How Much Does Civil Litigation Affect Municipal Budgets?
A lot. A recent Governing Magazine article reports,
Claims and lawsuits are an everyday occurrence in the Big Apple, where about 9,500 cases were filed against the city last fiscal year. In all, New York paid out $720 million in judgments and claims in fiscal 2016, which amounts to about $84 per resident. That’s only about 1 percent of the city’s total expenditures, but it represents much-needed funding that could be directed elsewhere. For instance, it’s more than the combined budgets of the Parks and Recreation Department and the Department of Buildings.
Steep legal bills aren’t just an issue in New York. In large cities across the country, court challenges can be a drain on municipal coffers. To gauge the fiscal impact of claims and lawsuits, Governing requested financial data from the two dozen largest cities in the U.S., the first such national review of comprehensive legal costs. Twenty cities responded, and their combined financial information paints a picture of just how significant these claims costs can be. All totaled, the cities paid out more than $1.2 billion in their last fiscal year.
The article goes on to point out that many of these claims are possible due to extremely aggressive lobbying on behalf of the New York State Trial Lawyers Association, which benefits greatly from these municipal payouts.
Of course, many claims are legitimate, but they come with a trade-off in services that are not able to be provided in areas such as education, healthcare, and updated infrastructure due to lower levels of funding.