Testimony at the Public Hearing on the Clean Hands Certification Equity Amendment Act of 2021

Chairperson McDuffie and members of the Committee, thank you for the opportunity to testify today. My name is Michael Johnson Jr., and I am a State Policy Fellow at the DC Fiscal Policy Institute (DCFPI). DCFPI is a nonprofit organization that shapes racially-just tax, budget, and policy decisions by centering Black and brown communities in our research and analysis, community partnerships, and advocacy efforts to advance an antiracist, equitable future.

I am here today to testify along with our colleagues at Tzedek DC in strong support of the Clean Hands Certification Equity Amendment Act of 2021. DCFPI strongly urges the Council to:

• Adopt the Clean Hands Certification Equity Amendment Act of 2021.
• Require the Office of Tax and Revenue (OTR) to annually collect and publish data on the number and demographics of Certificate of Clean Hands applicants and those who are denied.
• Require the Office of the Chief Financial Officer (OCFO) and OTR to conduct ability to pay assessments for all residents issued fines and fees under the purview of the Clean Hands Law.

The Need to Adopt the Clean Hands Certification Equity Amendment Act of 2021

Since 2001, the Clean Hands law has disproportionately prevented Washingtonians with low incomes from renewing their drivers, occupational, or business licenses due to any fees, fines, or taxes owed to the DC government totaling $100 or more.^[1] This makes DC a national outlier as one of only three states nationwide that deny license renewals to individuals who owe government debt.^[2]

DC also stands out as a national outlier in terms of the revenue collected from regressive sources such as fines, fees, and civil asset forfeitures. A news article from 2020 reported that in 2017, DC collected $261 per resident in revenue from fines and forfeitures – the highest out of any major US city and more than double the next highest city, New York City.^[3] DCFPI’s own analysis of data on non-tax revenue from the OCFO finds that DC generated just over $283 per resident in fiscal year 2019, indicating an increasing reliance on revenue from fines and forfeitures .^[4] (Data for fiscal year (FY) 2020 show a drop to $215 per resident, but that’s likely due to the impact of the pandemic-induced shutdown.) Since these penalties are flat and do not change based on an individual’s earnings, District residents with low incomes are overwhelmingly those who cannot fully pay.

This system of penalizing individuals who cannot afford to pay is also racially inequitable. Looking at traffic and parking debt alone – the vast majority of all debt collected – Tzedek DC’s report on the impact of the Clean Hands law finds that traffic enforcement and the denial of licensure renewals due to unpaid debt overwhelmingly harms Black and brown residents.^[5]

• Despite comprising 43 percent of DC’s population, Black Washingtonians account for over 65 percent of all traffic and parking tickets.^[6]
• Black and brown residents are also overrepresented among those with low incomes, and therefore more likely to have trouble paying these tickets, which increase in cost the longer they go unpaid.
• Black Washingtonians are also disproportionately likely to be arrested for driving without a valid license—18 times more likely than white residents, putting them in the position of paying even greater fines to DC government.^[7]
• And Black and brown residents are also much more likely than white residents to owe debt. While only 9 percent of white residents have a debt in collections, over 43 percent of people of color do.^[8]

DC residents who cannot afford to pay traffic, parking, and other fines are at risk of losing their livelihoods under the status quo. They may lose their employment if they don’t have other reliable and affordable ways of getting to work. Considering that fewer than 10 percent of jobs in DC are accessible via public transit within 45 minutes, driving remains the main mode of transportation and sometimes the only option to maintain and secure employment.^[9] They may have to choose between going into debt to the government or paying for other necessities. And those who cannot afford either option face increased risk of involvement with the criminal legal system.

Require the OTR to Collect and Publish Data on Certificate of Clean Hands Applicants

The lack of public data further masks the inequities of the Clean Hands Law and complicates efforts for reform. From March 2021 to January 2022, of the 46,719 requests for a Certificate of Clean Hands, more than 16,000 were denied due to unpaid debts over $100.^[10] However, the OTR does not include demographic data for those who apply or are denied, the average amount owed, or the number of applicants in years prior. Without collecting and publishing this information, the OTR cannot accurately assess how and to what extent “Clean Hands” exacerbates racial inequities within the District – which underlying traffic enforcement data strongly suggests. While the OTR has stated its intentions to release a report detailing this data in the future, DCFPI strongly urges the OTR to release this report annually and in a timely manner.

Require the OCFO and OTR to Conduct Ability-to-Pay Assessments for All Residents Issued Fines and Fees Under the Clean Hands Law

Evidence from other places shows us that the reforms proposed in the Clean Hands Certification Equity Amendment Act of 2021 and those that I’ve named in my testimony will improve racial and economic equity in DC’s revenue raising without undermining the District’s revenues. For example, in 2013, Minnesota launched a pilot program which reinstated licenses and created payment plans for individuals with unpaid traffic debt based on their ability to pay. A study of this pilot found that these reforms were responsible for collecting a significant amount of unpaid debt which would have otherwise gone uncollected.^[11] Additionally, California and Washington enacted legislation in 2018 that requires the courts and traffic agencies to conduct ability-to-pay assessments for any fines or fees issued.^[12]

Currently the District does not make any attempt to conduct ability-to-pay assessments but does offer payment plans for individuals who demonstrate financial hardship. However, payment plans are only available for debts over $250 and require a down payment of 25 percent of the total debt owed.^[13] In developing its own ability-to-pay system, the District should look to the guidance provided by the Fines and Fees Justice Center which recommends states and localities consider the following for those owing government debt:^[14]

• If they are a current recipient of any needs-based public benefits/assistance;
• Earns less than 100 percent of the Department of Housing and Urban Development’s (HUD) “very low” individual income limit for public housing;
• Experienced homelessness in the previous 12 months; or
• Are currently in custody, sentenced to custody for at least six months, or released from a term of at least six months in jail or prison within the past 12 months;

These are just some of the considerations states and localities should take into account when making ability-to-pay determinations. Additional guidance from the same report recommends agencies presumptively calculate the monthly income of individuals with government issued debt (excluding any child support and Supplemental Security Income) to determine the feasibility of partial payments, rather than paying the full amount. For instance, if an individual earns greater than 100 percent but less than 200 percent of HUD’s “very low” individual income limit for public housing, they would only be responsible for 25 percent of the total fine/fee. Other forms of payment, such as community service, have also been implemented, which DC should also look to for those who cannot afford to pay.

Rather than remain a national outlier, DC has an opportunity to provide meaningful, immediate relief to thousands of residents through the proposed reforms to the Clean Hands Law – particularly for its Black and brown communities. Thank you for the opportunity to testify, I have provided additional information in my written statement and will be happy to answer any questions.