How Much Could Court Closures Supposedly Cost California’s Economy? How About $30 Billion?

Yes, you read that correctly. That’s $30 billion with a b. That’s how much of a hit California’s economy could take if court closures continue according to a Reuters article. The media organization was given a copy of a study commissioned by LA County which predicted the worst possible scenario:

The internal study, commissioned by Los Angeles County and made available to Reuters, posits a worst-case scenario of a 30%-per-year cut to state court budgets through 2013. That would slow economic recovery by trapping $15 billion of unresolved corporate deals and disputed assets in legal limbo, and have additional negative ramifications.

Many lawyers and judges agree that operating at current funding levels over the long term would damage already strained trial courts, slow economic growth and hurt business by raising legal costs and delaying settlements.

Those seeking the services of state courts could wind up facing other serious consequences besides the $30 billion price tag.

Roy Weinstein, an economist who co-authored the study, said, “The number of filings is increasing and the pipeline is getting smaller at the same time you are trying to push more through.” He added: “The value of the (assets) that are going to be stuck is increasing.”

The potential closure of one-third of Los Angeles County courtrooms would stretch the average wait for trial to 4-1/2 years from 16 months, resulting in the loss of $13 billion in legal industry revenue and 155,000 jobs, the study showed.

“There will be a reduced demand for legal services because people are going to realize that lawyers and their firms can’t resolve problems quickly enough,” Mr. Weinstein said.

And has been detailed numerous times on this blog and in other news articles, one of the main issues that will inspire heated debate will be the continued use of $5 billion in bond funding for court construction. On one side you have people who believe that that funding should be used to restore court services and budgets. On the other side you have people who believe that use of that funding will benefit the communities in which the new courthouses are built. We get to see both side argue their positions when the legislature convenes next month to discuss the budget for 2010-2011.

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21 responses to “How Much Could Court Closures Supposedly Cost California’s Economy? How About $30 Billion?

  1. judicial observer

    The Chief Justice has been heard to say that the courthouse construction funds are part of the judicial branch’s economic stimulus and will benefit the local construction trades. In weighing that benefit, this study shows how any impact on contractors, carpenters or cement masons is much less dollarwise than the overall impact in our communities on our justice partners, clerks and local business community when courthouses are required to continue with closures and furloughs.

    Mike Roddy, a former AOC Regional Director, is quoted in the full article that he thinks that this study can be a tool to get the legislature to realize the Judicial Branch needs even more money next year. The legislature knows this, but where is the money going to come from? This is coupled with he Chief’s comment that he is “cautiously optimistic” about next year’s funding of the courts. What planet are they on?

    The Chiefs optimism is based is based upon what? That his personal relationship with the governor and Senator Steinberg is larger than the needs of education, the poor and the infirm in this economy? Does he not even acknowledge this state is facing even greater cuts than last year? Does he think that his status will overcome the questions of his Judicial Council’s continued lack of control of massive expenditures on failed technology with no oversight? Does he not think there will be any issue that he oversees a bureaucracy which continues to give raises and spends like a drunken sailor while denying the citizens their services and forces lower staff persons and judges to cut their salaries? Does he not realize that the legislators them selves took a massive pay cut? Does he not know that the executive branch agencies are furloughing even more more than ours? The legislature is going to give his Branch more money than last year and further cut education, the DMV, CalTrans, Medical, the community colleges, etc.?

    The Chief Justice says “we are not going to let any court go under.” Really? Tell that to San Bernardino court were they have closed their Redlands Courthouse. Tell that to the citizens of Needles and Big Bear where now they only have services one day a week? Tell that to the residents who no longer use the Gridley Courthouse in Butte. Tell that to the residents in Sacramento and Mendocino Counties who have lost the services of their courthouses.

    With all due respect to the Chief Justice, a little reality check is needed. And something concrete to back up his statements would be nice. For someone who seems concerned about his legacy, it is sad that his inability to now lead this branch in a rational manner during times of economic crises will overshadow any accomplishments he may have had in the past. Our trial court system is failing, and it is because of a failure in leadership.

    Happy New Year to all.

    • justinianscode

      Specifics to back up the assertion that no court will be allowed to go under would be nice. So would specifics about how the Judicial Branch will justify getting more money when it means that education, health, etc., then have to make do with even less. But I have never seen any information that actually supports the wisdom of such branch leadership assertions.

      We are told that our criticisms are based on lack of information, but from all the material I’ve read in Mr. Vickrey’s memos, Justice Huffman’s emails, and on courtinfo.ca.gov (and I’ve read a lot of information there including the Judicial Council briefing materials) there is no data to back up these assertions.

      All we get are the assertions, memos that reiterate the assertions, and a press release that points to the memo as justification for the assertions.

    • Judicial Observer

      Very well said.

      At the JC’s October 2009 meeting, the Chief Justice made a similar comment when Judge Edmonds expressed concern about the proposal before the council to spend $160 million of AOC reserve funds on CCMS/Technology projects given the bleak budget forecast. My reaction was similar to yours when the Chief Justice responded by suggested that he was confident things would work out and that Judge Edmonds and others with similar views, just needed to have a little “faith”.

      The AOC has been trying for 3 years to get funding for conservatorship investigations without success. The funds needed for the investigations is a fraction of what the funding the courts would need restored to get them to the current year level of funding. If the legislature will not fund investigation it mandated, why does the Chief think it will come up with $100+ million in funding restoration?

      Every year the AOC budget strategy seems to entirely depend on the the benevolance (or lack thereof) of the governor and the legislature. Last year the AOC’s plan was to lobby for restoration of the $100 million budget reduction from the previous year. Not only was this funding not restored, the governor surprised the AOC with an additional $168 million in cuts.

      Perhaps lobbying for funding restoration is one budget strategy that should be explored, although the likelihood of it being successful is very questionable this year. On a parallel track the AOC should prepare for the worst case scenario and work with the trial courts on strategies to mitigate the impact of anticipated and/or continuing budget reductions.

      These strategies should include all options including suspending funding of CCMS and the use of at least some SB 1407 funds for court operations. Only when everything is on the table can the AOC, JC and courts develop a comprehensive budget strategy.

  2. Nathaniel Woodhull

    Ditto!
    Happy New Year all.

  3. Well said Judicial Observer.

  4. I just wanted to thank all fellow AOC watchers for all their great insights and suggestions on how to improve the California justice system. I am optimistic 2010 will bring positive change to the public we all serve. Thanks again to the AOC Watcher for providing this great forum. Happy New Year everyone !

  5. Here is some news regarding furloughs in the Executive branch.

    http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2010/01/01/MN321BC7TI.DTL

    “When furloughs are implemented to save money, yet their implementation in some agencies saves nothing and increases costs, such a policy is arbitrary, capricious and unlawful,” (Judge) Roesch said.

    Amen.

  6. judicial observer, your post is very logical and just makes good sense.

    The Alliance of California Judges and the California Judges Association should consider lobbying their legislators for the following amendment in public contract code, so they have a better idea of how money is being spent.

    Public Contract Code 10106. For purposes of this part:
    (a) “Department” means any of the following:
    (1) The Department of Water Resources as to any project under the jurisdiction of that department.
    (2) The Department of General Services as to any project under the jurisdiction of that department.
    (3) The Department of Boating and Waterways as to any project under the jurisdiction of that department pursuant to Article 2.5 (commencing with Section 65) of Chapter 2 of Division 1 of the
    Harbors and Navigation Code.
    (4) The Department of Corrections and Rehabilitation with respect to any project under its jurisdiction pursuant to Chapter 11 (commencing with Section 7000) of Title 7 of Part 3 of the Penal
    Code.
    (5) The Military Department as to any project under the jurisdiction of that department.
    (6) The Department of Transportation as to all other projects.
    (b) “Director” means the director of each department as defined herein respectively.

    Amend to add: (7) The Administrative Office of the Courts

    The ACJ and CJA might also consider making requests regardless of the applicability of prevailing law.

    Public Contract Code 10111. Commencing January 1, 2007, the department shall make available a report on contracting activity containing the following information:
    (a) A listing of consulting services contracts that the state has entered into during the previous fiscal year. The listing shall include the following:
    (1) The name and identification number of each contractor.
    (2) The type of bidding entered into, the number of bidders, whether the low bidder was accepted, and if the low bidder was not accepted, an explanation of why another contractor was selected.
    (3) The amount of the contract price.
    (4) Whether the contract was a noncompetitive bid contract, and why the contract was a noncompetitive bid contract.
    (5) Justification for entering into each consulting services contract.
    (6) The purpose of the contract and the potential beneficiaries.
    (7) The date when the initial contract was signed, and the date when the work began and was completed.
    (b) The report shall also include a separate listing of consultant contracts completed during that fiscal year, with the same information specified in subdivision (a).
    (c) The information specified in subdivisions (a) and (b) shall also include a list of any contracts underway during that fiscal year on which any change was made regarding the following:
    (1) The completion date of the contract.
    (2) The amount of money to be received by the contractor, if it exceeds 3 percent of the original contract price.
    (3) The purpose of the contract or duties of the contractor. A brief explanation shall be given if the change in purpose is significant.
    (d) The level of participation, by agency, of disabled veteran business enterprises in statewide contracting and shall include dollar values of contract award for the following categories:
    (1) Construction.
    (2) Architectural, engineering, and other professional services.
    (3) Procurement of materials, supplies, and equipment.
    (4) Information technology procurements.
    Additionally, the report shall include a statistical summary detailing each awarding department’s goal achievement and a statewide total of those goals.
    (e) The level of participation by small business in state contracting including:
    (1) Upon request, an up-to-date list of eligible small business bidders by general procurement and construction contract categories, noting company names and addresses and also noting which small
    businesses also qualify as microbusinesses.
    (2) By general procurement and construction contract categories, statistics comparing the small business and microbusiness contract participation dollars to the total state contract participation
    dollars.
    (3) By awarding department and general procurement and construction categories, statistics comparing the small business and microbusiness contract participation dollars to the total state
    contract participation dollars.
    (4) Any recommendations for changes in statues or state policies to improve opportunities for small businesses and microbusinesses.
    (5) A statistical summary of small businesses and microbusinesses certified for state contracting by the number of employees at the business for each of the following categories: 0-5, 26-50, 51-75, and
    76-100.
    (6) To the extent feasible, beginning in the year 2008, the number of contracts awarded by the department in the categories specified in paragraph (5).
    (7) The number of contracts and dollar amounts awarded annually pursuant to Section 14838.5 of the Government Code to small businesses, microbusinesses, and disabled veteran business
    enterprises.
    (f) The level of participation of business enterprises, by race, ethnicity, and gender of owner, in contracts as identified in Section 2051 of the Government Code, to the extent that the information has
    been voluntarily reported to the department. In addition, the report shall contain the levels of participation of business enterprises, by race, ethnicity, and gender of owner, for the following categories of contracts, to the extent that the information has been voluntarily reported to the department:
    (1) Construction.
    (2) Purchases of materials, supplies, or equipment.
    (3) Professional services.
    (g) In the years 2011 and 2012, any errors reported to the department by an awarding agency as required by Sections 10302, 10344, and 12104.5, in the previous fiscal year.

  7. Claire Voyant

    Thank you Mermaid.

  8. As a newbie to all of this, can anyone tell me if there is substance to what I have gleaned from talking to various sources in Sacramento? Apparently, just a few years ago the JC/AOC had great credibility there thanks, in large part, to its Governmental Relations Office. Word is that turnover in leadership there has come at great cost.
    I’ve been told that the office used to be thought of as a source of straight dealing, even to the point of insisting that SF leadership be truthful.
    I don’t want to put anyone on the spot but can’t help but wonder if the former AOC/Sacto lead representatives have weighed in on these issues.
    Does anyone know? Has anyone consulted them?

  9. PattyJaneSmith

    Blitz – You’re right in youe assessment that the AOC used to be well regarded and credible. The entire Office of Government Affairs culture has changed as its leadership has changed. And obviously, not for the better. A very fine and honest person used to head up that office and worked very hard to represent the branch in an honest and dignified manner. This did in fact include pushing to make sure the AOC leadership was truthful and kept their word. But now the office is run by a person of the same ilk as the AOC leadership. I am sure that many former AOC staff have spoken to Legislators and folks who want to see the Judiciary cleaned up.

  10. joshmadisonn

    PattyJane is right. Kate Howard was a great director at the Office of Governmental Affairs. She was competent, professional and friendly.

    • I never worked with Kate after she took the reins at OGA (and have no ability – or interest – in comparing her work as director there with anyone who came before or after her), but we worked together a lot when she was an attorney staffing an advisory committee I was on years ago.

      She is a great lawyer from what I saw, very smart and reliable in her advice to the committee. Plus she was extremely easy to work with, always pleasant and very willing to do what it took to follow up on the work the judges were proposing.

      Hmmm, I wonder if she’d consider applying for a spot on our bench?

      Tim Fall, judge
      Yolo Superior Court

  11. I’ve heard nothing but good about Kate & her predecessor & their efforts on behalf of the courts, the other parts of the justice system & the state as a whole. Is anyone talking w/ them?

    • Obi-Wan Kenobi

      I think the ACJ should be talking to her. The Chief should be talking to her too. Not for another position at OGA but for a position at the helm of the AOC – if he ever intends on being re-elected.

  12. Obi-Wan Kenobi

    My guess – and this is only a guess – is that there was a jumping off point for Kate.

    About the time that she resigned to find greener pastures all hell had been breaking loose in the AOC’s HR department for a bit of time up before that point. CCMS had exploded in it’s projected costs. Team Jacobs and AGS had just started changing lightbulbs for 2 grand apiece.

    Kate had a solid no-nonsense reputation for honesty and fair dealings with all people and was a leader among the AOC yet everything around her was starting to run amok about this time at a rapidly accelerating pace.

  13. PattyJaneSmith

    Before Kate was Ray LeBov who represented the Judicial Council and AOC with the utmost of integrity and loyalty. Ray served the AOC for 15 years and he is a fine human being who cared deeply for the judiciary and treated all those who dealt with him with great regard.

  14. PattyJaneSmith

    PS – I believe Kate is doing some consulting for the AOC.

  15. Mermaid –

    Thank you for the suggested legislative change to the Public Contract Code.

  16. PattyJane -I have so many questions. What has been the impact of the changing of the guard in AOC representation in Sacramento? My inquiries to folks who have been around for a while confirm all the good things I’ve seen on here about Mr. Lebove & Ms. Howard. Do you know why they left? How much influence did they have on the conduct of AOC business? Did their leaving result in changes for the bad? If so, how/why? Might they be willing participants in any investigations?

  17. PattyJaneSmith

    Blitz – I’m sure they left for reasons that are entirely personal to them. My guess is that they were probably tired of the AOC drama. I think Ray LeBov who was with the AOC for many years had a lot of influence over how AOC business in the capitol was conducted. But, overtime there was pressure from the top to do things a certain way and I would guess that both Ray and Kate were under increasing pressure to do things a certain. From what I understand, nothing happens in terms of the way the Office of Government Affairs conducts itself in the capitol without the direction and approval of Bill Vickery. Given this, it wouldn’t matter who ran the OGA because Bill Vickery runs it.