Appendix
Data Sources, Definitions, and Methodology
A. Census Bureau Annual Survey of State and Local Government Finances
The national and state-level estimates in Part 3 are based on Reason Foundation analysis of data from the Census Bureau's Annual Survey of State and Local Government Finances. The Census Bureau has administered this survey annually since 1957. Every five years, in years ending in 2 and 7, a comprehensive census is conducted in which the Bureau attempts to collect data from all state and local governments in the United States. In intervening years, a sample of approximately 12,000 governments is used. A new sample is selected every five years, in years ending in 4 and 9. The data used in Part 3 are from fiscal year 2022, the most recent census year.
Even in census years, a substantial portion of reported values are imputed rather than directly collected. Where a government fails to respond, the Census Bureau estimates values using data from prior years or from comparable responding governments. The prevalence of imputed values means that figures for individual local governments may not reflect actual reported financial data and should be interpreted cautiously. Aggregated state-level and national figures are less sensitive to individual imputed values and provide a more reliable basis for analysis. For this reason, Part 3 presents analysis at the national and state levels only. Analysis of individual local governments is presented separately in Part 4 using audited financial statements.
Fines and Forfeitures: Census Bureau Definition
The Census Bureau classifies fines and forfeitures under revenue code U30, which falls within the Miscellaneous General Revenue subcategory of its General Revenue classification. The Census Bureau defines fines and forfeitures as revenue from penalties imposed for violations of law, civil penalties such as those for violating court orders, court fees levied upon conviction of a crime or violation, court-ordered restitution to crime victims where the government actually collects the funds, and forfeits of deposits held for performance guarantees or against loss or damage, such as forfeited bail and collateral. This definition excludes penalties relating to tax delinquency, library fines, and the sale of confiscated property.
General Revenue: Census Bureau Definition
The Census Bureau defines general revenue as all revenue except that classified as liquor store, utility, or insurance trust revenue. General revenue comprises four subcategories: taxes, intergovernmental revenue, current charges, and miscellaneous general revenue. Because fines and forfeitures fall within the miscellaneous general revenue subcategory, they are included in both the numerator and denominator of any reliance ratio calculated using the Census Bureau's general revenue figure.
B. Audited Local Government Financial Statements
The local government-level analysis in Part 4 is based on Reason Foundation's collection and analysis of audited financial statements from 8,054 cities and 2,478 counties across all 50 states, covering fiscal year 2023. Financial statements were gathered from official government websites and state transparency portals. Each financial statement was reviewed to identify line items corresponding to fines and forfeitures revenue, including items labeled fines and forfeitures, court fines, fines and fees, and substantively equivalent categories. Positive fines and forfeitures revenue with usable general revenue was identified in 5,859 cities and 1,567 counties. Explicit $0 fines values were reported by 18 cities and 4 counties, and 1 city reported a negative adjustment. General revenue figures were drawn from the statement of activities in each financial statement, consistent with Governmental Accounting Standards Board (GASB) reporting conventions.
Each included financial statement has been reviewed by an independent auditor, making this dataset a more reliable source for identifying the financial practices of specific jurisdictions than survey-based data subject to imputation. However, the dataset does not constitute a complete census of all local governments. Coverage varies across states, and in a small number of states the dataset is too sparse to support reliable conclusions. Readers should interpret the absence of jurisdictions from the map and threshold charts in those states as a reflection of data availability rather than low reliance.
Fines and Forfeitures: Financial Statement Data
Fines and forfeitures figures were identified from line items in each government's financial statements using a consistent set of category labels. Because local governments have some discretion in how they label and organize revenue line items, the financial statement data may capture a somewhat broader or narrower set of revenues than the Census Bureau's definition in any given jurisdiction. For instance, some governments may report court-related fees separately from fines, or may combine fines and forfeitures with other revenues under a broader label such as “fines, forfeitures, licenses, and permits.” Where ambiguity existed, items were included if they were substantively equivalent to the Census Bureau's definition based on the label and context provided in the financial statement. The interactive data table in Part 4 reports the line items scraped from each financial statement in the "Fines Field" column.
General Revenue: GASB Standards
Local governments prepare financial statements in accordance with standards issued by the Governmental Accounting Standards Board. Under GASB Statement No. 34, revenues are classified as either program revenues or general revenues on the statement of activities. Program revenues derive directly from a specific program or from parties outside the reporting government's taxpayers or citizenry as a whole and reduce the net cost of that program to be financed from general revenues. General revenues are all revenues not meeting the definition of program revenues.
GASB Statement No. 34, paragraph 49, explicitly classifies fines and forfeitures as program revenues under the charges for services category, on the grounds that they result from direct charges to those who are otherwise directly affected by a program or service. This means fines and forfeitures are excluded from the general revenues line on the statement of activities even when the funds are deposited into a government's general fund and used to finance core operations.
Because fines are excluded from the GASB-defined general revenues denominator, the reliance ratios presented in Part 4 can exceed 1.0 in jurisdictions where enforcement-generated revenue surpasses the government's conventional tax-derived and unrestricted revenue base. A ratio above 1.0 does not indicate that fines exceed total governmental revenues. It indicates that enforcement revenue is larger than the government's general revenues, which is a meaningful signal of structural fiscal dependence on law enforcement activity.
C. Comparability Between Part 3 (Census Data) and Part 4 (Financial Statement Data)
While both sections use a ratio of fines and forfeitures to general revenue as the primary reliance measure, the two ratios are not perfectly comparable due to differences in how the Census Bureau and GASB define general revenue. The most significant difference is that the Census Bureau's general revenue classification includes all intergovernmental revenues regardless of whether they are restricted to specific programs, while GASB excludes restricted intergovernmental revenues such as operating grants from general revenues. This means GASB-defined general revenues will typically be smaller than Census-defined general revenues for the same government, which contributes to differences in the scale of the reliance ratios across the two sections.
Readers should therefore treat the reliance ratios in Part 3 and Part 4 as reflecting the same underlying concept measured through different but complementary methodologies, rather than as directly equivalent figures. Where figures from the two sections appear to diverge for a given state or jurisdiction, differences in coverage, fiscal year, and definitional conventions should be considered alongside any substantive differences in enforcement revenue reliance.