Fla. courts, clerks may get emergency $90 million to keep them going this year

Article Courtesy of The Palm Beach Post

By Dara Kam

Published March 24, 2011

TALLAHASSEE — Gov. Rick Scott and lawmakers are prepared to sign off on an emergency $50 million to rescue the Florida courts system and avoid furloughs in the face of a projected $72 million deficit this year due to an unexpected decline in foreclosure filings.

An additional $44 million bailout, which doesn't need Scott's approval, is also being readied for the state's clerks of courts, who are facing a $50 million shortfall for similar reasons.

"If the current revenue shortfall ... is not remedied, it will be necessary for the judicial branch to impose extensive furloughs of court system personnel," Florida Supreme Court Chief Justice Charles Canady wrote to Scott and House and Senate budget leaders last week. "Such furloughs would cause a severe disruption in the functioning of the courts."

Two years ago, lawmakers changed the way the courts are funded by creating the State Courts Revenue Trust Fund, which is filled by court filing fees. About three-fourths of the state courts' total budget, including payroll and operating expenses of the entire judicial branch, depends on the trust fund, and about 77 percent of the trust fund money was projected to come from real estate and mortgage foreclosure filing fees this year.

But foreclosure filing fees dipped precipitously late last year and haven't recovered since, leading to the current deficit that is expected to total $72 million by June 30, the end of this fiscal year.

Palm Beach County's foreclosure filings, for example, fell 37 percent last year compared to 2009, with the biggest declines coming in the fall when banks acknowledged problems with their home repossession procedures.

That's about the time most major lenders froze foreclosures when it was revealed that employees were signing thousands of documents every month swearing to having personal knowledge of the cases, when they in fact did not. At the same time, federal mortgage backers Fannie Mae and Freddie Mac fired one of the largest law firms in the state handling foreclosures. The transfer of files from the Plantation-based Law Offices of David J. Stern to new attorneys may also have stalled some filings.

Although real estate experts expected foreclosures to pick up again early this year, they haven't. In December, just 872 foreclosures were filed in Palm Beach County, a 69 percent decrease from the previous December. Combined totals for January and February were 1,616, down from 4,641 during the same months in 2010.

The state clerks of courts saw a similar decline in revenue and also have asked lawmakers for an emergency cash infusion to offset a $50 million deficit.

Senate budget chief J.D. Alexander, R-Lake Wales, has agreed to bailouts of $50.2 million for the courts and $44 million for the clerks.

Scott is expected to officially approve up to $50.2 million to keep the courts operating and avoid furloughs by late tomorrow, according to a source inside the governor's office.

Most of the cash would come from transferring money from other funds to the courts' trust fund.

The courts have accounted for the other $22 million through other measures such as hiring freezes and postponing projects until after July.

Canady hopes lawmakers will change the way courts are funded in the future to avoid similar fiscal crises.

"We're using a very specialized revenue source to fund nearly all of court operations," state courts administrator Lisa Goodner said. "To fund almost an entire branch of government on a very volatile source of revenue is something obviously, given what has happened this year, we really want to work to fix."

Barbara Dawicke, trials court administrator for Palm Beach County's judicial circuit, similarly blamed the shortfall on the downturn in the collection of fees in foreclosure cases.

With lawmakers expected to approve a $44 million bailout for the clerks of courts, the clerks will still have to cut $6.6 million from this year's spending, according to Fred Baggett, a lobbyist for the statewide association of clerks.

Palm Beach County Clerk of Courts Sharon Bock said she lost 110 employees following an 18 percent budget cut two years ago and she fears another 5 percent cut to her current year budget could result in further staff reductions and delays in issuing property titles, filing new cases and processing child support payments.

"We're already three months behind right now on issuing titles for foreclosures," Bock said. "If we get cut more, I don't even know what will happen to the public's access to justice."

She said her office collects about $255 million each year in filing fees, fines and court costs, but that she only gets $34 million of that to pay for her budget. About 93 percent of that budget is personnel costs, she said.

Bock said her solution to the budget crisis would be to exempt the clerk of courts from an annual 8 percent charge levied by the Department of Revenue to log the what the clerks send the state and then to send each clerk's cut back.

"If all they did was exclude the Department of Revenue charge, we would not be underfunded," Bock said. "That's one reason the frustration level is so high."