Sometimes the government does pay out for wrongful imprisonment, but it's always insultingly low numbers, in the range of a couple thousand usd per year. And in many cases prisoners are Monetized with the for-profit prison operator and their vendors collecting exorbitant fees for basic things.
You are a bad cop, and you expose the government to liability. After a few such liabilities, the government makes it clear to your chief that this will affect his (or her) budget.
Your buddy officers, with their pensions threatened, confront you in the locker room.
Or perhaps your department takes out insurance, and the premiums are high and rising. Buddy officers etc. "I'm sorry Binks, but there's no money for CoL this year with this wrongful conviction thing."
I'm just speculating. If the government insists against visiting the negatives on the culprit law enforcement agency, then it's the citizens who suffer instead. But I think that the costs would eventually exert influence on the problem children.