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Court Funding Task Force Attending: Kirk Johns, Roland Hjorth, David Donnan, Glenn Olson, Sophia Byrd, Mike Chapman, Dick Carlson, Barb Miner, Betty Gould, Judge Gordon Godfrey, Judge Deborah Fleck, Wayne Blair, Tammy Fellin, Justice Barbara Madsen, Judge David Tracy, Joan Ferebee, John Cary, Judge Bruce Hilyer, David Donnan AOC Staff: Jeff Hall, Yvonne Pettus, Gil Austin SPECIAL TESTIMONY/PRESENTERS
KJ presented an overview of trial court funding compiled from various materials circulated to the Court Funding Task Force. He explained that the overview is a work in progress, and that refinements and revisions will be circulated as the Task Force effort proceeds. He expressed thanks to Jeff Hall and Yvonne Pettus for working with him to resolve various questions about the data in the previously distributed materials. Page 3 - Presentation of the overall structure of the Washington State trial courts and that there are 49 district courts in 39 counties with 109 municipal courts. Page 4 - Overview of sources of state funds – with 50.3% from taxes, 16% from licenses, permits and charges for services, totalling 66%, with 75% of total tax revenue coming from sales and use taxes (56%) and B&O taxes (19%). Page 5 - Demonstrates the allocation of the Washington State Budget, with the judicial branch receiving .3%. This allocation is $141M; with the breakdown allocation of these funds to AOC and for superior court judges salaries. These amounts are appropriations and do not include capital expenses. Page 5 figures are biennial figures. Page 6 - Overview of state and county contributions to TOTAL court funding. The state of Washington contributes 14% while the local governments contribute 86%. KJ pointed out that the presentation by Yvonne Pettus to follow his will show that the state’s 14% figure drops to 10.5% if you focus on trial courts alone, rather that total court funding .KJ pointed out that the earlier indication that the US DOJ figure that the state contributes 15%, includes services that Washington State does not fund via the courts. Note – that 6% of local government funding goes to the fund trial courts. The central issue is that the Washington State contribution to trial court funding is among the lowest in the nation. These are annual basis. Page 7 - An itemization of State – Local Contributions to Total Court Funding. Some of the court costs may reflect local indigent defense costs, and in approximately 5 counties there are distinct indigent defense departments. Figures on page 7 are annual figures. At this point these figures do not reflect the split between the state and local sources for juvenile operations. Page 8 – Discussion of the allocation of PSEA funds to purposes which do not relate to the core purposes of the trial courts. Page 9 – State and Local Distribution of Annual Court Revenues. Page 10 – The $10 of total penalty will increase to $20 which is to be allocated by legislation from the 2003 session to fund the BECCA program. Page 11 – Shows which courts are contributing funds and to which accounts these are allocated. Slide 3 shows % of total funds except capital distributed by the state. These % generally hold true for each biennium Slide 6 shows the % of judicial branch funds going to various judicial branch entities. Slide 7 shows on what the AOC budget is distributed. This is general fund and about the only such funds AOC receives. Slide 8 breaks out JRA funds to various juvenile programs. The funds are $55.8 M the 01-03 biennium. Slide 9 Shows other state funds used for trial court operations which come from the budgets of various state agencies. Slide 10 Demonstrates the local government contributions to trial courts on an annual basis. Slide 12 & 13 History of PSEA and a short history of the development of various funds to one PSEA accounts from 30 + RCWs. Slides 14, 15, 16 Further description to which PSEA allocations are made. The point was made that the legislature can fund a choice of programs on an biennial basis. Slide 17 Description of new assessments added by the legislature and the various accounts that have been added since 1992. Pointed out that one of the new accounts is the BECCA add on account from PSEA. Judge Godfrey pointed out that PSEA allocations are not subject to the 601 limitations and that all of PSEA are court collections of court imposed costs and fees. Slide 18 shows the revenue for the appellate courts. Slides 19 and 20 relates the superior court revenues and local and state allocation. Slide 21 Juvenile court revenue is detailed. Slide 22 and 223CLJ revenue with the base penalty of $37 which with added PSEA and other added fees increases to $87, but with 2003 legislation will increase this amount to $101 Slide 24 and 25 – Distribution of traffic infraction revenue Slide 26 CLJ Criminal DUI Penalty calculations and distribution. Slide 27 CLJ non-criminal penalty calculations and distribution. Slide 28 CLJ Civil filing fee splits. Slide 29 – Discussion of PSEA funds to the state Slide 30 – Shows local government revenue for PSEA Slide 31 – Summary of annual state and local expenditures for trial courts. Slide 32 - Annual State and Local Revenues from Trial Courts. Slide 33 – Reports on the number of judges in trial courts and the costs borne by state and local entities for the salaries of judges. Slide 34 – Only for larger muni. courts is there an objective need analysis for judicial officers. Slide 35 - For superior court staff it does not include juvenile courts. Discussed the perspective of budget officials and their incremental approach to fiscal management and that they tend to move funds in small amounts to keep a balance in funds. Budget staff start with baselines and move incrementally from the baselines. Budget analysts look upon courts as important entities. Reviewed the traditional areas that counties fund. Source of revenues are set out on page of Typical County Total Revenue by Source. With the county level only 1% of revenue from courts. County funds are not mostly general revenue on the Restricted vs. Non-Restricted Revenue. Discussion of next page with chart of Restricted and Unrestricted Revenue by Source & Fund. With only the yellow areas where there is discretionary funding. Clark County, like other counties, has had to increase the budget by 50% to cover services associated with population growth and inflation. Although total spending increased at about 77%. See table Cost of Clark County Government. Real Cost of Clark County Government shows the real amount of spending and the following page shows that the per capita spending is relatively flat and is accounted for by the state mandates to perform more activities. Cost of General Fund Services – note that Clerk’s Office and Indigent Defense are in the salmon colored portion of the chart. Cost of General Fund Services chart shows the growth has been in courts and juvenile system. Cost of Court Services chart shows that revenues are declining as a portion of total costs since 1994. State funding alone equal about 18% of total operating costs for the county and about 11% of court operating costs. General Fund Forecast chart shows declining general fund revenues for the county. Presented at "Funding Alternatives Work Group" handout which explains the types of funds from which courts can receive funds while other types of funds bring risks due to potential shortfalls in that dedicated funds. Challenges for the state is that there are shortfalls in the revenue. A problem is that the citizens have changed the structure of the state revenue. In a state without reliable revenues there is not adequate funding. Shortage of funds will remain the same until a new revenue source is developed. Given that the current budget structure stays in place the state may find alternate ways of using general funds. Discussion of how to replace local costs for such items as jails by asking to state to share part of these costs and perhaps present true alternatives to funds methods including sentencing option changes to reduce jail and prison population and PWTF (Public Work Trust Funds). Reference to California’s approach of counties contributing a certain fixed amount for courts and the state funding the increases. Discussion of the loss of criminal justice funds from I-695 and the need for counties to meet these costs from other general fund revenues. Another aspect of funding is that the state passes the laws and local government is required to pay for the cost of implementing the laws. Hugh Spitzer reviewed the slides in the presentation by the State Tax Structure Committee. Taxes tend to be volatile and that when the economy reduces in Washington State then the revenues for the state decline even further. It also points out that when the economy declines the sales tax revenue declines even further. Erosion of the Tax Base is increasing due to retail purchases out of state. There is an effort to bring some equity between states on retail purchases so Congress will impose an internet sales tax. B&O taxes are not neutral and increases these taxes in non-vertically integrated companies. The commission recommended a VAT to replace some B & O tax or the GST; a flat personal earned income tax and business gross receipts tax; a graduated income and corporate tax. Chart showing source of taxes. Commission looked at a system for reducing the state sales tax and replace it with an income tax. A proposal was to take a piece of the property tax away from the schools and state and move it back to the counties and use an income tax. Slides showing a graduated income tax and its effect on persons at certain income levels. One of the findings was that graduated income tax was as volatile as a property tax. Flat income taxes with some income tax is less volatile during a slow economic period. Discussion of polling reviewed by the Commission which indicates persons are not willing to change their tax system for another system from another state. ISSUES DISCUSSED Discussion of which sources of funds the court can impose which would increase court generated revenue and whether increasing court costs is a desirable means of raising revenue. Means of increasing court revenues from complex civil legal fees. Discussion of the lack of a constituency in funding for the courts in communities that would prevent governments from cutting courts’ budgets. Ron Hjorth proposed that the presentations indicate that the only way to get more money for the courts is to find it from somewhere else and the likelihood for new sources of funds is limited. Glenn Olson would proposed that funding for courts come from changes in the county taxing structure, for instance transferring the cost of certain law and justice costs to the state and the counties using the savings for court funding improvements. Hugh Spitzer indicates that people are more likely to support increased taxes at the local level. PROBLEMS IDENTIFIED Discussion of how much more in funding is needed to fund the trial courts with a statewide cost of $417M and $177M in Revenues generated by the courts. Question arose as to what portion of the revenues that go to local government are in turn allocated to the courts? ACTIONS/DECISIONS None TOPICS/MATERIALS FOR NEXT MEETING State Revenue Handbook as published by the State of Washington, Department of Revenue. Can it be determined from Clerk’s Office records which civil cases are complex civil cases that might be considered for a sliding scale of user fees. Review principles for funding for courts. INFORMATION/MATERIALS PRESENTED "'Snap Shot' Overview of Trial Court Funding in the State of Washington" (Rev.1), dated April 17, 2003, by Kirk Johns. "Overview of Court Funding", dated 4/17/03, by Yvonne Pettus "County Finances and the Courts" by Glen Olson "Overview of State Tax Structure and Recommendations of State Tax Structure Committee" by Hugh Spitzer
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