CHICAGO - A judge's ruling that Michigan reneged on its duty to pay for local trial court operations could cost the state $1 billion if upheld.

The decision issued by Judge James Giddings of the Ingham County Circuit Court last month stemmed from a class action lawsuit filed in 1988 by 134 local governments. That suit charged the state was not paying for the court services, thereby violating the state constitution and state statutes.

Judge Giddings rejected the local governments' argument that the state is required to pay for local courts because the constitution requires Michigan to pay for the services of state government, and that those services include the trial courts. In his decision, the judge pointed out that the constitution allows for "other resources" besides state taxes to pay for state services.

On the statutory question, the judge ruled that a 1980 law passed by the legislature mandated that the state appropriate money for the court services. That law called for a graduated increase of state appropriations for the services, beginning with 20% of the cost in 1983 and ending with 100% of the cost by 1988.

Douglas Van Essen, the attorney for the plaintiffs, said the state never appropriated any money for the court services except for Wayne County, which has been receiving about half the cost of its court services since the law was passed. Because of its larger population compared to other counties in the state, Wayne County, which did not join the lawsuit, was treated separately in the legislation, Mr. Van Essen added.

Lawyers for the state had argued that one legislature cannot be take appropriation action that binds future legislatures, according to Chris DeWitt, a spokesman for Michigan's Attorney General's office.

"We won half and lost half of the case," he said.

Mr. Van Esse said the ruling on the statutory count left the door opened to damages to the local governments that could total $1 billion for the time period covered by the lawsuit. In addition, a win on either the statutory or constitutional count for the local governments would result in the state paying an estimated $250 million a year to the governments for the court services, he added, pointing out that a trial court would have to decide the exact cost to the state if the governments prevail.

Mr. DeWitt did not dispute the estimates.

Both Mr. Van Essen and Mr. DeWitt said appeals would be filed with the Michigan Appeals Court.

In the meantime, the circuit court ruling will not have any effect on the state's current budget or fiscal 199 budget, that takes effect Oct. 1, according to Nick Khouri, the state's chief deputy treasurer.

"Clearly this is not a current budget issue, he said. "There will be an appeal and were confident the judge's ruling will be repealed."

Mr. Van Essen said that if the local governments win, it could take two to three years before the cost to the state is decided by a trial court.

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