Source: MSN Money on Jan 1, 2009

Speeding? You'll pay higher 'taxes'

Watch out, leadfoots: Many strapped cities and towns are trying to fix their budgets by stepping up traffic enforcement.

By Christopher Solomon

MSN Money

Here's a tip for the next time you're barreling down U.S. 425 through northeastern Louisiana: If you see a sign that reads "Baskin Town Limits," slow down. Way down.

Baskin has been expecting you.

Between 2004 and 2006, little Baskin (population about 200) got 87% of its town budget from speeding tickets, the highest percentage of 304 Louisiana municipalities surveyed.

"It is primarily a tool in many communities to raise revenue," Louisiana state Rep. Hollis Downs, who represents two parishes in north-central Louisiana, says of the town's aggressive traffic enforcement -- what others might call speed traps.

Baskin is perhaps the most extreme example confirming what you've long suspected: Tickets are often as much about revenue as safety. And now, as a soured economy or other factors further empty coffers, many are turning to law enforcement to serve as part-time tax collectors -- with guns and badges.

Many states and cities no longer even try to hide that fact.


Making up for lost money

Cities, counties and other government agencies have found that there's lots of money to be made in stepped-up traffic enforcement:




'Welcome to Detroit; here's a ticket'

The complicated -- sometimes comical -- experience of two Michigan police departments shows how sticky the issue can get.

A Detroit News analysis last fall found that metro-area police departments had "drastically increased" the number of tickets issued for moving violations as revenue from the state -- in the throes of multiple economic crises -- had declined markedly.

One department, in Romulus, issued 12,040 tickets in 2007 -- a 136% increase since 2002 -- despite a population of just 25,000, according to the newspaper's analysis. Detroit Metropolitan Airport sits within the city and is accessed by two interstate highways. Romulus unmarked patrol cars regularly ticket drivers exiting to the airport or accelerating away from it.

The city's traffic enforcement effort has grown so aggressive, some say, that a remarkable cat-and-mouse game has sprung up between airport officials and Romulus police.

"We have taken the initiative of alerting our customers," airport spokesman Michael Conway says. How? By handing out warning fliers to drivers and telling airport police to park near the unmarked patrol cars with their lights flashing, to slow motorists.

When the airport installed a temporary electronic radar signs that tells motorists "Your speed is . . ." Romulus police threatened to tow it away, Conway recalls, still chuckling in disbelief.

Romulus police Lt. John Leacher says officers don't have a mandate to fill city coffers. "We've been doing this (emphasis) for the last four years," he says, "and we haven't been doing anything different than we were then."

From July 1 to about mid-November, Romulus had issued tickets for about 10,000 moving violations, according to the airport's police chief, on pace to crush 2007's record.

It's not the welcome mat that the Detroit area should be rolling out, Conway says. "The first message out of town visitors get is, 'Welcome to Detroit; here's a ticket.'"


A new way to tax?

The simple fact is this: Governments have an incentive to write more tickets, says Thomas Garrett, an assistant vice president and economist at the Federal Reserve Bank of St. Louis, and a co-author of a recent study, "Red Ink in the Rearview Mirror: Local Fiscal Conditions and the Issuance of Traffic Tickets" (.pdf file).

Garrett and his co-author, Gary Wagner, studied tickets issued by North Carolina counties over 14 years and found that "significantly more tickets are issued in the year following a decline in revenue."

But in years after revenue increases, there was no corresponding drop in traffic tickets, they wrote. "Our results suggest that tickets are used as a revenue generation tool rather than solely a means to increase public safety."


Why is this happening?

"Over the last couple of decades, state and local governments have pretty much exhausted their tax bases," and now they often have to seek voter approval for increased taxes, Garrett says. There have been occasional voter tax revolts. In short, there are incentives for officials to find other ways to raise money. Tickets are one such source.

As Garrett notes, "There's no voter approval on this revenue source."

Though Josh Barro, a staff economist at the nonpartisan Tax Foundation, doesn't agree that all governments have tapped out their tax bases -- tax burdens can vary widely by state, he says -- he agrees that "there is a political impulse to raise fees instead of taxes."

After all, this is the country that has disliked taxes ever since the Boston Tea Party, Barro points out.


Adding it up

Of course, it's not just the tickets that add up.

Let's say you're an experienced driver in California with a single-car policy and a good driving record, paying average rates statewide for liability, collision and comprehensive insurance coverage. That's about $920 annually. If you were an Allstate customer, you'd get a 20% good-driver discount and pay only $736.

One speeding ticket would bring that to $1,129 annually, Allstate says. Get a second minor ticket and you'd lose your good-driver discount, and your premium would rise again, to $1,479, the company says. After a third ticket, expect to pay $1,631. Over three years you would end up paying about $2,685 more than if you'd kept your nose clean.


Clearly, while tickets indeed can reduce accident rates, they can also increase insurers' profits by raising drivers' premiums. That's one reason insurer Geico, for example, several years ago used to donate radar units to police departments. But a Geico spokeswoman says she believes the company has discontinued that practice, which came under heavy criticism.

Feeling a little beleaguered? Just be glad you're not in Finland. There, speeding tickets are figured based on a formula that figures in both the severity of the offense and the income of the offender. In 2002, a Nokia executive was fined more than $100,000 for driving more than a dozen miles over the speed limit. (The fine was later reduced to closer to $5,000.)

In the United Kingdom, police are now empowered to ticket drivers $90 for any number of "careless driving" infractions, such as tailgating, and can accept payment on the spot -- sparing drivers the inconvenience of going to court to seek justice.


The backlash

As a driver, you have little recourse other than to carefully obey the limits or to fight a ticket in court. Speeding is speeding, no matter the reasoning behind the ticket.

As a taxpayer and voter, though, your options are broader. Legal questions, political pressure and even public outrage have put a damper on some of these programs across the nation:

Downs' bills didn't find a lot of support. The second time around, the committee room was packed with ornery sheriffs and small-town mayors, Downs recalls, who said it crimped their ability to keep their streets safe.

In retrospect, he says now, he might have had better luck with an idea to quash another scheme some small communities have started: annexing portions of freeways on the outskirts of town, then ticketing drivers on that stretch of road. "You come rolling through Washington, La., cruise control never off 78, and they're gonna nail you for $200, $300," he says.

Even so, Garrett, of the St. Louis Federal Reserve, thinks the trend seems likely to continue, unless there's a revolt by drivers who also happen to be voters. But police may also have that one figured out: Another study from 2007 found that out-of-town drivers indeed had a higher chance of getting ticketed than local drivers. The farther away you live, the bigger the fine.

But you knew that, too, didn't you?