Municipal Fees and Fines Must Be Carefully Distinguished

by Michael Castaldo III

Municipal income is generated mostly from sales and property taxes. Consequently, many municipalities rely on fines and fees to bolster their revenue. Some of the most common fees come from towing and impounding vehicles connected to criminal activity. The ordinances imposing those penalties, though, often invoke court challenges where plaintiffs claim the fees or fines are unconstitutional. If the ordinance creating the fee or fine structure is not narrowly drafted, the challengers could be successful.

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Many such cases involve a Village ordinance imposing a $500 charge to the vehicle owner in addition to the other fees related to the towing and storage of the vehicle and the penalties imposed for the specific wrongdoing. The premise behind these claims is that such administrative fees are unconstitutional, as they are not reasonably related to the recovery of the Village’s administrative costs, thus constituting an unlawful attempt to use police powers to produce revenue. In a recent case in which this argument was made, the City of O’Fallon argued that the administrative fee was actually a fine intended to deter criminal behavior. The trial court dismissed the case, but the plaintiff appealed, arguing that the ordinance provided for a fee, not a fine. That subtle distinction is significant.

The cardinal rule of statutory construction is to ascertain and give effect to the legislature’s intent, and the plain language of the statute is the best indication of that intent. The language of a municipal ordinance is treated similarly. The best indicator of the intent of an ordinance is the plain language used by the municipality in creating an ordinance. Despite this, oftentimes a municipality opts for simple language, which can be beneficial. At other times, though, the intention of the corporate authority might be misconstrued without spelling out the intent in those pesky recitals that many municipal attorneys like to avoid.

Generally speaking, legislation and ordinances do not violate substantive due process if they bear a rational relationship to a legitimate governmental purpose and are neither arbitrary nor discriminatory. However, in Saladrigas v. City of O’Fallon, 2020 IL App (5th) 190466, the Fifth District Appellate Court questioned whether the intent of the ordinance was to impose a fee or a fine before even applying the rational basis test. Fines and fees serve different purposes and are scrutinized under differing constitutional standards. A “fine” is considered a pecuniary punishment payable to the public treasury that is imposed as a part of a sentence on a person convicted of a criminal offense. In contrast, a “fee” is a charge to recoup expenses incurred for providing labor and services. Due process requires that a fine be rationally related to the offense on which the defendant is sentenced, whereas a fee must be in an amount that bears some reasonable relationship to the actual costs that the fee is intended to recoup.

In Saladrigas, the City adopted an ordinance imposing an “administrative fee” to be paid by the vehicle owner, the amount of which varied depending on the severity of the violation. The court noted that despite having specific characteristics suggesting that it was a fine, the ordinance specifically labels it as a fee. Furthermore, the preamble of the ordinance specifically stated that “the administrative fees are based upon the amount of resources expended by the members [of the police department] and designated to help . . . recoup costs associated with processing certain arrests.” The court then reiterates the importance of the municipalitys intent as shown by the plain and ordinary language of the ordinance. If the language of an ordinance is clear and unambiguous, the court must interpret it according to its terms.

A picture containing road, building, outdoor, street Description automatically generated Here, the Appellate Court reversed the circuit court’s finding that the “administrative fee” was actually constitutional. Instead, the case was remanded back to circuit court to make a determination as to whether the amount of the fee was rationally related to the City’s legitimate government interests in recouping costs.

With respect to municipal towing ordinances, the reason why fees can become potentially troublesome is that each instance of towing is unique. If challenged, the municipality would bear the burden of proving the fee amount was reasonably related to the recoupment of expenses for any services provided by the municipality. Alternatively, imposing a fine can also be potentially troublesome absent any additional language setting forth the intent of the fine; for example, to deter certain behavior. Interestingly, the court in Saladrigas specifically noted that its analysis would have been different had the City’s ordinance stated that its intent in imposing the charge was to punish vehicle owners and to deter crime. This serves as a fine example of the importance of clearly crafting ordinance language to effectively match the corporate authorities’ intention. If you have any questions about the effectiveness of your municipal towing ordinance, or any other fee- or fine-based ordinance, contact your attorney to help navigate those complicated waters.