Prospects Dim for New Courthouse Funding

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Renderings of the proposed new courthouse in El Centro.
Renderings of the proposed new courthouse in El Centro.

 

While Santa Clara and Tehama counties celebrated new courthouse openings in October, funding for the proposed new courthouse in El Centro remained in limbo, its only hope is legislative action to restore it.

However, officials agreed the outlook will be uncertain when lawmakers get back to work for a new session in January.

“It doesn’t seem the governor (Jerry Brown) would increase the budget unless there is revenue coming in to pay for it,” said state Assemblymember Eduardo Garcia, whose 56th District includes Imperial County.

The proposed $48 million courthouse would be built near South Eighth Street and West Wake Avenue in El Centro. Ground was to be broken in January. Yet it appears the 3.6-acre lot will remain vacant dirt for the foreseeable future.

The issue rests with the legislature and the governor because this past summer the California Judicial Council, which oversees operations of all courts in the state, voted to indefinitely suspend all new courthouse projects where construction had not already begun. The council determined it did not have adequate funds to repay the cost of bonds that would be sold to finance construction.

“Given its annual expenditures compared to its actual declining revenues, the ICNA (the Immediate and Critical Needs Account that funds new court construction) is in deficit spending and relying on its fund-balance reserves to meet current and future annual obligations,” according to the minutes of a June 28 meeting of the council Court Facilities Advisory Committee.

Recent analyses, the minutes state, project revenue for court construction to be “$250-255 million annually, forecasting that value flat for approximately 30 years,” while expenditures could reach $323 million a year.

Imperial County Superior Court Presiding Judge Christopher J. Plourd was among several officials from courts across the state to appear at an Aug. 11 Court Facilities meeting to plead their case for retaining funding. To not avail. The full Judicial Council nixed the funding for the El Centro court and 16 others statewide at its Aug. 26 meeting.

 

“To me, this is in the hands of the legislature. If they act, we get the funding and there is a need,” Plourd said in an interview in El Centro following his Aug. 11 appearance.

 

The legislature did not act to restore funding before its summer session ended Aug. 31. However, lawmakers did approve “language directing the Judicial Council to report to the Legislature with options to address ICNA solvency as part of budget discussions for FY 2017-18,” stated Blaine Corren, Judicial Council public affairs analyst.

In an e-mail response to a request for comment from The Desert Review, Corren added, “The council is developing these options now and will have an advocacy plan for budget discussions following the release of the Governor’s Jan. 10 proposed state budget for FY (fiscal year) 2017-18.”

That budget would be for the period of July 1, 2017 to June 30, 2018.

Funding options detailed

There are four main options for funding new court construction, though only three are currently in play. First, the Judicial Council can request the State Public Works Board to issue, meaning sell, “lease-revenue bonds” to generate monies for construction projects. This is the existing mechanism where the funding shortfall exists.

The sale of up to $5 billion in lease-revenue bonds to finance new courthouse construction and renovation projects was authorized by a state law passed in 2008. Later that year, the proposed El Centro courthouse was one of 41 approved by the Judicial Council to be funded under the bond sales.

Such bonds are not subject to voter approval because they are categorized as lease payments and the state Supreme Court has determined the lease-revenue mechanism does not create “constitutional debt,” according to council documents.

The bonds are sold, and the money is put in the fund for new construction projects that are approved and paid for by what is in the fund. The buyers of the bonds are then paid back, plus interest, from court revenues, including fees and fines.

The Judicial Council’s recent decision is based on projections showing the courts are not generating enough revenue to pay back investors who would buy new bonds.

Two other methods, which would be considered in a legislative session, are a line item in the state budget and a bill that specifies funding for new court construction. These, according to Garcia, are the options that could be looked at in the coming budget year.

The fourth method is a voter-approved bond sale, but there is not one currently proposed.

 

Garcia outlines position

In an October interview at his Imperial field office, Garcia outlined the competing interests afoot in budgeting for new court facilities. He said that while he understands the needs courts have in serving the public, they need to be balanced with fiscal responsibility and not placing too heavy of a cost burden on the public.

Garcia explained he is not in favor of raising more funds by increasing fees related to court filings and fines, including fines from traffic offenses. Those fines and fees are a major source of court funding.

Both current alternatives to bond funding—a bill or a budget line item for court construction—appear unlikely, Garcia said, explaining, “I am not so optimistic.

“I don’t see the governor putting a line item in the budget for this item so it will play out through the current system (waiting for the bond situation to improve), he said. “(It’s) not likely coming from the general fund.”

Of a potential bill, Garcia added, “Unless those bills are a priority of the governor or of the Democratic or Republican leadership, they are not going anywhere.”

The trepidation, Garcia continued, is well founded due the suffering the state endured during the last recession.

“The governor has done an excellent job with being fiscally prudent. He has a rainy-day fund,” Garcia said and then added, paraphrasing the governor: “We’re certainly going to see this storm again. You are going to thank me for this (rainy day fund).”

Asked if he would consider introducing a bill to finance new court construction, Garcia would only state, “I think the conversation needs to continue. I’m optimistic in knowing the conversation will be had.”

The more prudent focus, he maintained, is ensuring there is enough money in the court budget for maintenance of current court infrastructure.

Council analyst Corren outlined the situation by explaining: “Assembly Member Garcia is correct that the economy is the primary factor here. Due to the great recession, the state over the years has redirected a total of $1.4 billion from ICNA to help the state general fund.

“This redirection of funds, combined with declining revenue from fines/fee/penalties due in part to a reduction of court filings, has decreased the revenue stream dedicated to court construction and is projected to be insufficient to pay back the bonds.”

At a Judicial Council meeting in late October data was released that shows the number of court filings statewide continues to decline, Corren said.

Another factor cited by court officials for declining revenues was a recent amnesty for traffic fines.

For his part, Imperial County Presiding Judge Plourd remained optimistic the need would be addressed, stating, “These projects are not cancelled. Our group, those buildings (set to start) this year and next year, we are to continue and be shovel ready.”