Savings produced by court budget cuts are exceeded by harmful economic effects, white paper says

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Savings from state-court budget cuts are outweighed by lost tax revenues and other harmful economic effects, according to a white paper (PDF) analyzing several studies by DRI, the Voice of the Defense Bar.

Salaries make up as much as 96 percent of court budgets, the white paper says. Budget cuts result in job losses, diminished tax revenues for local governments, and the increased expense of unemployment benefits.

Cuts also slow resolution of civil cases. The uncertainty caused by pending cases makes businesses reluctant to spend money on equipment, additional employees and expanded product lines, which also affects the local economy, the paper concludes.

“Because the judicial branch comprises such a small portion of a state government’s overall budget,” the paper says, “cuts to the judicial branch result in little savings for state governments, but trigger significant governmental, social and economic costs.” This press release summarizes the results.

The paper cited studies that the Washington Economics Group did for the Florida Bar and the Georgia State Bar, and two studies of Los Angeles courts by Micronomics.

The Florida study, for example, concluded that the backlog in foreclosure cases caused by underfunding of the state court system resulted in a $9.9 billion annual loss to the state’s economy in direct costs, and an additional $7.2 billion in indirect costs.

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