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Business leaders feel the sting of court cuts

By Jan Pudlow, Senior Editor - February 1, 2009 

Startling sound bites fell from the lips of Coral Gables economist Tony Villamil: Civil case delays caused by the court funding crisis are resulting in $17.4 billion lost in Florida economic output each year.

And those civil case delays also “adversely impact” more than 120,000 Florida jobs each year.

Those figures laid the foundation for two panels — business leaders on one, and lawyers and judges on the other — to unite to find a permanent solution to Florida’s court funding crisis.

The event, sponsored by The Florida Bar and the Young Lawyers Division, was billed “Funding Justice: The Summit for Florida’s Courts.” Moderated by Dudley Goodlette, a Florida Bar legislative consultant, the summit was held January 16 at the Bar’s Midyear Meeting in Miami, with a simultaneous Web-cast. 

“There is no question that the judicial branch, what I call the silent branch of government, is critical as a foundation to our economic development. A smooth and efficient court system is essential to be able to increase the standard of living of all of our citizens,” said Villamil, an economist with 30 years of experience and principal advisor to The Washington Economics Group.

With a Power Point presentation of charts and graphs, his analyses of backlogs and delays in civil cases, Villamil said, show “significant impacts on the economic development of Florida.” 

In October 2008, there were more than 335,000 civil cases pending in Florida’s courts. Of this total, about 286,000 were real property/mortgage foreclosure cases. He estimated at the current case disposition rates, it will take almost 18 months for the foreclosure cases currently in the courts to be disposed of.

A conservative estimate of the direct economic impacts of civil case delays, Villamil calculated, are $10.1 billion per year, when you add up $1.2 billion in additional legal and other case-related expenses; $4.6 billion in lost/foregone mortgage interest on foreclosed properties; and $4.3 billion in declines in property values due to case delays. 

He then took that $10.1 billion a year caused by the broken funding mechanism and big backlog in adjudicating cases and “filtered it through the economy in terms of adverse impacts on economic activity.” 

“So, in one year, as a result of backlogged cases, given the multiplier effect of this, throughout the economy and linkages that exist with other industries . . . we are suffering $17.4 billion in lost output,” Villamil concluded.

Next, the panel of business leaders assembled: Barney Bishop, president and CEO of Associated Industries of Florida; Dominic Calabro, president and CEO of Florida TaxWatch; William Large, president of Florida Justice Reform Institute; and Rick McAllister, president and CEO of the Florida Retail Federation.

“The court system is important to the business community, for it’s in our best interest,” said Bishop. 

Bishop made what he called a “simple observation: Keep the money. Let’s face it. The courts generate dollars to fund the judicial branch. The problem is the Legislature steals the money to fill other holes in the budget. It’s a matter of keeping the funding you already generate.”

Having technology to improve court efficiency is important to AIF, Bishop said, adding his frustrations about a seven-year lawsuit AIF was entangled in. But, he said, the Legislature has not been persuaded to spend money on court technology.

“Frankly, the mood in the Legislature and in the last executive branch is that the judiciary had enough funding and doesn’t need more,” said Bishop, adding that some in the Legislature view the judiciary as “activist judges” and “they don’t want you having money because they don’t want you to make decisions.”

Evidence of a “lack of respect” for the judiciary in Tallahassee, he said, can be found in the fact that the entire court budget is seven-tenths of 1 percent of the state budget.

“That doesn’t sound like a lot of respect,” Bishop said.

Large, president of Florida Justice Reform Institute created by the Florida Chamber of Commerce to look at costs within the civil system, said an element of what attracts business to move to a state is how long it takes to dispose of civil cases.

“Because of cuts to the judiciary in Florida, we are seeing Fortune 500 companies moving to Alabama and South Carolina . . .instead of Florida. So it’s also jobs.”

Calabro, of TaxWatch, said, “The challenge is the courts have been treated as state agencies for budget purposes in good or bad times. There is no sympathetic constituency. You guys get that, right?”

The issue of funding for clerks versus funding for courts, Calabro said, is “frankly, the issue at hand.”

“Unlike others, the court system did not develop a sophisticated tap on the funding. Another group you work with has wisely taken the lead in that regard. That is the court clerks,” Calabro said.

McAllister, of FRF, noted that everyone on the panel has met as a coalition to support the court system, and said he was thankful for the summit and access to the research.

“One of the things we have faced over five years . . . is lack of data. I think this will help us substantially as we make your case in the halls of the Legislature in Tallahassee. I commend you for this important first step,” McAllister said.

Drastic effects on access to the courts were detailed when the lawyers and judges panel gathered (Chief Justice Peggy Quince; Justice Charles Canady; 15th Circuit Chief Judge Kathleen Kroll; Merrick “Rick” Gross, immediate past chair of the Business Law Section; and Eugene Pettis, chair of the Bar’s Committee on Judicial Independence).

“I’m looking at a chart here that shows the clerks receive approximately $540 million from court-related sources of fines, fees, and service charges,” said Canady, one of the newest justices on the Florida Supreme Court. 

“Well, that is more than the whole budget for the judicial system. That is a startling fact, and I think a very striking fact that needs to be examined. I believe that a priority as we go forward in this process is to evaluate the proper distribution of revenues from existing filing fees and other court-related sources. Look at some of the numbers before us. It really cries out for reexamination,” Canady said.

Chief Justice Quince added: “One of the important things we have to keep in mind is the money comes in, but the Legislature doesn’t really have any oversight of it. They get what they get at the end of the day. They don’t have, and we cannot get, any clear idea of where that money — all the rest of the money — is being used.”