April 26, 2018 2017-126
The Governor of California
President pro Tempore of the Senate
Speaker of the Assembly
Sacramento, California 95814
Dear Governor and Legislative Leaders:
As requested by the Joint Legislative Audit Committee, the California State Auditor presents this audit report concerning the funds that the State and local governments receive from the penalties assessed pursuant to specified Government and Penal Code sections (penalties and fees).
This report concludes that California’s current approach to funding state and county programs through penalties and fees from criminal and traffic violations has proven problematic both for the programs that rely on those funds and for drivers who receive costly citations. Specifically, penalties and fees intended to help pay for various programs were added to state law in a piecemeal fashion over time, and the resulting revenue has been inconsistent. Although these penalties and fees generate more than $450 million annually for numerous state funds, the revenue is derived from penalty and fee amounts that do not appear to be based on the needs of the funded programs. Further, the revenue collected from penalties and fees is trending downward, creating challenges for many of the programs that rely on this revenue to provide services. For example, penalty and fee revenues for state funds have decreased by 14 percent to 25 percent over the last three years. Many of these funds rely on penalties for 50 percent or more of their annual revenue.
These penalties and fees also create a financial burden on drivers, particularly low-income individuals who may be unable to pay them. In fact, the cost of certain traffic offenses increase six-fold after the penalties and fees are included. Further, many of the penalties are paying for programs that are not directly related to the traffic offenses for which they are incurred. To address the problematic nature of the current funding approach, the Legislature would need to make public policy decisions about whether and to what extent to fund the programs currently receiving penalty and fee revenue. We provide recommendations of possible approaches to address the concerns we identified.
ELAINE M. HOWLE, CPA