I think the better way would be that such fines are sent straight to a national/federal agency, which in turn disburses the fund across the entire country as needed. That would prevent any corrupt small-town police force from simply fining people to raise money because they may never see any of it themselves.
There should be no incentive for the government to collect fines. We should incentivize fewer crimes and fewer fines, not more.
If you're worried about deflation, then another solution would be to put all the fines collected into a fund that is split up and given directly back to the citizenry every year. But the point is that crime shouldn't fund government as it's a perverse incentive.
It's worth noting that from the federal govt's perspective, destroying money and collecting it are basically the same. As long as the supply of money decreases, they can just print more.
Sending the revenue up the chain only enables graft and corruption at a larger scale, not to mention constitutional issues at the federal level at least.
The only solution I see is to make enforcement absolute and trust that enough people get hit with unreasonable fines that they vote in someone who will end them. The big issue here is selective enforcement keeping the pool of people affected small enough that they can't effectively fight back.
