AMERICAN JUDGES ASSOCIATION LAHAINA, HAWAII SEPTEMBER 2008 RICHARD VAN DUIZEND PRINCIPAL COURT MANAGEMENT CONSULTANT NATIONAL CENTER FOR STATE COURTS Court Funding: Lessons From the Last Recession

Questions to Consider How bad were court budget deficits in the last recession? How did budget cutbacks affect judicial services to the public? What are the budget forecasts through 2010? What did we learn from the last recession that might help courts develop strategies be to address this next round of budget shortages?

Where Did Increased State Spending Occur in the 1990s? Source: Donald J. Boyd, Nelson A. Rockefeller Institute of Government Note: This is measured per capita. Figures are adjusted for inflation and population growth

What did the financial picture look like from FY ? 26 states had less revenue than estimated in states expected budget deficits in states exceeded budget spending levels for FY 2003 Most states had budget deficits equivalent to 11 percent of total expenditures Council of State Governments, State Fiscal Crisis: Critical information for State Decision Makers, April 2003

What caused the fiscal crisis in the last recession? Spending Increases Occurred at the Same Time as Tax Cuts Were Enacted How could states cut taxes while increasing spending and still maintain balanced budgets? Sales taxes increased as consumer spending increased State income taxes increased as peoples incomes increased States enacted permanent tax decreases Stock Market losses September 11 Per capita increase in state spending Council of State Governments, State Fiscal Crisis: Critical information for State Decision Makers, April 2003

Adequacy of State Judicial Branch Current Appropriations, As Rated by Court Administrators FY 2001 Note: N = 38.

Adequacy of State Judicial Branch Current Appropriations, As Rated by Court Administrators FY 2003 (Note: N = 32)

92% of These States Took Actions to Curb Spending Because of Funding Restrictions During 2003.

Nearly half of the responding states reported budget restrictions for FY 2003

Virtually every state reported significant public impact from the crisis. Alabama: 475 court positions cut in 2004 California: early release of prisoners47,000 from Los Angeles alone New Hampshire: suspended jury trials for a month Oregon: closed courts to the public on Fridays Minnesota cut funding to crisis centers meaning less help to victims of domestic violence New York: cuts to Rochester Public Interest Laws Office meant 200 people would receive no legal help

WHAT IS IN STORE FOR STATE BUDGETS THROUGH 2010?

12 Source: Pew Center on the States

14 State Courts Systems Face 0 to 10% Budget Reduction in FY NCSC survey of State Court Administrators, May 2008, forty-two states responding

What's Causing State Budget Woes This Time? Bursting of the housing market Sales tax revenues decline Property tax revenues, Local governments will be looking to states for relief Past policies have left states vulnerable Unaffordable past tax reductions Tax cuts being phased in over next few years Structural budget imbalance Use of one-time revenue and budget gimmicks Inadequate rainy-day funds

What Tactics and Strategies Did State Courts Implement Last Time?

State Strategies

Most Frequent Short-Term Actions to Curtail Court Expenses (2003) 1. Hiring delay or freeze (27 states) 2. Permanent layoffs (7) 3. Delay pay raises (10) 4. Reduce training (18) 5. Travel restrictions – out state (24) 6. More use of electronic communications (22) 7. Reduce capital expenditures (28) 8. Cut funding to problem solving courts (10) 9. Enhancement of revenue streams (14) 10. Invest in automation (12)

Things May Be Worse This Time Property taxes, sales taxes and income tax could all be hit Many states filled the budget shortfall last time by raising fees; there is little room left for new increases May need to radically redesign services to continue to provide adequate access to the public

Examples of Service Redesign Court Servicesprioritization, consolidation and elimination of services Process Efficienciescentralize and streamline services Technologyredesign services around IT

State Courts Systems Considering Steps to Adjust Expenditures in FY NCSC survey of State Court Administrators, May 2008, forty-two states responding

What Is NCSC Doing? Templates for re-designing services Survey the depth of the cuts Track solutions Budget Resource Center Toolkit