Background
States charge fees for the use of certain services. These fees are based on the principle that people should pay according to the benefits they receive. State and local governments also levy utility taxes and a variety of user fees, including road tolls and fees for vehicle registration, park admission, and various permits. User fees may have great potential in the infrastructure area as they could be a source of funds for the maintenance and repair of roadways and utility systems.
These fees tend to fall more heavily on people with lower incomes as the fees represent a larger share of their income. In addition, failure to pay some fees can result in severe consequences, creating an extra burden for people with low incomes.
In addition to user fees on services people use, states also charge impact fees on developers of commercial, industrial, or residential real estate projects to defray some of the public infrastructure costs that such projects entail.
Sometimes states choose to raise money by selling off public assets such as parks and open spaces. Such asset sales produce short-term revenue gains but can result in longer-term revenue losses and reduced future public enjoyment of assets.
USER FEES AND ASSET SALES: Policy
User fees
User fees should bear a direct relationship to the services received and should not unfairly burden people with low incomes or unduly limit access to public services.
States should consider requiring commercial developers to bear their fair share of development costs by funding infrastructure improvements, paying impact fees, or contributing to housing construction.
Asset sales
Public assets should not be sold to raise revenue if the sale would sacrifice valuable and efficient capital resources that serve important national and regional purposes or would harm the common interests of present and future generations.