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April 17th, 2009

States Turn to Unusual Fees to Pad Budgets

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How would you feel if your local government charged you a monthly fee for using the town’s traffic lights? What if you were billed $316 after a fender bender for apparent “accident response fees?”

That what many residents are experiencing across the country as their state and local governments work to fill the gaps in their budgets. Lawmakers feel that increasing, or creating new, fees are less objectionable than raising taxes:

Ohio’s governor has proposed a budget with more than 150 new or increased fees, including a fivefold increase in the cost to renew a livestock license, as well as larger sums to register a car, order a birth certificate or dump trash in a landfill. Other fees take aim at landlords, cigarette sellers and hospitals, to name a few.

Some local governments estimate the new and increased fees could help generate thousands of dollars. And if past research serves as any indication, these types of revenue schemes are likely to increase — even as we speak:

Gary Wagner, a professor of economics at the University of Arkansas at Little Rock, was one author of a study of moving-vehicle and parking tickets in North Carolina, covering a 14-year period. He found a strong correlation between a dip in government revenue and a rise in ticket-writing by the police.

“But there’s a lag time,” Mr. Wagner said. “Typically, it’s about a year after the revenues drop that the police start writing more tickets.”

If you date the start of the downturn to last September, the ticket-writing is just getting under way.

Have you discovered any new, hidden, or added fees that your local government is enforcing?

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HSH.com's daily blog focuses on the latest developments in the mortgage and housing markets. Our mission is to relate how changes in mortgage rates and housing policy, as well as the latest financial news, impacts consumers, homebuyers and industry insiders alike. Our 30-plus years of experience in the mortgage industry gives us an edge as we break down the latest changes in an ever-changing market.

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Tim Manni is the Managing Editor of HSH.com and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

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