Florida courts face $72.3 million deficit from foreclosure freeze

florida, foreclosures, foreclosure filings, courtsA drop in foreclosure filings has meant big trouble for Florida's court system. By Tami Luhby, senior writer


NEW YORK (CNNMoney) -- Florida desperately needs more foreclosures ... or its court system does, at least.

The steep drop in foreclosure filings in recent months has opened a $72.3 million deficit in the Florida court system's budget. The financial situation is so dire that the chief justice has asked Gov. Rick Scott to temporarily transfer $42.5 million to the courts from other funds.

Otherwise, the courts will have to impose "extensive furloughs" of its personnel, Chief Justice Charles Canady wrote to Scott last week.

"Such furloughs would cause a severe disruption in the functioning of the courts," said Canady, adding that he's already implemented a freeze on hiring and operating budget expenditures, which will close the rest of the gap.

The governor's office agreed Tuesday to transfer a total of $14 million from trust funds for mediation and arbitration and for court education. This will keep the courts operating through April.

And it will give Scott's team time to understand what led to the deficit and how it can be resolved, wrote Budget Director Jerry McDaniel to Canady. They will then decide whether to shift $28.5 million in non-court funds to the judicial system.

In 2009, Florida lawmakers changed the court system's funding system, making it dependent on filing fees rather than money from the state budget. Some 80% of the court's $462 million budget comes from filing fees.

And the courts, which have been swamped with foreclosure cases in recent years, projected that 77% of their fees would come from real estate filings this year.

But foreclosure cases have dropped precipitously since last fall, when mortgage servicers were caught up in a paperwork scandal. Many halted or slowed their foreclosure filings after it came to light that they were submitting improper documents to courts nationwide.

In Florida, foreclosure filings fell to 8,205 in February -- the lowest since October 2006. Filings peaked at 38,371 in October 2008.

The court system estimates that foreclosure filings will rebound in the next fiscal year, which starts in July. While Canady says he has some reservations about that projection, it will resolve the judicial branch's fiscal crunch.

The chief justice said he is also working with state lawmakers to lessen the court's reliance on foreclosure filing fees. To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Index Last Change % Change
Dow 17,804.80 26.65 0.15%
Nasdaq 4,765.38 16.98 0.36%
S&P 500 2,070.65 9.42 0.46%
Treasuries 2.18 -0.03 -1.27%
Data as of 12:43am ET
Company Price Change % Change
Bank of America Corp... 17.62 0.09 0.51%
Apple Inc 111.78 -0.87 -0.77%
General Electric Co 25.62 0.48 1.91%
Intel Corp 36.37 -0.65 -1.76%
Microsoft Corp 47.66 0.14 0.29%
Data as of Dec 19

Sections

New York Magazine reporter Jessica Pressler, who has been caught up in controversy this past week, will not be moving on to a new job at Bloomberg News. More

Investors beware: These 5 global crises are likely to rattle the stock market and world economy. More

Forums in dark corners of the web sell the kinds of hacks that befell Sony. More

Unilever sued Hampton Creek over its egg-free mayonnaise spread Just Mayo. But the company behind Best Foods and Hellman's mayonnaise has now dropped the lawsuit. More

The income of the top 1% jumped significantly in 2012, far outpacing inflation. Not only did this group make a larger share of the country's income, their share of total taxes also jumped from 35% to 38%. More

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.