State courts’ recent halcyon budget days might be reversed by coronavirus shutdowns

After years of suffering in the recession and well into the recovery, California's courts budget has grown in recent years. Then came the coronavirus.

Most government and media attention has gone to short-term efforts to fight the virus and keep vital services like courts operating to the extent possible. But a brief report issued by the state Legislative Analyst's Office on Wednesday painted a vague but grim picture of what is likely to come in terms of the state's finances.

"The courts are not focusing on budget right now, but trying to balance constitutional rights and due process with health and safety of all court users and employees," said Judicial Council spokeswoman Merrill Balassone by email.

Courts did not fare well in the last downturn. The 2008-09 recession kicked off years of cuts, culminating in a $350 million reduction in the 2011-12 fiscal year. Fifty-two courthouses closed in the following years.

Last week's report suggests the state could be heading into something similarly dire.

"Earlier revenue estimates now clearly require downward revision, though it is premature to say by how much.," wrote Legislative Analyst Gabriel Petek in "COVID-19 and California's Evolving Fiscal Outlook." "While our office will provide updated economic and fiscal analyses as more information becomes available, this could take a few months. Regardless of the ultimate revenue estimates, the Legislature almost certainly will have to reassess its policy priorities for the upcoming year."

In recent years, the courts have been one of those priorities. The change can be easily seen in the annual statements from Chief Justice Tani G. Cantil-Sakauye reacting to the governor's January budget proposals for the next fiscal year. These veered from urging lawmakers to consider the importance of the courts and warning of dire consequences to praising the foresight of first Gov. Jerry Brown and now Gov. Gavin Newsom.

"We are grateful for Governor Newsom's budget proposal," she said in a statement released Jan. 10, when Newsom unveiled his draft 2020-21 budget. "It is welcome news for our residents, who rely on a fair, just and accessible court system."

The first domestic U.S. case of the novel coronavirus was announced 10 days later.

There are factors working in favor of the state and the courts in particular. The California courts budget grew more than half a billion dollars between the $3.7 billion allocated in the 2018-19 fiscal year to more $4.2 billion proposed in the current 2020-21 budget year.

Some of this money has been poured into technology such as remote filing, videoconferencing and other capabilities that should allow the courts to continued to operate to some degree while limiting the spread of the virus. For instance, Newsom's budget includes $10.3 million for items like cloud computing and electronic forms. Another $6.9 million is slated for digitizing documents.

California has also taken steps to prepare for the current crisis.

"The state goes into this period on strong fiscal footing with significant budget reserves," the analyst's report noted. "These reserves could help the state respond to the emergency and, if necessary, help address budget shortfalls."

But the report also goes on to identify several areas of concern. For one thing, the state budget is highly dependent on high-income filers, meaning an estimated $30 billion in expected capital gains taxes over the 2019-20 and 2020-21 fiscal years could end up being far lower.

More ominously, the report warns the economy has largely come to a "halt" for an unknown duration. The approximately $20 billion in reserve funds built into Newsom's current budget proposal will likely come in "several billion dollars lower," the report states. What discretionary money the state does have will likely go toward economic recovery and helping those in need.

"Out of necessity, the Legislature may have to prioritize assistance to adversely affected small businesses, nonprofit agencies, and individuals," the report warned.

But for the moment, the Judicial Council is moving forward with its standard budgeting process. The body meets Tuesday, by teleconference, to evaluate 33 high-priority court construction projects.