OCFO Must Improve Reporting on Revenues Generated from Fines, Fees, and Forfeiture

Testimony of Michael Johnson at the FY2024 Performance Oversight Hearing for the Office of Chief Financial Officer

Chairperson McDuffie and members of the Committee on Business and Economic Development, thank you for the opportunity to submit written testimony. My name is Michael Johnson, and I am a Policy Analyst at the DC Fiscal Policy Institute (DCFPI). DCFPI is a nonprofit organization that shapes racially-just tax, budget, and policy decisions by centering Black and brown communities in our research and analysis, community partnerships, and advocacy efforts to advance an antiracist, equitable future.

My testimony focuses on the need for the Office of the Chief Financial Officer (OCFO) to improve reporting on revenues generated from fines, fees, and forfeitures. The lack of detailed public reporting on fine and fee revenue collections, including those who pay them, undermines efforts to make this part of the revenue system more equitable. As DC continues to expand revenue generation from non-tax revenue sources such as fines and fees, the committee and the Council should be intentional in ensuring that these revenue sources are not disproportionately targeting those with low incomes and historically marginalized communities. Improving reporting on existing fines and fees is critical to identifying and monitoring inequities in the collection and imposition of this regressive revenue source and for advancing equitable reform, such as ability-to-pay determinations.

The committee should:

  • Require the OCFO to publish detailed non-tax and special purpose revenue reports biennially, as done with dedicated taxes, which will improve reporting of revenue sources generated through fines and fees; and
  • Work with the OCFO and other agencies to collect, share, and publish fines and fees collections data by demographic characteristics.

Fines and Fees Are Harmful Revenue Generating Mechanisms

Over the prior decade, the District has substantially increased revenues generated from regressive sources such as fines and fees. Currently, the OCFO provides the most comprehensive data about revenue collected from fines and fees in its annual revenue reports. These reports capture fines, fees, and forfeitures that are used for general purposes as well as those that are dedicated for specific purposes, such as court fines used to fund supports for victims of crime.[1],[2]

Fines and fees are a regressive source of revenue for the District. Unlike DC’s progressive income tax structure that levies higher rates on higher levels of income, fines and fees are typically flat and not adjusted for income level. This results in people with lower incomes paying a larger share of their earnings in fees and fines than people with higher incomes, and potentially undermining the precarious financial situation of those with very low incomes. For example, for someone making $30,000 per year, or less than one-third of the median household income, an unexpected traffic fine of $100 can put a household with already extremely limited resources behind on rent, groceries, or utilities. This is particularly true if the person cannot pay in time and sees the fine double after 30 days. Moreover, due to historic and ongoing systemic racism, Black household income in DC is persistently lower than white household income, meaning that Black residents experience outsized financial harm as a result of fines and fees.[3]

Fines and fees disproportionately harm Black residents and residents with low incomes, both in DC and nationally. As DC continues to expand Automated Traffic Enforcement (ATE) cameras, motorists in predominately Black neighborhoods face more frequent ticketing, on average, compared to motorists in other areas of the District.[4] In addition to traffic fines, Black people make up nearly 90 percent of DC’s jail and prison populations, which means the overwhelming majority of court-imposed fines and other criminal legal fees are imposed on Black DC residents. This is consistent with the racially disparate experience of fees and fines in other states and localities across the country. For example, in a 2017 study of more than 9,000 cities, researchers found that those with higher populations of Black residents relied more heavily on revenue from fines and fees. Compared to cities with smaller Black populations, cities with the largest Black populations collected between $12 and $19 more per person in revenue from fines and fees.[5]

Relying on fines and fees for general operating dollars is also ill-advised budgeting practice. Fines and fees are often imposed to reduce socially harmful behaviors, such as dangerous driving. If the fines and fees are an effective solution, revenue generated from the source should decrease over time. When governments rely on fines and fees revenues to fund core services, however, they create perverse incentives to maintain or increase those fees and fines regardless of impact on behavior. For example, when the mayor, DC Council Chair, and Attorney General opposed the 2023 US House of Representatives’ spending bill proposal to block DC’s expansion of ATE cameras, these officials rang the alarm on revenue concerns: without expected ATE revenues, the District would face a nearly $100 million budget deficit in fiscal year 2024 and $1 billion budget gap over the financial plan.[6]

Improve Public Reporting of Fines and Fees

The OCFO’s limited and outdated reporting on revenues collected through fines and fees conceals the Inadequate and inaccessible public information on fees and fines severely hinders residents’ awareness and understanding of how these revenue sources affect DC’s communities and undermines advocates’ efforts to make the system of fees and fines more equitable. To improve public transparency around fines and fees, the committee should:

Require the OCFO to Publish Detailed Non-Tax and Special Purpose Revenue Reports Biennially

The OCFO reports annually on general and special purpose non-tax revenues, including an overview of fines and fees revenues. The OCFO’s current annual reporting on fines and fees revenues is useful, but details regarding many of the District’s fines and fees are incomplete. For example, the annual reports do not have detailed information about the rate structure, purpose, and revenue designation for DC’s fines and fees. Previously, the OCFO published supplemental reports, known as non-tax and special purpose revenue reports, that gave this type of detailed information about each fine and fee levied in the District. Unfortunately, the OCFO is not statutorily required to publish these supplemental reports and has not done so since 2015.

Meanwhile, DC has continued to add more revenue sources from fines and fees since the OCFO published its last supplemental report in 2015. For example, in 2015, the OCFO identified 99 individual fines or fees; by 2019, however, the number of individual fines and fees increased to 153 – an increase of 55 percent.[7] The OCFO should update its 2015 non-tax and special purpose revenue reports. Additionally, the Committee should ensure that these supplemental fines and fees reports are updated biennially, similar to OCFO reporting of dedicated taxes in the District.

Work with the OCFO and Other Agencies to Collect, Share, and Publish Fines and Fees Collections Data by Demographic Characteristics

Currently, the District is working to reform and reduce inequities within the imposition of fines and fees for DC residents, including through the mayor’s ATE equity task force and the Tax Revision Commission. As discussed, there are data to demonstrate that fines and fees result in racially disparate harm that affects Black residents most. However, because existing fines and fees data don’t include a breakdown of how fines and fees are collected across income levels, race and ethnicity, gender, disability status, or other characteristics, stakeholders lack an understanding of the full impact of fines and fees on specific populations in DC. Without these demographic data, it is challenging for advocates to advance meaningful and equitable reform, such as ability-to-pay determinations for traffic, court, and other fines.

The committee should work with the OCFO, and other agencies responsible for levying and collecting fines and fees, to increase inter-agency coordination, data collection, and data sharing aimed at ensuring the OCFO is equipped to publish demographic information about the DC residents paying fines and fees.

To support the OCFO, the committee could conduct a systemic review of agencies’ existing data collection practices and data sharing agreements to better understand what demographic information is already collected, where and how those data are shared, and where data sharing connections across agencies can be improved. Where gaps exist in collection and sharing of demographic characteristics, the committee and OCFO could work with agencies to identify common reporting metrics or to create data sharing agreements.

Alternatively, the committee could explore creating a new inter-agency task force focused on improving fines and fees reporting. Some questions the task force could consider include: How often do DC residents fail to pay traffic or other related fines because of an inability to pay? How often do DC residents forgo living expenses to pay for fines or fees? What share of fines and fees are collected from historically marginalized populations? These, and other questions, could help stakeholders better understand the impact of fines and fees on communities throughout DC. Moreover, answering these questions will equip the Council, committee, and advocates to offer more effective and equitable fines and fees reforms.

[1] DCFPI analysis of non-tax and special purpose revenue collections, 2010-2019. Dollars represented in 2024 dollars.

[2] Ibid. Figures exclude non-tax revenues generated from business and non-business licensing.

[3] Caitlin C. Schnur and Erica Williams, “DC Made Progress on Poverty Thanks to Public Investment in Residents,” DC Fiscal Policy Institute blog, September 15, 2023.

[4] John Harden, “D.C. parking, traffic tickets snowball into financial hardships,” The Washington Post, August 2021.

[5] Michael W. Sances and Hye Young You, “Who Pays for Government? Descriptive Representation and Exploitative Revenue Sources,” The University of Chicago Press Journals, July 2017.

[6] Martin Austermuhle, “House Republicans Advance Bills Targeting D.C. Traffic Cameras, Abortion, Elections, Gun Laws,” DCist, July 2023.

[7] DCFPI Analysis of non-tax revenue sources, 2010-2019. Sources include fines or fees captured as miscellaneous revenue sources but exclude O-type revenues.

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