State struggles to pay for new courthouses

lblackford@herald-leader.comJanuary 31, 2010 

The state court system laid off 47 people last fall, and judicial officials say they're looking at even more drastic measures in the upcoming budget cycle.

If the courts don't get a $76 million increase in funding, "we will have to see whether we can operate five days a week, 52 weeks a year," said Laurie Dudgeon, director of the Administration Office of the Courts.

Even though most other state agencies face cuts, Gov. Steve Beshear has recommended an extra $50 million from the General Fund for the courts, both to make up for past budget cuts and to pay for new courthouses that will be opening in the next two years.

Most of that money will be used for 38 new courthouses that will open over the next two years. That means the state has to start paying off the bonds used for construction.

Since 2000, $880 million has been appropriated for new courthouses that are part of a program designed by former Chief Justice Joseph E. Lambert that was aimed at putting a new courthouse in all 120 counties.

The state must start paying for the courthouses, or the counties will default on the bonds. So the court system's budget will have to be cut in other areas. But the judicial branch's financial conundrum — in the midst of one of Kentucky's worst fiscal crises ever — is raising questions about the politically popular but expensive courthouse construction program.

"I am very supportive of our courthouse project, but on a statewide basis, there wasn't a lot of thought given to how this money would be paid back," said Fleming County Judge Executive Larry Foxworthy.

Fleming County floated $11.5 million in bonds to build its new courthouse.

"It will be a big asset to us, but things could have been done to save more money," Foxworthy said. "These questions needed to be asked before the General Assembly obligated the state to this kind of payback."

Shelby County also floated bonds for its new courthouse, $18.4 million worth.

"In my opinion, the entire program was way too aggressive," said Shelby Judge Executive Rob Rothenburger. "Based on all the projected revenues, the AOC should have slowed down with these projects. I would have looked at what we could have done to renovate more courthouses."

In a complicated process for financing new courthouses, counties float bond issues, but they are paid back by the AOC through "use allowance payments." That means AOC actually rents the courthouses, and the rent money is then used to pay off the bonds.

If those payments didn't come through, the county would be on the hook — either to pay off the bonds or to give up the courthouse and its property to the bondholders.

"That would put us in a pickle," said Hancock County Judge Executive Jack McCaslin. An $11.7 million judicial center is due to open there next year. "I don't see how we could do that (pay the bonds) unless we filed bankruptcy."

Critics have also questioned whether more money could have been saved if the program had used more competitive bidding. Most of the major contracts for construction management are awarded through a request for qualifications process.

But no matter how shaky the financing may be, the courthouse construction program remains popular for bringing jobs and what many say are badly needed court facilities.

For example, in the last biennium, the AOC recommended funding for only one courthouse — in Carlisle County because the former one had burned to the ground. But legislators added four more in Allen, Bracken, Lawrence and Morgan, for a total of $64 million more in funding.

One of the legislators who pushed for those new projects has no apologies.

"There's no doubt our courthouses were outdated and overburdened," said Rep. Mike Denham, D-Maysville, who represents Bracken County. "If people from around the state are going to get one, my folks deserve one, too."

In its current budget proposal, AOC has recommended no new courthouse construction.

Beshear spokeswoman Kerri Richardson said the governor's budget was fulfilling promises made for past courthouse construction.

"The state has an obligation to meet those contractual agreements," she said in a statement. "Despite $900 million in budget cuts, Governor Beshear has not halted work on any capital projects already in progress, and he does not plan to set that precedent with new courthouses."

The governor's office denied the Frankfort perception that its budget proposal is somehow political payback for the judicial branch's help in electing more Democrats to the state Senate. After a judicial nominating committee included Senate Republican Leader Dan Kelly as a finalist for a judgeship, he was appointed by Beshear. Kelly's seat was filled by Republican Jimmy Higdon of Lebanon.

"The allegation that these dollars are a return for political favors is patently absurd," Richardson said in a statement. "The governor cannot appropriate general funds; only the General Assembly can do that. The judicial branch made a valid case regarding their funding needs, and now it is up to the legislature to determine how the needs of all three branches ... will be met."

House Speaker Greg Stumbo said this week he has concerns about the amount of money Beshear has allocated to the judiciary branch, saying Beshear has essentially restored all cuts to the judiciary when other agencies are struggling.

However, Stumbo said he realizes the court system has already laid off employees and it's essential to keep the courts operating.

"We have major concerns about that," Stumbo said of Beshear's proposed increase for the judicial branch. "Part of that is debt service for courthouses that are coming online and obviously that has to be done.

But Stumbo said there may be a "better way in the future," to maintain courthouses.

Denny Nunnelley, executive director of the Kentucky Association of Counties, which lobbies for the counties, said KACo would urge lawmakers to provide the money for the court system to make their payments to the counties.

Nunnelley stopped short of saying the court system had overbuilt in the county courthouses.

"I can't politically come out and say yay or nay," he said. "I'd like to point the finger at someone, but I'm not going to. But it begs the question."

The hard decisions will be left to the General Assembly as they try to fund the judiciary along with the rest of state government.

"I certainly wouldn't want to affect our bond rating, and we certainly don't want these facilities sitting there dark," said Rep. Jim DeCesare, R-Rockfield. "So I don't know what we're going to do."

Ryan Alessi and Beth Musgrave contributed to this story. Reach Linda Blackford at (859) 231-1359 or lblackford@herald-leader.com.

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