Legislature(2001 - 2002)
03/05/2002 03:40 PM Senate STA
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
SENATE STATE AFFAIRS COMMITTEE
March 5, 2002
3:40 p.m.
MEMBERS PRESENT
Senator Gene Therriault, Chair
Senator Randy Phillips, Vice Chair
Senator Rick Halford
Senator Ben Stevens
Senator Bettye Davis
COMMITTEE CALENDAR
SENATE BILL NO. 336
"An Act giving notice of and approving the entry into, and the
issuance of, certificates of participation for the upgrade,
expansion, and replacement of certain correctional facilities and
jails; giving notice of and approving the entry into, lease-
financing agreements for certain of those projects; and providing
for an effective date."
HEARD AND HELD
PREVIOUS COMMITTEE ACTION
SB 336 - No previous action to record.
WITNESS REGISTER
Margo Knuth
Strategic Planning Coordinator
Department of Corrections
431 N. Franklin Ste 400
Juneau, AK 99801
POSITION STATEMENT: Testified on SB 336
Devon Mitchell
Debt Manager
Department of Revenue
PO Box 110405
Juneau, AK 99811-0405
POSITION STATEMENT: Testified on SB 336
Margaret Branson
P.O. Box 271
Seward, AK 99664
POSITION STATEMENT: Testified in support of SB 336
Scott Janke
P.O. Box 167
Seward, AK 99664
POSITION STATEMENT: Testified in support of SB 336
Steve Sweet
1108 Galena Street
Fairbanks, AK 99709
POSITION STATEMENT: Testified in support of SB 336
Jim Lacrone
7010 Staedem Drive
Anchorage 99504
POSITION STATEMENT: Testified in support of SB 336
George Avila
P.O. Box 872379
Wasilla, AK 99687
POSITION STATEMENT: Testified in support of SB 336
Brad Wilson
2444 Tulane Street
Anchorage, AK 99504
POSITION STATEMENT: Testified in support of SB 336
Dee Hubbard
P.O. Box 88
Sterling, AK 99672
POSITION STATEMENT: Testified in support of SB 336
Mayor John Williams
210 Fidalgo Street
Kenai, AK 99611
POSITION STATEMENT: Testified in support of SB 336
John Fulton
City Manager
P.O. Box 522
Dillingham, AK 99576
POSITION STATEMENT: Testified in support of SB 336
Paul Carr
North Slope Borough Chief of Police
P.O. Box 69
Barrow, AK 99723
POSITION STATEMENT: Testified in support of SB 336
John Duffy
Mat-Su Borough Manager
350 East Dahlia Avenue
Palmer, AK 99645
POSITION STATEMENT: Testified in support of SB 336
Don Ethridge
AFLCIO Representative
th
710 W. 9 Street
Juneau, AK 99801
POSITION STATEMENT: Testified in support of SB 336
Paul Richards
City of Bethel Representative
nd
217 2 Street Suite 201
Juneau, AK 99801
POSITION STATEMENT: Testified in support of SB 336
Joseph Reed
Department of Corrections
431 N. Franklin Ste 400
Juneau, AK 99801
POSITION STATEMENT: Testified on SB 336
ACTION NARRATIVE
TAPE 02-13, SIDE A
CHAIRMAN GENE THERRIAULT called the Senate State Affairs
Committee meeting to order at 3:40 p.m. Present were Senators
Davis and Stevens and Chairman Therriault. Senator Phillip
arrived at 3:41p.m. and Senator Halford arrived at 3:45 p.m.
SB 336-LEASE-PURCHASE CORRECTIONAL FACILITY
CHAIRMAN THERRIAULT announced SB 336 was only one item on the
calendar. It was introduced on behalf of the governor to deal
with the expansion of prison facilities around the state.
He stated his intention was to hear the bill, listen to community
testimony and hold it in committee. Because there were a number
of testifiers from each community, he asked that a spokesperson
be selected for each area so that support or opposition could be
determined. He also wanted to ensure that there was enough time
to discuss the financing mechanism with individuals from state
agencies.
MARGO KNUTH, Department of Corrections Strategic Planning
Coordinator, spoke for the administration. She said the bill
represents a regional approach to expanding and upgrading some
state prisons and jails. With the exception of the Anchorage
jail, there has been no new construction in Alaska since Spring
Creek was brought on line in the 1980s. Because of overcrowding,
they have used a private prison in Arizona to deal with the
overflow. There is an appreciation throughout the state that it
would be better to house Alaskan inmates in the state. Through
certificates of participation (COP), this bill will authorize the
department to add 237 beds at the Palmer prison that is located
in Sutton. The jails in Bethel and in Fairbanks are regional
facilities that would be increased by 96 and 60 beds
respectively. Those facilities have been overcrowded with pre-
trial detainees and prisoners with short sentences, which has
created significant logistical problems for the department. For
instance, a person who hasn't gone to trial yet, hasn't been
sentenced, or has just a few days to serve needs to stay in the
local facility to keep transportation costs from becoming
prohibitive.
This would also authorize expansion of the Spring Creek facility
by 170 beds. This would be specifically oriented toward expansion
of the youthful offender facility. In the last decade there have
been a number of initiatives that have waived juveniles to adult
status. These individuals represent a discrete population that
needs special management and special programs. This can be
provided most efficiently by having a special program in just one
place and Spring Creek already has a youthful offender program
that has a 50 bed capacity. Offenders in the 16 to 25 year age
group are more impulse driven, have less foresight into the cause
of their problems, and need special programs and management.
The bill also outlines future needs including the Point MacKenzie
Farm and the Mat-Su Pretrial Facility, which has the largest
population increase in the state and will need a jail expansion
in the near future. The Anchorage jail that will open in a month
is designed for expansion and should be expanded by 200 beds in
the next five years. In phase three they envision more prison
beds in Kenai at the Wildwood facility and jail beds at Lemon
Creek and Ketchikan.
The other component of the bill addresses some of the community
jail needs around the state. There are a number of areas with no
state jails or prisons but they still need to hold a small number
of people until they can be transferred to a state facility. This
is how community jails came about and many of them have had no
infrastructure upgrades in a long time. Dillingham, Kodiak,
Kotzebue and North Slope Borough have the most pressing needs and
this bill proposes authorizing matching funds of $4 million each.
It would be incumbent upon the community to find their match to
bring the project online.
They have identified what the additional operating costs will be
and unfortunately, incarceration is not cheap. To control costs
in corrections, Alaska's sentencing laws would probably have to
be readdressed. As the baby boomers age and populations increase,
other states are reevaluating how much they want to allocate to
corrections.
She noted the booklet put together by the Department of
Corrections titled, "The New Way of Doing Business" and is based
on community partnerships. [A copy can be found in the bill
file.] It provides more information about the state jails and
prisons identified in the bill.
SENATOR PHILLIPS asked if Alaska isn't in a different position
than other states. People in his area are complaining about the
increasing budget and the fact that the state is taking on more
responsibility. He asked for a comparison with Washington and
Oregon.
MS. KNUTH said Alaska has always been unique in not operating at
the county level. In other states, jails are county
responsibility while Alaska has a unified system for its prisons,
jails and its court system. With the exception of the community
jails outlined, they are operated at the state level. If we
operated like California and Washington, we would only be
responsible for prisons at the state level and they tend to
operate efficiently and can have lower costs due to economy of
scale. However, Alaska has the dual responsibility of providing
both prisons and jails.
SENATOR PHILLIPS asked if local governments could take on the
responsibility.
MS. KNUTH said that is theoretically possible, but it raises the
political question of at what point is the state going to ask
communities to assume more responsibility for law enforcement on
several levels.
CHAIRMAN THERRIAULT noted he isn't in favor of putting "findings"
on bills and asked if there was a reason for them.
MS. KNUTH though the bill would be just as effective without the
"findings."
SENATOR HALFORD said he was having trouble understanding the
book. He asked what "two levels of 48 double occupant cells 96
total beds" meant.
MS. KNUTH though it was written awkwardly. There are 24 two bed
cells per floor.
SENATOR HALFORD accepted the explanation.
CHAIRMAN THERRIAULT said he would like to talk about the funding
mechanism.
DEVON MITCHELL, Debt Manager for the State of Alaska, explained
that the bill proposes the use of certificates of participation
for funding. The Spring Creek correctional facility, the Kenai
Courthouse, the Palmer fire facility and the Fairbanks Courthouse
have all used this mechanism. Although those were all single
projects, this bill takes a group of projects to use the same
financing mechanism. It would work as follows:
You have a piece of property with a facility on it. You
give a title interest in that facility to a trustee
bank. The trustee bank then enters into a lease with
the Department of Administration. The revenue stream
that is created by that lease becomes a security for
investors who will put up the money to make the
improvement or build the facility. In this case, we
would be looking at entering into leases on a limited
number of these facilities and then using those
proceeds to fund both those facilities improvements as
well as improvements outside the scope of those
particular projects so the grants would go to the
community jails as well as the design work on the
facilities that would be contemplated for the future.
CHAIRMAN THERRIAULT asked whether the trustee bank gets title to
the entire facility of just the addition.
MR. MITCHELL said they would have title to the entire facility.
CHAIRMAN THERRIAULT said the $4 million isn't substantial but
it's like taking a home equity loan on state jails to make a
grant.
MR. MITCHELL said they wouldn't enter into leases on every one of
the state facilities that was listed. They would pick facilities
that match the approximate value of the bill. This would amount
to approximately $118 million including the cost of issuance so
they would try to match that with certain state owned facilities.
None of the investors would invest with the idea that they would
actually own a prison in the State of Alaska; they would want to
be repaid. The real security is the pledge of the State of Alaska
to repay the money, subject to annual appropriation.
CHAIRMAN THERRIAULT asked if there was an added expense to the
financing mechanism other than a straight general obligation (GO)
bond.
MR. MITCHELL said it is more complex than that. The trustee bank
would have an annual fee of between $3 and $5 thousand. Because
there are more buildings, it might be as much as $10,000 on an
annual basis. With a GO it's a better credit because of the full
faith credit pledge rather than the annual appropriation and it
is a less complex transaction because the leases don't have to be
completed. There would be a better credit rating, which would
result in paying slightly less and because of that, the leases
the state enters into are rated one full grade below the state's
GO rating of AA2. This means it would be more expensive. Although
he couldn't quantify the number right then, he would work on it.
CHAIRMAN THERRIAULT asked if he could address the policy call
made by the administration regarding why they chose this route
rather than the other.
MR. MITCHELL said he couldn't speak to the administration's
policy, but could speak to the different mechanisms that exist to
finance projects like these in the state. COPs and GOs were
discussed previously. The third financing method is lease revenue
bonds, which was the mechanism used to build the Anchorage Jail.
This involves a financing that is similar to a certificate of
participation except that the municipality owns the facility.
Therefore the state enters into a lease with the municipality.
Again, the credit is the State of Alaska appropriating money
annually and making those lease payments. It's the same credit
but a different structure. It doesn't fit this situation well
because there are state projects as well as community jails.
Also, there is some outstanding debt on the Spring Creek facility
making it difficult to add debt of a different kind.
SENATOR PHILLIPS asked for the limit on COPs.
MR. MITCHELL replied it is $1 million or $10 million in
repayments.
SENATOR PHILLIPS said, "That's why we're here. Otherwise you
probably would have done it a long time ago. Right?"
MR. MITCHELL had no answer.
There were no further questions on the financing mechanism.
MARGARET BRANSON testified from the Seward LIO and said they were
primarily interested in the Spring Creek addition, but they
support the entire bill.
SCOTT JENKE testified via teleconference from the Seward LIO and
reinforced Ms. Branson's testimony. The city is prepared to move
forward with the Spring Creek expansion. The bond that was sold
to build Spring Creek expires in September 2006 and they are
ready to move forward with the expansion.
CHAIRMAN THERRIAULT asked whether the community wants the COP
financing mechanism used or would they favor any method that gets
the project done.
MR. JENKE said they support any mechanism that gets the bill
passed and the facility built.
STEVE SWEET testified via teleconference from the Fairbanks LIO
in favor of SB 336. He said passage of the bill would result in a
cost savings to the state and he thinks it is important that
prisoners are incarcerated in state and reasonably close to
family members.
CHAIRMAN THERRIAULT asked whether he was representing himself.
MR. SWEET replied he was representing himself.
JIM LACRONE testified via teleconference from the Anchorage LIO
in support of SB 336. He said he is a retired corrections officer
and sees this bill as a way for the state to have an impact on
multiple regions and communities throughout the state. He
supports placing prisoners close to their families, their support
groups and their cultural heritage.
GEORGE AVILA testified via teleconference from the Anchorage LIO
in support of SB 336. He is currently employed by the Department
of Corrections and believes the bill makes good use of the
existing infrastructure in the state and will keep inmates closer
to their families.
BRAD WILSON testified via teleconference from the Anchorage LIO
in support of SB 336. He said he is with the Public Safety
Employees Association and they represent the Alaska State
Troopers and other law enforcement officers around the state. A
state run facility is preferable to one that is privately run.
DEE HUBBARD testified via teleconference from the Anchorage LIO
in support of SB 336. She said it is important to have inmates
close to their families and their homes and it is preferable to
build public facilities that benefit the entire state.
CHAIRMAN THERRIAULT asked Ms. Hubbard whether she was
representing herself.
MS. HUBBARD said she was representing herself.
JOHN WILLIAMS, Mayor of Kenai, testified via teleconference in
support of SB 336. He was an outspoken critic of the plan to
build a private correctional facility in Kenai for many reasons.
Most of those objections are discounted in SB 336. The location
of beds is important as is the utilization of existing
infrastructure. The citizens he represents feel it is the state's
responsibility to operate correctional facilities rather than
support private prisons. In fact, they voted three to one against
the private prison concept.
The City of Kenai is a First-Class Home Rule Chartered City,
which means they have broad and far-reaching powers. Among those
powers is the power to issue revenue bonds for economic
development in and around the city. If they were included, they
could bond, with the permission of the State of Alaska, and build
286 beds at Wildwood in the immediate future. They successfully
partnered with the state to build the Kenai Courthouse then
leased the facility from the state. They are prepared to do the
same thing for the Wildwood expansion.
With regard to the issue of local jails that Senator Phillips
mentioned, the city did run a jail many years ago and found it
difficult to do so as a small municipality. They were pleased
when the Wildwood Pre-Trial Facility was built and took them out
of the jail business.
He thanked the committee and asked them to consider amending the
bill to allow the City of Kenai to participate in the bonding
process for construction at Wildwood.
CHAIRMAN THERRIAULT asked whether the community did follow up
polling following the local election regarding the private prison
to determine why the vote turned out the way it did.
He challenged whether the Mayor could really say the vote was
three to one against the private prison concept unless polls were
taken.
MAYOR WILLIAMS replied he had the privilege of running for his
sixth three year term of office during that same period. His
platform was against the private prison concept and in favor of
the public prison concept. Although he hasn't done any official
polling since the election, he won by a greater percentage this
time than in any of the previous six elections. In fact, one
precinct in the City of Kenai voted 181 votes against the prison
and 181 votes for him as mayor. He took that as a signal that the
community was on his side of that issue.
JOHN FULTON, Dillingham City Manager, testified via
teleconference in support of SB 336. He said the Dillingham
Contract Jail operates at or near its eight bed capacity most of
the time and the Alaska State Troopers and Department of
Corrections continually have to move prisoners to accommodate the
space limitations. Depending on the season, it costs the state
between $900 and $1,200 per prisoner for one way in state
transportation. Frequently the prisoners have to return to
Dillingham a few days after they have left so a larger facility
would relieve the need to transport.
The tax base in Dillingham is very limited and they can't afford
to build or run a 25 bed facility with their own resources. They
look to the state for help and they support this bill or one that
is similar. He agreed with Mayor Williams and would like this to
be a state run facility but they are willing to continue to
operate the jail. They only enforce state laws so the prisoners
that enter that jail have violated state laws not municipal ones.
CHAIRMAN THERRIAULT asked whether Dillingham would be able to
come up with the dollar for dollar match as envisioned under
section 5 of the bill.
MR. FULTON replied he isn't even sure how he will keep all his
departments this year. He does not have $4 million in the bank.
PAUL CARR, Chief of Police for the North Slope Borough, testified
via teleconference in support of SB 336. The existing nine bed
jail in Barrow was built in 1980 and due to code violation, they
aren't able to expand their facility. Because of the size of
their facility, they have problems with segregation and
classification of prisoners. They have supported the idea of
regionalized corrections for many years and are willing to commit
to the matching capital requirements to the extent the state is
willing to commit to the operating funds.
CHAIRMAN THERRIAULT asked whether he is able to speak to the
local government's ability to match funds dollar for dollar.
CHIEF CARR said they are committed to do so.
CHAIRMAN THERRIAULT noted the wording allows one community to
provide the match for another. He asked how much the North Slope
Borough could come up with.
CHIEF CARR wasn't sure he understood the question.
CHAIRMAN THERRIAULT said that he believes the North Slope Borough
is the most able to come up with the required match funds and the
wording in the bill would permit them to put up more than their
match to build the facility. They could help other rural
communities and he wondered if they had thought about that
possibility.
CHIEF CARR replied that sort of decision is over his head.
CHAIRMAN THERRIAULT thought some of the National Petroleum
Reserve-Alaska (NPR-A) money that flows through the borough could
also be used to make the match for all the rural community jails.
He commented it is an interesting issue.
JOHN DUFFY, Mat-Su Borough Manager, testified in support of SB
336. They agree with the regional concept because it addresses
community needs and spreads the economic impact throughout the
state. They also agree with the concept of expanding existing
facilities because it is cost effective to do so.
Mat-Su does prefer SB 231 as the mechanism for expansion of
existing prisons. It better addresses today's needs as well as
the future needs of the prison population and utilized Alaska
Industrial Development and Export Authority (AIDEA) funding as
the mechanism and better addresses the needs of Mat Su, Fairbanks
and Ketchikan.
There was no additional teleconferenced testimony.
DON ETHRIDGE, AFL-CIO representative, spoke in support of SB 336.
They like to see the facilities spread throughout the region with
jobs created statewide.
SIDE B
4:30 p.m.
PAUL RICHARDS represented the City of Bethel and spoke in support
of SB 336. He called member's attention to the resolution from
the City of Bethel that was in their packets. The concept is
unanimously supported by the city council.
CHAIRMAN THERRIAULT announced for the benefit of those testifying
via teleconference that committee members have copies of
resolutions from a number of municipalities in their packets.
SENATOR HALFORD referred to the fiscal note and said that 1,222
new beds would be available. Currently there are about 800
inmates housed in Arizona for which the state pays an annual cost
of $20 million. He said, "The operating component picks up in
2006 with about $11 million, so what is the offset on the
operating side or is this net of complete offset?"
JOSEPH REED with the Department of Corrections and author of the
fiscal note replied that, "When this bill kicks in, in FY 2006,
at the end of this fiscal year we will be down to 585 beds in
central Arizona. We are anticipating maintaining that 585 beds in
other words our $20 million contract our $18 million contract in
Arizona is going to go down to $13 or $14 million. On page two of
the fiscal note I have built in state institutions you'll see
less out of state costs of 563 beds and $13.357 million that
offsets the operating costs that are anticipated. The FY 2006
operating expense has already factored out the offsetting cost of
moving the Arizona prisoners back in the state."
CHAIRMAN THERRIAULT said it's the net increase.
MR. REED agreed it's a net increase on the front of the fiscal
note.
SENATOR HALFORD asked for the projected increase in the number of
prisoners. 1,222 beds are added, 563 are taken away, which leaves
a net increase of about 650. He was trying to determine the cost
comparison between the two methods.
MS. KNUTH said they didn't have any appreciable increase for a
few years but this last year saw a net increase of 300 inmates.
They book in 33,000 inmates each year and book out 32,700. They
estimate that the trend is going to be between 150 and 300
additional "keepers" each year. The percentage of pretrial
detainees has been increasing for several years and is now at
about 50 percent. This is a result of judges feeling
uncomfortable releasing defendants on bail.
From a cost perspective, prisoners can be housed more cheaply in
Arizona so bringing them home does come with a price tag.
SENATOR HALFORD asked, "What is that, just in round numbers, per
Arizona versus per bringing them back per prisoner."
MS. KNUTH replied it's about $30 per prisoner per day.
SENATOR HALFORD asked, "The cost in Arizona is what?"
MS. KNUTH replied that it is $57 per day.
MR. REED clarified that it costs $65 per prisoner per day for the
central Arizona detention. That includes transportation, inmate
wages and incidental prisoner expenses but excludes any major
medical expenses. In state costs are between $114 and $115 per
prisoner per day.
SENATOR HALFORD noted that's almost double.
MR. REED agreed. The fiscal note indicates that the 563 beds in
Arizona are offset but they will have to ask the Legislature for
an additional $8.2 million to bring those prisoners back.
SENATOR HALFORD asked what the cost per bed in Bethel is. He
explained he was interested in the comparison between a fairly
large but rural facility versus [Mr. Reed anticipated the
question.]
MR. REED estimated it is about $140 per day in Bethel.
SENATOR HALFORD confirmed $140 in Bethel and $114 in Anchorage.
MR. REED reminded members that Bethel has a 38 percent cost of
living allowance and Nome has a 42 percent allowance.
SENATOR HALFORD emphasized that he wasn't being critical; he's an
advocate of spending money on wages rather than transfer
payments. He simply wanted to know the comparison.
CHAIRMAN THERRIAULT asked whether the constitutional issue of
getting prisoners rehabilitated and back into society and housing
prisoners out of state had been litigated.
MS. KNUTH replied federal appellate courts have ruled that being
incarcerated out of state is within the purview of a state. A
"Law Review" article suggested the Alaska Supreme Court should go
beyond federal ruling and require that inmates be kept in Alaska,
but that has not been pursued in litigation.
SENATOR PHILLIPS commented that is an opinion.
MS. KNUTH agreed.
CHAIRMAN THERRIAULT noted they needed information from Mr.
Mitchell regarding the cost of the COP versus the GO.
MS. KNUTH said she wanted to note that Kotzebue has a $4 million
federal grant that they can use for their matching share. Half of
the communities know where their match would come from and half
do not know.
SENATOR PHILLIPS asked how Kotzebue got the grant.
MS. KNUTH wasn't sure whether it was through BIA but she thought
it was based on native population. Recently there have been
several criminal justice grant programs available to native
organizations.
CHAIRMAN THERRIAULT asked committee members to contact his staff
if they had questions or wanted any information before the bill
was heard again. If members wanted to work independently, he
asked that they keep him informed.
SB 336 was held in committee.
There being no further business to come before the committee,
Chairman Therriault adjourned the meeting at 4:40 p.m.
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