SACRAMENTO, Calif. (CN) — The prospect of having to dole out $2 billion over the next ten years to pay off already completed courthouses in California did not sit well with state lawmakers, who on Monday seemed to favor the Legislature exercising more control over courthouse construction funding.
“This shift is something we can start on now,” said Assembly member Mark Stone, a Democrat from Scotts Valley who sits on the Assembly’s budget committee for public safety. “The Legislature is interested in getting its hands more firmly around where some of this money is being spent, why it's being spent, what some of these projects are and clearly understanding where the need is. I'd like to see a path toward putting these construction funds into the General Fund so we have more direct access to being able to manage those and help direct priorities.”
Monday’s committee hearing comes as the state Legislative Analyst’s Office warned in a report last month that a critical fund used for California's courthouses is running out of money and faces insolvency in fiscal year 2022–23.
Governor Gavin Newsom proposed preserving the status quo with a $40 million bailout from the state’s general fund in January to backfill the fund on a onetime basis, but the LAO said the Legislature should consider a more longterm solution.
“Our concern is there is a longterm solvency issue in this construction fund that is not proposed to be addressed,” LAO senior policy analyst Anita Lee told the lawmakers on Monday. “The insolvency will likely require significant General Fund resources on an going basis; at least $200 million annually for a decade to pay for the debt service for already completed courthouses.”
The State Court Facilities Construction Fund is managed by the Judicial Council, the rulemaking body for the state’s 58-county court system. Zlatko Theodorovic, the council’s director of finance, said the fund isn’t paying for any new courthouses but is used to make payments on completed projects.
Funding for new construction used to come from another fund managed by the Judicial Council, but that was shifted to the state’s General Fund following another LAO report in 2021 that forecasted its impending insolvency.
“I think maybe we should take away the capacity of the Judicial Council to handle this and actually get some construction professionals to be on top of this, or hire our own private managers, almost like inspector generals, to oversee these projects so that they come in on time and on budget and give the Legislature some comfort that these projects are being done according to our specifications and what we are allocating the money for, and that the monies are being spent appropriately,” said Assembly member Reginald Jones-Sawyer Sr., a longtime committee member and its former chair.
Pella McCormick, the Judicial Council’s Director of Facility Services, bristled at the implication.
“We do have a unit of professionals, I am a licensed professional myself and have been doing project management for 30 years. And I do have a cadre of at least 20 professionals who do manage these projects.” McCormick said her staff works with the governor’s Department of Finance and the Legislature’s State Public Works Board to ensure that projects are completed on time and within budget.
Jones-Sawyer asked whether her department has been staying within the state’s Construction Cost Index, which measures how much a project should cost based on building and material prices.
“Have you been going over the index by a lot or a little, and do you do clawbacks if the contractor is not performing to your standards? Do you claw back some of that taxpayer money and hire someone who is going to get the job done quicker, faster and cheaper?" the Democrat from Los Angeles asked. "What kind of controls do you have; or do you come back to us and just ask for more money?”
“We watch our bottom line very closely,” McCormick said. “Construction escalation especially throughout the pandemic has been problematic, but the majority of our projects have been running within budget. We have been successful in getting them delivered on time.”
The Department of Finance also said courthouse construction is in line with or below the cost of inflation and “the judicial branch has done a really good job of keeping their projects in budget.”
Jones-Sawyer’s tough questioning stems from having been around long enough to remember when it was different story, particularly during lean budget years when funding dried up and projects faced years of delay. Jones-Sawyer, backed by a group of fiscally-cautious trial judges, pressed for a state audit of the Judicial Council’s construction program in 2017. It never came about, but legislators ultimately agreed to tie funding to a requirement that all new projects get legislative approval before moving forward.
A new governor, a few generous budget cycles, and greater legislative oversight led to the construction program’s resurgence, and in 2019 the Judicial Council gave the Legislature its list of priorities for 80 courthouse construction and renovation projects across California.
But Stone also said he wanted to see the Legislature be more involved in setting construction priorities. “A plan to do that will give us much more visibility into what the construction needs are. And I know this will send shudders down the spine of everybody at Judicial Council, but have the Legislature more involved in decisions about where court construction is happening.”
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