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Stable revenue sought for court system

Governor seeks to replace unreliable funding stream from foreclosure fees with money from state’s general fund.

The recurring need for emergency loans to keep state courts afloat may cease if Gov. Rick Scott’s budget proposal to fund the courts with $280 million from the general fund instead of foreclosure fees becomes reality.

The courts have been operating with money from the State Courts Revenue Trust Fund, fueled largely by foreclosure fees, which became erratic when foreclosures dropped from their 2008 peak. The instability resulted in a shortfall last year that required almost $100 million in emergency loans from the executive branch to keep courts operating through March. The money pays for judges, their assistants, interpreters, court reporters and other programs.

Scott’s proposal would return the source of funding to the general fund, where it was pre-2009. Meanwhile, foreclosure fees that would have gone into the trust fund would instead go into the general fund to offset the $280 million provided for court operations. If less than $280 million in foreclosure fees comes in, the gap would be absorbed by the general fund.

The decision is up to the Legislature, which is grappling with a proposed $66.4 billion budget and a shortfall of nearly $2 billion.

“I like the idea of providing stability in our court funding and I understand that the reliance exclusively on foreclosure fees does not give the courts a reliable source,” said Rep. Gary Aubuchon, R-Cape Coral.

But the legislative session just began Tuesday, and he can’t speculate that far down the road, Aubuchon said.

Margaret Steinbeck, deputy chief judge of the 20th Judicial Circuit, called it crucial the Legislature adopt a new funding mechanism for the courts. The 20th Circuit includes Lee, Collier, Charlotte, Glades and Hendry counties.

“The key issue for the courts is to stabilize the revenue stream,” said Steinbeck, who also is vice chairwoman of the Trial Court Budget Commission, a group of judges that meets to provide court budget recommendations to the Florida Supreme Court. “The court has not overspent our authorized or appropriated budget. We simply have not had money in the bank to cover the bills.”

Steinbeck said she is going to Tallahassee this week to attend the legislative session. “What I’ve heard has been very gratifying,” in that legislators recognize the courts have to be adequately funded, she said. “I think there is recognition of the key role that we play in the economic recovery of the state as well as making Florida attractive to new business.”

The court system is one of the factors businesses look at when they decide where to locate, Steinbeck said. If the courts are not funded adequately, the flow of court cases will be slowed, litigation will take longer and cost more, she said.

The governor’s proposal is a great idea, said Charlie Green, Lee County clerk of court. “We’re trying to make sure we have good funding so we have a court that works quickly,” as well as a courtroom and clerk’s office that is continually looking for ways to save money and clip corners, he said.

“It’s easy to holler for money.” But then you also have to say, “Here is what we’ve done to reduce costs,” Green said.

Lawyer likes it

Real estate attorneys also welcomed the proposal. “I think it’s probably wise,” said Michael Hagen, a Fort Myers attorney who specializes in foreclosure defenses. “The state tried to basically fund the court system by jacking up the foreclosure filing fees,” he said.

The normal filing fee in circuit court cases is $400, while foreclosure filing fees more than quadrupled to up to $1,905 per case, depending on the amount owed, he said. “As we all know, the numbers dropped substantially.”

The slowdown in the resolution of foreclosures was mainly due to the voluntary moratorium started by some lenders because of irregularities such as mishandled or fraudulent documents, and robo-signing.

The moratorium started around October 2010, said Craig Waters, spokesman for the Florida Supreme Court, who responded by email to The News-Press. Foreclosures filed dropped about 68 percent, from an average of 28,000 in the fiscal year before the moratorium to about 9,000 after, through June 2011.

In 2010, the court disposed of an average of about 27,000 foreclosure cases before the moratorium began. After, the average fell to 17,900. With the end of funding of the state’s foreclosure initiative on June 30, the average number dropped further to 14,000 – a total drop of about 49 percent.

With the June 30 end of the “rocket docket,” a one-year, $6 million state program that brought in retired judges to handle the huge backlog of foreclosure cases, foreclosures are now back in the regular stream of civil cases. The 20th Judicial Circuit has kept up with filings since the end of the rocket docket with the use of senior judges for summary judgments and mediation for contested cases, Sheila Mann, spokeswoman for the 20th circuit, wrote in an email.

The number of filings dropped in the circuit from 2,060 in January 2010 to 587 in January 2011. Since then, “there has been a gradual tick upward,” with 970 foreclosure filings circuit-wide in December, she wrote.

The average time for a foreclosure to be processed to its conclusion in Florida is 749 days, according to a November RealtyTrac report. The company also has predicted an increase in foreclosures for 2012.

Written by Mary Wozniak

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