involved will respond to it.

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Arnold Ventures

Do you see any solutions that don’t have as many loopholes?

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Michael Makowsky

One of the ideas I proposed was redirecting all criminal justice revenue generated at the local level to the state, and then redistributing back to local governments by population, by need, by crime rate and things like that. The reason that can work is because the incentive at the arrest level for the officer in question has been diluted to near zero. So, yes, I could arrest you. I could confiscate your car. I could confiscate the cash you have on you. I could seize that property, and that could generate some revenue. But if that's remanded up to the state and then split in some way across the entire state, the actual dollars that my department or my municipality is likely to get out of that arrest is trivial.

On the other hand, we've created an incentive now for law enforcement across the state to coordinate, and for the actors across different municipalities to try to find a way to generate more revenue via arrests, year to year. The state could end up becoming a source of pressure on local governments across the state to generate more revenue. When we go through these ideas, there's always a way that the system can further adapt to nullify the changes.

I’ve also proposed refunding the revenues from criminal justice at the state level, just bringing it all in, and then refunding it back to the poorest members of that state.

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Arnold Ventures

Why would it make sense to refund those criminal justice revenues to the poorest communities?

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Michael Makowsky

The poorest are the people most affected by crime. They're also the ones who are most frequently interacting with law enforcement. We want them to trust the officers in their community. One way we can achieve that goal is to ensure that every dollar taken from members of that community through the criminal justice system is then immediately returned back to them. When they interact with an officer, they know that that officer is not acting as an agent of the local or state government to fund the public sector off their backs. They are there to help and provide a service, and that is the only thing they're there to do — serve and protect.

The most appealing thing about this rebate system is that criminal justice becomes revenue-neutral for local and state governments. It can never solve any of their budget problems. Money goes in, money goes out, and then the money collected becomes singularly about its original purpose, which is to deter crime.

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Arnold Ventures

Are there other policies that can reduce this incentive to treat the criminal justice system as a revenue source?

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Michael Makowsky

We can just remove the retention of proceeds from seized property absent a conviction. By definition, there’s no crime to deter because no crime has occurred. There's only the perverse incentive of generating revenue through expropriation, which is akin to theft. States like California and Missouri have already banned this practice.

But we also have to expect that if governments lose one source of revenue in the criminal justice system, that need will just be displaced to some other part of the system. How are we going to put guard rails around the entire criminal justice system to keep these incentives from bleeding into the discretionary decisions of individual officers, who are just trying to get through their day safely?

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Arnold Ventures

So where have you seen the most egregious example of revenue-motivated law enforcement?

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Michael Makowsky

The headline event was the death of Michael Brown in Ferguson, Missouri and the resulting protests. The police officer who killed Brown, like a lot of officers, was essentially out there to write jaywalking tickets. He was increasingly viewed in the community as somebody who hassled local black men and women to generate revenue off them from a relatively trivial offense. These were substantial fines, so when they went unpaid, bench warrants were routinely being served. The government was jailing people, disrupting their lives, and extracting significant fines and fees — all in pursuit of essentially supporting the local government. Then these repeated negative interactions culminated in a death.

I'm not saying that that was the source of that one infamous interaction, but this is a process that happens over and over. You end up with a community that views officers not as people there to serve and protect, but as roving bandits that any interaction with is potentially financially devastating for their family.

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Arnold Ventures

How widespread is this kind of dependence on funding from the criminal justice system?

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Michael Makowsky

Hundreds of municipalities across the country are fiscally dependent on criminal justice revenue in excess of 10% of their budgets. In Georgia alone, there are 13 municipalities that get more than half of their budget from fines and fees. These are small towns with relatively low populations. They're able to generate a lot of revenue from out-of-town and out-of-state people — nonvoters.

There are court systems in Phoenix that have been explicitly transformed into revenue generating centers. This slow evolution and erosion of the criminal justice system into a revenue engine makes sense politically because taxes are obviously very difficult to raise.

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Arnold Ventures

Your paper references Missouri’s Senate Bill 5 as a potential solution to overreliance on criminal justice revenues. The 2015 law limits the cost of fines and fees to individuals and restricts how much municipal budgets can rely on criminal justice fines and fees. Is it working?

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Michael Makowsky

The early results are very promising. The Missouri attorney general has reported that the revenue generated by the state's municipal court system fell 44% in the first year. We don't know yet how the criminal justice system in these localities is going to adapt — are they going to find new ways of generating revenue, new sub-populations to target, or different stages of the criminal justice system to generate revenue?

We hope the local governments will be incentivized to make up for their budgetary shortfalls through traditional revenue devices, such as taxes.

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Arnold Ventures

So much of the conversation about criminal justice revenues focuses on the people who have to pay. But does this transformation from law enforcement to revenue collection impact police officers, too?

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Michael Makowsky

Law enforcement officers did not sign up for this, and they aren't reaping any benefits in any deep, meaningful sense. If you're an elected official and can provide public services to middle class voters without raising their taxes, you are going to have benefits heaped on you every electoral cycle. If you're an officer in certain areas, you have to spend your days embedded in a community that's terrified of you. They're already afraid of you because you carry a firearm and you have the capacity to do them tremendous physical harm without facing the same consequences of an ordinary citizen. You're already in a position of power, you're already in a position of intimidation. Now there’s the added responsibility, if not obligation, to generate revenue interaction by interaction with the members of these communities. That is a terrible way to go through every day of your career.

The only one who enjoys this system is the person who knows that voters are rationally ignorant about supporting a system in which their taxes didn't increase. The more light that gets shined on this, the more attention it gets, and the easier it's going to be to unravel.

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