Does Capping Local Government Revenue from Traffic Fines Alter Police Behavior? Evidence from Missouri

• In Event: Equity, Access, and the Distributive Effects of Public Policy

Abstract

Traffic law enforcement is vital for ensuring public safety, but it can also serve as a mechanism for generating local government revenue through fees, fines, and asset forfeitures—a phenomenon known as "taxation by citation." Previous research demonstrates that revenue losses in jurisdictions such as North Carolina and California are followed by increases in traffic citations, raising concerns about predatory policing and its negative societal impacts. Aggressive enforcement for financial gain erodes public trust, disproportionately affects certain racial groups, and diverts resources away from crime-solving efforts. Notably, it has contributed to high-profile incidents and civil unrest, such as the killing of Michael Brown in Ferguson, Missouri.

In response to these concerns, policymakers have called for reforms to reduce municipal reliance on fines and fees. However, there is limited causal evidence regarding the effectiveness of such interventions in altering police behavior. This study addresses this gap by examining a unique reform in Missouri that followed the Ferguson unrest: In 2015, Missouri enacted legislation lowering the cap on municipal traffic fine revenue from 30% to 20%. In particular, it further lowered the cap to 12.5% for municipalities in St. Louis County, because of their alleged "abusive practices" of revenue-driven policing. This policy change creates a quasi-experimental context to explore how financial incentives influence officer conduct.

Using a difference-in-differences approach, this study compares changes in traffic stops, searches, and arrests across municipalities in St. Louis County with those in neighboring counties in St. Louis Metropolitan area (St. Charles, Warren, Jefferson, Lincoln, Franklin) before and after the reform. The analysis leverages disaggregated data by race, providing a nuanced understanding of differential impacts. Preliminary findings indicate that post-reform, St. Louis County municipalities observed 1,325 fewer traffic stops (a 29.5% decrease), 1,059 fewer stops involving White drivers (a 40% decrease), and 111 fewer arrests (a 16.7% decrease), relative to comparison municipalities. While overall search rates and searches rates of white, Hispanic and Asian drivers remained unchanged, the search rate of Black drivers declined by 3.53 percentage points (a 52% decrease).

These results suggest that capping municipal revenue from traffic fines can meaningfully influence police behaviors and mitigate some of the negative consequences of revenue-driven enforcement. The study offers robust evidence to inform ongoing debates about institutional reform, fiscal incentives, and policing practices.

Author

• Weijie Wang, Texas A&M University
  Presenting Author