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Excessive Fines and Fees a Thing of the Past for Local Governments

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State and local governments can no longer impose excessive fees and fines after a Supreme Court ruling on Wednesday, February 20. The unanimous decision reinforces the Eighth Amendment to the United States Constitution that “Excessive bail shall not be required, nor excessive fines imposed, nor cruel and unusual punishments inflicted.” Fees and fines of this sort represent a sizable portion of state and local government budgets, raising the question of how these offices will replace or cope without this sizeable source of revenue.

The Supreme Court’s ruling comes in the wake of several cases in which personal property was seized during an arrest and eventually sold to fund law enforcement agencies or the local government. This process gave local governments a financial incentive to impose higher fees to improve their budget.

Quoted in The Washington Post, Justice Ruth Bader Ginsburg explained the court’s decision: “For good reason, the protection against excessive fines has been a constant shield throughout Anglo-American history: Exorbitant tolls undermine other constitutional liberties [and] fines may be employed in a measure out of accord with the penal goals of retribution and deterrence.”

In the past, state and local governments have issued financial penalties to pay for municipal services in criminal and civil cases. USA Today, citing a report from the American Civil Liberties Union, notes that “100 cities with the highest proportion of revenue from fines and fees in 2012 financed 7 percent to 30 percent of their budgets that way.”

The Chicago Sun Times quotes a study conducted by Harvard University and the National Institute of Justice that states, “10 million people owe more than $50 billion as a result of the fines, fees and forfeitures.” The study also found “60 percent of the 1,400 municipal and county agencies surveyed across the country relied on forfeiture profits as a ‘necessary’ part of their budget.”

The new ruling brings into question how state and local governments will replace this considerable percentage of their budget. One likely outcome of the Supreme Court’s ruling will mean state and local governments must become even more attuned to their accounts receivable balances, taking every measure to ensure the best possible recovery rate.

IC System recommends that these government offices review their current collection procedures to make sure that past-due accounts reach a collection agency in under 90 days of delinquency. Maximizing recoveries on the remaining fees and taxes due to state and local governments will help facilitate a stable budget. For additional best practices and recovery solutions, state and local governments are encouraged to visit IC System’s Government collection services page.

About the Author:

Brian Eggert is a business development specialist and writer for IC System, one of the largest receivables management companies in the United States. With 18 years in the collection industry, Brian's experience includes operations, client service, proposal writing, blogging, content creation, and web development.