Legislature(1995 - 1996)
02/20/1996 01:36 PM FIN
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HOUSE BILL NO. 428 "An Act giving notice of and approving a lease-purchase agreement for construction and operation of a correctional facility in the Third Judicial District, and setting conditions and limitations on the facility's construction and operation." Co-Chair Hanley noted that HB 428 would be assigned to a subcommittee. Representative Mulder observed that the Department of Corrections' budget has grown by over 600 percent. He stressed that the intent of HB 428 is to come to grips with the spiraling cost of corrections. He noted that HB 428 was influenced by hearings held during the interim. He explained that the legislation allows, but does not mandate, the Department of Corrections to contract with a private contractor to construct and operate up to a 1,000 bed facility. The total cost would be up to $100.0 million dollars. He observed that private contractors projected that a 1,000 bed facility could be built for $60.0 to $75.0 million dollars. He maintained that savings derived from the private sector stem from the fact that the private sector does not have to contend with all the rules and inefficiencies of the public system. Representative Mulder addressed misconceptions. He clarified that the legislation does not require the construction of 1,000 beds. The legislation allows the 2 commissioner to authorize construction of up to 1,000 beds. He noted that $100.0 million dollars is the upward limit that can be spent. He added that the safety record of privately operated facilities is roughly comparable to state operated facilities. He asserted that the new prison will relieve overcrowding. He observed that the State is over capacity by 100 -250 prisoners per day. He noted that the State is being fined $300 hundred dollars for each institution each day that the facility is over capacity. He maintained that the legislation will allow the new prison to take pretrial prisoners. Representative Mulder acknowledged that the new facility will have associated operating costs. He observed that the State currently spends $6.0 million dollars in the state of Arizona to house Alaskan prisoners. He stressed that the bill will not take jobs away from Alaskans. The bill calls for a project labor agreement for the construction of the facility that will maximize Alaskan hire and employment. He emphasized that Alaskan Native corporations and Alaskan private businesses have expressed interest in the legislation. He maintained that HB 428 represents new economic opportunities for Alaskan businesses. He observed that corrections is a growth industry. He pointed out that as long as the State continues to pass get-tough-on-crime legislation the State will be incarcerating more individuals. He noted that the State is projected to need 962 new beds by the year 2002. Representative Mulder noted that the facility will be built some where in the Third Judicial District. He stated that the facility will not be built at the location of the Alaska Village in Anchorage. Representative Mulder summarized that HB 428 represents a win/win situation. He maintained that HB 428 relieves overcrowding, brings prisoners back to Alaska, saves the State money, and provides jobs for Alaskans. Representative Brown stated that she shares many of the goals expressed by the Subcommittee Chairman. In response to a question by Representative Brown, Representative Mulder emphasized that he has no personal tie to the legislation. He noted that several Native corporations and private businesses have expressed interest in the legislation. He could not provide details of plans by the private sector. He stated that no particular site has been identified. He observed concerns by the Mayor of Anchorage. He pointed out that arrests in Anchorage have more than doubled. He emphasized that the Commissioner has latitude in selecting a site. 3 Representative Brown expressed concern with the overall cost of the legislation. She questioned if operating costs and land purchase are included in the total construction and related costs as contained on page 3, line 9. She emphasized the need to compare "apples to apples." Representative Mulder noted that the Subcommittee has not received a plan by the Administration. Representative Mulder noted that the Commissioner of the Department of Corrections recommends the deletion of the requirement that contract facilities abide by court orders. The restriction on housing male maximum security prisoners will be removed at the request of the Commissioner. The Department felt that this provision was confusing. The removal of this provision will allow the Commissioner the full range of options for housing inmates at the facility. In addition, the facility accreditation provision will be removed at the request of the Commissioner. He noted that design cost will be included in the cost of construction. Operating costs will not be included. Representative Mulder reiterated his belief that the private sector can built the facility cheaper than the State. He observed that the Department of Corrections estimated that a 400 bed facility would cost $104.0 million dollars. Private contractors have indicated that the facility could be build for approximately $65.0 million dollars. He observed that operating costs will be part of the private bid process. If the Department feels it can operate the facility at a lower cost the Commissioner does not need to accept the bid. He observed that it would be prudent to construct the RFP to state that if none of the bids meet the requirements in terms of cost savings no bid will be accepted. In response to a question by Representative Brown, Representative Mulder reiterated that maximum security male prisoners are being excluded to allow the Commissioner more flexibility. He noted that Spring Creek is the State's primary maximum prison facility. Representative Navarre pointed out that a prohibition on housing maximum security prisoners could restrict the housing of pretrial prisoners. Removal of the language would allow the housing of pretrial prisoners. He asked if the facility would displace current facility beds. Representative Mulder stated that the new facility is not projected to displace any current state employees. He observed that the Mayor of Anchorage is considering the closure of the 6th Avenue facility. He estimated that employees of the 6th Avenue facility could be absorbed within the current system. 4 Representative Brown asked the estimated operating costs. She observed that the annual operating cost of the Spring Creek facility is $14.0 million dollars. She asked how the operating costs would be provided for in the State's budget. Representative Mulder emphasized that the State is being fined for being overcrowded. Representative Brown pointed out that the fine is returning to the General Fund. Representative Mulder observed that options for adding beds include, additional prisoners being sent to Arizona, construction of additional beds in existing state facilities, or the construction of a new facility. All three options have associated costs. He acknowledged that sending prisoners out-of-state represents the lowest cost. He emphasized that it is good public policy to employ Alaskans. Representative Brown asked the estimated per day operating cost per prisoner. Representative Mulder noted that private contractors have given rough estimates of $55 to $69 dollars a day. He estimated that bids would be less than the current state average. He noted that public employee groups can form cooperatives to bid on the contract. Representative Mulder noted that the legislation allows a lease purchase option. The facility could also remain in the ownership of the private entity. He stressed that a private entity would pay property tax. Representative Navarre estimated that the private owner would roll property costs into the contract bid. Co-Chair Hanley assigned HB 428 to a subcommittee consisting of Representative Mulder as Chair and Representatives Kelly and Navarre. Co-Chair Hanley noted that the legislation does not require that a facility be built by a private enterprise. The Commissioner could request capital funds from the Legislature.