Fiscal Pressures Threaten Reforms to Court Fines and Fees
States and localities turned to various assessments during past budget crunches. Will this time be different?
States and local governments assess billions of dollars in court fines and fees each year, but their effectiveness—both as a source of revenue and as a crime deterrent—has been repeatedly called into question.
Today, many of the fiscal conditions that in recent decades led to this heavy reliance on fines and fees—federal retrenchment, slowing state tax revenue, and widespread property tax cuts—are reemerging. So far, states have largely steered clear of turning to the courts for additional revenue. Still, with bigger fiscal challenges to come for many jurisdictions, policymakers and advocates are watching closely.
Revenue source shaped by budget pressures
Court fines are monetary sanctions imposed as punishment for a crime or civil violation, while court fees are charges used to cover court services. Both were designed as tools for the criminal justice system, but they have become deeply embedded in state and local systems—often helping to fund operations, law enforcement, and other government services. In 2022, state and local governments raised a total of $13.9 billion from such assessments.
Although these revenues make up a relatively small share of most state budgets, they play a larger role in local government finances. In some, fines and fees account for more than 90% of locally generated revenue.
The reliance on fines and fees is rooted in the fiscal realities facing local governments. Every state restricts the revenue-raising authority of its cities and counties to some degree, limiting their ability to respond to budget pressure and rising public-service costs.
“Counties have essentially no budget flexibility at all,” said Geoff Neill, a senior legislative advocate with Nielsen Merksamer, a California-based law firm that represents local governments.
Over the years, growing fiscal constraints on localities led many to raise fines and fees or create new ones. Beginning in the 1970s and 1980s, a wave of state property tax cuts curtailed one of local governments’ primary revenue sources, prompting jurisdictions to seek alternative ways to fund services. The Great Recession compounded this dynamic; plummeting tax revenues and widespread budget deficits led many states and localities to expand their use of fines and fees.
Federal and state cuts to local government aid from the late 1970s to the years just before the COVID-19 pandemic amplified localities’ fiscal challenges, reinforcing reliance on court assessments and other user charges to fund government operations. In fact, a 2019 analysis found that jurisdictions that incurred steeper state funding cuts in the decade after the Great Recession were often the most fine-reliant. The pandemic brought an unprecedented influx in federal aid to local governments, helping to ease some pressures, but these funds were largely temporary.
Proponents of reform have long pushed states and localities to reduce their reliance on fines and fees, arguing that courts should not function as revenue generators. Momentum for change accelerated after the release of the Department of Justice’s 2015 Ferguson report, which found that the role of the Ferguson Municipal Court in Missouri had been compromised by its focus on revenue generation. Investigators found that the court was using its authority to compel the payment of fines and fees primarily to advance the city’s financial interests, violating the 14th Amendment’s due process and equal protection requirements.
Research also shows that fines and fees can create unequal consequences because the burden falls most heavily on people with the fewest financial resources.
“Because fines and fees are not generally scaled based on income, they tend to disproportionately harm low-income people who are unable to pay,” experts at the Reason Foundation wrote in 2022.
“This is a poverty tax,” said Marleina Ubel, a senior policy analyst at New Jersey Policy Perspective, a think tank that performs independent research on policy issues. “This is something that disproportionately punishes people that don’t have money.”
Although a fine might be a temporary inconvenience for someone with means, it could create lasting hardships for households already struggling to afford necessities. Court debt can become yet another burden in addition to housing, groceries, transportation, and utility payments.
Are fines and fees a viable revenue source?
These dynamics make fines and fees a weak fiscal tool.
“It’s like trying to squeeze blood from a stone,” said Lillian Patil of the Fines and Fees Justice Center, a national research and advocacy organization focused on reforming such practices. “Because people so often can’t afford what is charged, governments end up spending so much time and effort trying to enforce and collect and end up not getting very much out of it.”
A growing body of evidence shows that fines and fees are an unstable, unreliable, and inefficient revenue source for states and localities, yielding limited and declining net returns for the courts. Analyses of Texas and New Mexico found that counties collected an average of 59% of the assessed amounts from 2012 to 2018. In some instances, counties spent more money collecting assessments than was ultimately received, in part, because court hearings, policing resources, and jail expenditures drove costs above the revenue generated. In 19 states, median collection rates fell by 33% from fiscal year 2018 to fiscal 2022 while imposing significant burdens on communities.
Fines and fees also present a paradox similar to that of sin taxes charged on items such as cigarettes and liquor: They are meant both to raise revenue and to deter the penalized behaviors. To the extent that they are effective at doing the latter, the revenue shrinks. Researchers also say that, like sin taxes, fines and fees can be volatile, depending on factors such as enforcement practices or court caseloads and residents’ financial well-being.
Aravind Boddupalli, a senior research associate at the Tax Policy Center, recalled conversations with government officials who expressed frustration with the unpredictability of these revenues.
“The amount of money they get from one year to the next keeps going up and down,” Boddupalli said. “And if that’s an important line item in their budget, they can’t sustainably run their operations.”
A move away from reliance on fines and fees
Since 2017, at least 25 states have repealed some fees, with many also working to expand “ability-to-pay” determinations, reduce penalties for nonpayment, or limit some of the harmful consequences associated with court debt. These reforms have emerged across the political spectrum, reflecting the growing bipartisan concern that fines and fees are expensive for both individuals and governments.
Oklahoma, for example, eliminated six court-related fees in 2025 after a study found that collections costs exceeded revenue generated. And there are ongoing discussions in the state about further reform centered around how much money is assessed, how much is being collected, and how the revenues are ultimately being used.
Governor Kevin Stitt (R) has played a central role in the state’s recent efforts, making changes to fines and fees a key priority and even calling for full elimination of criminal justice fees in his 2025 State of the State Address.
Oklahoma’s 2025 fee-elimination bills followed an interim study that examined criminal justice fees, collection rates, and their effects on individuals and families. Similar reviews are underway in Michigan, Illinois, Washington, and New Mexico.
Reform efforts benefited from the strong fiscal conditions that followed the pandemic. Federal stimulus dollars and record tax revenue growth gave many states more flexibility to absorb the costs of reform.
According to Michael Mitchell of the Center on Budget and Policy Priorities, this was a time when states had “the fiscal space” to pursue reforms that might have been more difficult during periods of budget stress.
But now, the fiscal pressures that contributed to the increased reliance on fines and fees are beginning to reemerge. Tax revenue growth has slowed in many states, and federal policy changes are expected to place additional spending pressures on state and local finances. Meanwhile, some state policymakers have pursued measures to cut—or even eliminate—local property taxes in response to public frustration over rising home values, inflation, and housing affordability.
These trends raise concerns that governments could once again look to fines and fees as a fiscal solution. What’s more, leaders of reform efforts worry that budgetary circumstances could make it more difficult to advance additional changes.
“At the end of the day, this is a question centered around what the state and local relationship between revenue structures ought to be,” said the Tax Policy Center’s Boddupalli. He argued that if states provided local governments with more stable funding sources or broader revenue options, “this could help alleviate local concerns and improve fiscal prudence.”
Despite the constrained fiscal environment, Mitchell, of the Center for Budget and Policy Priorities, noted that momentum has continued, albeit at a slower rate. He worries, however, that if fiscal conditions deteriorate further, states and localities could begin revisiting the very practices they spent the last decade trying to unwind.
Final thoughts
States are continuing to advance efforts to better understand the impact of their fines and fees on courts and community members, as well as state and local budgets. Arkansas and Indiana are among the states conducting comprehensive reviews of their court fines and fees, while Montana, North Dakota, and Utah have also taken up fines and court fees as study topics ahead of their 2027 legislative sessions.
It is unclear what will come next regarding fines and fees as well as state and local budgets more broadly. In fiscal 2026, many state policymakers found themselves navigating delicate balancing acts: how to respond to affordability concerns while managing their own rising costs and preparing for significant federal changes in the years to come.
The fiscal pressures appear poised to increase. Still, advocates remain optimistic that the reform movement can withstand a more challenging budget environment.
“The environment is a little bit different. I think we have changed some hearts and minds,” said Gus Patel-Tupper, a clinical supervisor at the University of California, Berkeley, School of Law’s Policy Advocacy Clinic. “I think that [change] will be durable, even through a disastrous fiscal environment.”
Whether that shift in thinking endures amid rising fiscal pressures remains to be seen. But many policymakers recognize that turning to fines and fees during times of fiscal stress may ultimately exacerbate, rather than solve, the challenges they are trying to address.
Alexandre Fall is a principal associate with The Pew Charitable Trusts’ Fiscal 50 project, and Eshaan Kawlra is a principal associate with Pew’s courts and communities project.
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