The Systemic Racism of Public Debt Collection in California

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One thing we learned in the wake of the 2014 police killing of Michael Brown in Ferguson, Missouri, is that austerity fuels the systemic racism at the heart of America’s criminal justice system. At the time of Brown’s death, Ferguson’s second-largest revenue source was fines and fees, disproportionately paid by its black residents. Nearby Pine Lawn, Missouri, still imposes a $100 fine on the parents of children caught wearing “saggy pants.”

In the age of tax cuts for the wealthy, local governments nationwide have become more reliant on revenue from traffic tickets, court payments, and other fines and fees, with black, brown, and poor people bearing the brunt of these “hidden taxes.”

Regressive taxation is a key ingredient to racism in the mass incarceration era, and a new California Reinvestment Coalition report adds a wrinkle to this distressing saga. The group of more than 300 organizations advocating for low-income communities and communities of color found similar dynamics when they looked at the public debt collection practices of 17 counties, from rural Colusa County to Los Angeles. 

Court-ordered payments disproportionately harm people of color due to higher rates of economic instability, over-policing of neighborhoods, and higher traffic stop rates—just as they did in Ferguson. In the Bay Area’s Alameda County, the average black family with a juvenile on probation pays more than twice the administrative fees ($3,438) than the average white family ($1,637). An unpaid parking ticket can quickly spiral into thousands of dollars of debt for someone who can’t afford to pay it, sometimes even leading to jail time.

But the report reveals that, at least in California, privatization of the criminal justice system is the reason behind these debilitating fines and fees. Many of the state’s courts contract out fine and fee collection to corporations that take varying rates of commission on delinquent debt. Like other debt collectors, these contactors use unfair, abusive, or deceptive tactics to collect payments. They rake in high commissions, from 12 to 25 percent. 

They often report unpaid debt to credit agencies, harming people’s future access to credit. 

For example, a legally blind black man who simply owed a traffic court fine had his bank account wiped clean by AllianceOne, the debt collection contractor hired by Alameda County.

Yet, unlike Ferguson, debt collection generates little revenue for the local governments studied by the coalition. Private collectors in Los Angeles County bring in nearly $70 million a year, but that’s less than half of a percent of the county’s total revenue. None of the counties generate more than 5 percent of their revenue from fines and fees. This is likely because, unlike Missouri, the state government picks up much of the tab for running local courts.

In other words, California counties are imposing excessive fines and fees on their poorest residents not so much to fund government but to enrich a handful of corporations. (It’s important to note that two corporations, AllianceOne and GC Services, hold a majority of the contracts, and have been sued in other states for worker overtime violations and making unlawful collection calls.)

Of course, when you’re the one paying or being threatened with jail because you can’t afford to pay, it doesn’t matter whether it’s a corporation or the government on the other end of the line. The real culprit is the fiscal austerity starving all levels of government of the revenue needed to fund schools, maintain infrastructure, and provide services to residents. Not only do tax cuts for the wealthy force “hidden taxes” on to everyone else, but they also set the stage for privatization of public functions under the—often false—premise of “cutting costs.”

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