Episode 15: How to Spend $18,000 to Make $250
The Hidden Incentive Between Courts and Jails
I want to talk about city and town courts — and the way they interact with county jails in a way that creates a serious structural problem.
This is not an attack on municipal courts. I have friends and colleagues who work for town and city governments. Many of them are thoughtful, ethical public servants. The issue I’m describing is not about bad people. It’s about incentives.
We’ve discussed before how costs can cascade downward in government — federal decisions increase state costs, state decisions increase county costs, and so on. But the flow doesn’t always move in one direction. Sometimes decisions at the local level create financial burdens at higher levels of government.
Municipal courts are a good example.
When Towns Choose to Run Courts
Some states do not allow towns and cities to operate their own courts. Others mandate that they do. But in many states, municipalities have the option.
These local courts typically handle misdemeanor crimes, traffic infractions, and ordinance violations.
If you’re an elected official in a town, you might reasonably ask: why would we run our own court system when the county already operates one?
In most jurisdictions, counties must run courts. They don’t get to opt out. So from a purely financial perspective, a town could simply allow the county to handle its cases and avoid the overhead.
On the surface, towns appear to have a disincentive to operate their own courts. Yet many of them do.
Why?
Revenue.
How Municipal Courts Generate Revenue
Local courts generate revenue through fines, fees, and bail.
If someone is arrested and bail is set, the court requires payment for release. If the person fails to return to court, the money is forfeited. Even if they do return, courts often impose fines and administrative fees. Those funds go to the municipality.
There may be other motivations — local control, administrative efficiency — but revenue retention is powerful.
And here’s the key: to maximize revenue, overhead must stay low. One judge. One court day per week. Minimal staff.
By limiting expenses while collecting fines and fees, the court becomes a revenue center.
There’s also a political advantage. Property tax increases are highly visible and unpopular. Court fees are not. Most residents have no idea how much revenue their town generates through its court system.
In effect, municipal courts allow towns to bring in money without explicitly raising taxes.
You could argue that fines, fees, and cash bail function as a form of regressive taxation. That’s a conversation worth having. But even setting that aside, there’s a deeper structural issue.
The Cost of Jail
Municipalities may operate courts. But in most cases, they do not operate jails.
County governments do.
Counties pay for jail construction, maintenance, staffing, medical care, food, transportation — everything. Jails are expensive. In many jurisdictions, incarceration costs exceed $100 per inmate per day. In my jail, it’s closer to $120.
At $100 per day, per inmate, a 1,000-bed jail costs roughly $36.5 million per year.
County officials know this. In my county, I participate in our Justice Reinvestment Advisory Committee, where department heads regularly review jail costs and strategies to reduce them.
Counties have a clear incentive: keep people out of jail when possible, and minimize length of stay when incarceration is necessary.
Municipal courts have a different incentive: generate revenue.
That’s where the conflict emerges.
A $250 Bail, A $3,000 Bill
Imagine someone — let’s call him Homer — is arrested for trespassing in a town.
The town police bring him to the county jail. The town judge sets bail at $250 and schedules the next court date one month out.
The town is implicitly assuming Homer will pay the $250 to get out. If he fails to appear later, the court keeps the bail. If he does appear, the court may impose fines and fees. Either way, the municipality generates revenue.
But what if Homer cannot afford $250? He remains in the county jail for 30 days awaiting his court date. At $100 per day, that’s $3,000 in county expenses — in order to potentially collect $250.
This is not about accusing judges of malicious intent. It’s about recognizing that the incentive structure produces outcomes where bail forfeiture becomes revenue and detention costs are externalized.
And this isn’t only about money. When someone sits in jail for 30 days over $250, they can lose employment, housing stability, access to medication, and community supports. The people least able to afford bail are often already on the margins — homeless, mentally ill, or both.
When their court date arrives, they may fail to appear. That generates a bench warrant. The cycle begins again.
In more extreme cases, I have seen municipal courts hold individuals in county jail for six months pretrial on low-level, non-violent charges because they could not pay $250 in fees. Six months at $100 per day is $18,000.
County taxpayers spend $18,000 while the town attempts to collect $250 from someone who is already destitute.
It would be difficult to design a system that misallocates resources more dramatically.
The Incentive Mismatch
The problem is straightforward:
Municipal courts generate revenue from fines and fees.
Counties absorb the cost of incarceration.
Municipalities are not financially responsible for the jail time their court decisions create.
This is a classic incentive misalignment. Towns pursue revenue while counties bear the expense.
A Simple Structural Fix
There are multiple ways to address this, but one reform stands out because it simply realigns incentives.
Counties could charge municipalities a per diem fee for housing individuals in jail on behalf of municipal courts. If a town had to pay, for example, $30 per day for each person it keeps in the county jail, the financial calculus changes quickly.
Trying to collect a $250 fee while paying $30 per day means that after about a week, most of the potential revenue is gone. After that point, continued detention becomes a financial loss. Municipal courts would still exist. They could still enforce ordinances and impose fines. But they would be incentivized to resolve cases quickly and avoid unnecessary detention.
Nothing in this proposal prevents enforcement. It simply ensures that the level of government creating the jail bill shares responsibility for paying it. Some municipal courts already operate efficiently and collaborate productively with county officials. The issue arises when financial incentives are misaligned. When incentives align, systems stabilize. When they don’t, taxpayers pay more and vulnerable people sit in jail longer than necessary.
And that is not a good outcome for anyone.