Fines and fees: Making parking revenue equitable
Dedicating meter revenue to the areas they serve can have unintended consequences.
Happy Finance Friday, readers! In one of my previous newsletters, I wrote that the idea behind any tax is to capture a small portion of a particular economic activity that’s occurring in a state or locality. But fines and fees—an increasingly larger source of revenue for cities—are a different story. They can have unintended consequences that ultimately place a greater burden on those who can least afford it.
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For the next several newsletters I’m going to break down a category of fines or fees, explain the equity issue around it, and give some examples to make that better. The first one is about a problem every city, town and village seems to struggle with no matter how much curb space is actually available: parking. (Hat tip to LSS reader and Louisville Metro Councilmember Ben Reno-Weber, who recently asked me about this.)
Who pays for parking?
Many of you may be wondering what inequities there could be with parking revenue when data show that it’s mainly middle- and higher-income folks who have cars and pay for parking.
Charging for parking isn’t necessarily inequitable. Cities can control the pricing and make street parking lower-cost or free in business zones in lower-income neighborhoods.
Within higher-priced zones, cities can make equity considerations. Austin’s Affordable Parking Program, for example, supports service and entertainment industry workers by providing low-cost evening parking permits.
The problem is not who’s paying. It’s how parking revenue gets divvied up.
Parking districts: To the victor, go the spoils
On the one hand, increased parking congestion around a commercial corridor is a welcome sign because it means that area is attracting more people. But, as NPR’s Jon Geeting once noted, the best-known cure—charging a price for curb parking—is about as unpopular as the affliction.
“People don’t like to pay for what they’re used to getting for free, and the revenue typically doesn’t fund any immediately tangible benefits,” he wrote.
Parking benefit districts were established as a way to make that cost more palatable. The idea is that some or most of the revenue generated by a commercial zone’s parking meters or permits will fund extra public improvements and services in that area.
“The prospect of a dedicated, ongoing local revenue stream for neighborhood projects becomes enticing enough to residents and businesses, and they become a countervailing force in support of parking meters,” Geeting wrote. “Those public improvements in turn attract even more visitors, which generates more parking revenue in a virtuous cycle of redevelopment.”
All well and good except for one thing: In cities with multiple commercial areas, this revenue structure could increase the gap between neighborhood “haves” and the “have nots.”
Without intervention, areas that are up-and-coming or thriving will get more money for streetscaping, public art or other benefits that create an attractive place to live and/or spend an afternoon. Meanwhile, commercial corridors that are dying or struggling (and are nearly always in low-income neighborhoods), will have to take whatever funding the city gives them.
It’s akin to the problems around using property tax revenue to fund public education: Schools in wealthier cities have more money to spend on teachers, infrastructure and programming than those in poorer areas and that gap widens without a state funding policy intervention.
Equitable solutions for parking revenue
To ensure that all neighborhoods and residents can benefit from rising parking revenue, cities need to be proactive when it comes to underserved areas.
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