Village Justice Court In The Red, Overbudget For Years

A drop in the number of tickets issued by Southampton Village Police and ordinance enforcement officers in 2011 and the revenues they generate for the village, which led to the village’s Justice Court technically ending the year in the red, has spotlighted a habit of casual oversight that had the court running over budget for years before actually realizing a deficit.

According to village financial records, the Justice Court was over budget in the 2007-08, 2008-09, 2009-10 and 2010-11 fiscal years. In 2008-09 and 2009-10, the court’s robust revenues obscured the overspending, because it still realized a profit despite posting better than $80,000 more in expenses than budgeted in 2009-10. In 2010-11, the court was again more than $50,000 over budget. At that point, independent auditors highlighted the court’s spending because a more than $150,000 decline in revenues left the department in the red, according to a 2011 audit that was completed earlier this spring.

Village officials said the revelation was troubling on two fronts: both the decline in revenues from tickets and fines, and the undisciplined management of the department’s finances.

“It’s not something that was ever supposed to even be a consideration when talking about the Justice Court—that court was created to make the village money, not cost money,” Mayor Mark Epley said. “There’s going to have to be some changes made from a couple different angles, obviously.”

When Southampton Village created its own Justice Court in 2002, it was done on the premise that adjudicating misdemeanors and, primarily, traffic violations in-house would be a financial windfall for the village government, both because the village would not have to share revenues from tickets and fines with the town court system, and also because it could better pursue scofflaws for back fines.

And for most of its tenure, the court has been a substantial moneymaker. In its first year, the court took in some $600,000 in revenues, whereas the village had been averaging just $125,000 in prior years when the village’s tickets and violations were handled by the Town Justice Court. In that first year of business, the court collected $400,000 more in revenues than it spent, much of which was attributed to the collection of delinquent fines.

Operating costs at the time, however, were only $150,000 per year. By 2009-10, they had climbed to more than $346,000. But the fines levied and collected by the court also climbed steadily from most of 2002 to 2010—peaking at $592,000 in 2009-10—and while spending increases were chipping into profits, the court remained comfortably enough in the black that little urgency was placed on reining in spending.

“There’s no question that costs grew in that period,” Mayor Epley said. “Some of that was necessary—the metal detector, for instance. They needed more help in the office when it was getting busier every year. But we needed to be minding the bills a little better.”

From its initial staff of two judges and one full-time clerk, the court now employs two full-time clerks and a court bailiff, as well as part-time help in the summertime, with more than $170,000 in annual salaries—more than all its operating costs in 2002. The court also spends some $70,000 a year on court stenographer services.

In 2007-08, after typically coming in under budget, the court overran its $286,000 budget by about $13,000, but took in $474,000 in revenues. The following fiscal year, the village upped the court’s spending forecast to $321,000. Final costs still outpaced the increase by $6,000, but court revenues leaped to $584,500. It was the first year the court started employing part-time help in the busy summer months to assist the two full-time clerks.

Despite the two years of small overages, the following year the village cut the anticipated budget for the court by $55,000 in the 2009-10 fiscal budget, to $266,000. Spending, however, climbed to $346,000, resulting in an $80,000 overage. But, again, the department took in a record-high amount of revenues, more than $592,000.

Mayor Epley said that a substantial part of the discrepancy in the budget that year was probably attributable to the salary for the court’s bailiff not being accounted for, since the officer had been counted as part of the village’s police department budget in some years. So the overspending was probably not as severe as it appears in financial statements. Nonetheless, he said, pennies were clearly not being pinched in the Justice Court as they were in other departments.

Following the broad overspending in 2009-10, the Village Board, laboring to keep tax increases to a minimum, increased the spending forecast for the court in its 2010-11 budget by just $25,000, to $291,655. Included in that budget was $10,000 for the hiring of part-time help for the two full-time clerks—triple what had been allotted in past years—in anticipation of the busy summer schedule.

But the busy summer was not as busy in 2011: Village Police issued just 2,400 tickets that year, a 36-percent decrease from 2010 and revenues to the court dropped by more than $155,000, to about $437,000.

The court’s costs for the year, despite the substantial decline in the amount of business, dropped by only $6,000 from the previous fiscal year and again came in well over budget, by about $50,000. While the revenues did still cover the court’s expenses, the village’s independent auditors, who account for the long-term costs of benefits for employees in calculating expenditures, showed the court running a deficit in 2010-11 for the first time.

“Government accounting standards do not look at an adopted budget as a major component of financial statements,” said John Lundy, the accountant from the village’s accounting firm, Satty Levine & Siacco CPA, who oversees the annual audits. “Departmental budgets are the village trying to estimate what is going to happen—and they’re not always right. They’ll be right on some and wrong on most, actually. When you’re putting the financial statements together, you’re only concerned with what actually happened. Only in the budget as a whole would overspending be a problem.”

At least part of the problem with the loose spending controls may be that the Justice Court is inherently different from other village departments. It is the only one with an elected department head, since Village Justice Barbara Wilson is technically the head of the court. And, as such, the department head is not chosen primarily for expertise at budgeting and cost controls, like most department heads appointed by the Village Board would be.

Judge Wilson herself acknowledged that her role, the one she is elected to fulfill, is not one of business management in the back office, but of fair, reasoned and experienced legal judgment on the bench.

“The village justice is different than a regular department head—I’m not that,” Judge Wilson said. “When we do the budget, I work with the administrator and [Village Board]. We have a brief meeting, I give them a budget of what I think I need, if there are any big changes or expenditures coming, they tell me what I have to spend on some things, and I call them in the summer and ask how much I have for the summer employees. I don’t know right now what happened last year.”

Indeed, the court’s budgeting was largely informal in past years, typically just a handwritten tally of employees and their salaries and what Judge Wilson ballparked as being needed for clerical supplies and ancillary costs.

Mayor Epley said that, going forward, the board and Village Administrator Steve Funsch will be keeping tighter tabs on the court. He also said the village is going to take steps to ensure that revenue from tickets is restored as well.

“We’re going to have to look at the staffing levels in the court, do they have more than they actually need and if so can there be some savings realized there,” the mayor said. “And revenues—well, if there was a drop in the volume of tickets and fine activity, we’re looking at why that happened and how we can turn that around as well.”