Legislature(2001 - 2002)
05/12/2002 09:06 PM Senate FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
CS FOR HOUSE BILL NO. 498(FIN) am
"An Act expressing legislative intent regarding privately
operated correctional facility space and services; relating to
the development and financing of privately operated
correctional facility space and services; authorizing the
Department of Corrections to enter into an agreement for the
confinement and care of prisoners in privately operated
correctional facility space in the City of Whittier; giving
notice of and approving the entry into and the issuance of
certificates of participation for the upgrade, expansion, and
replacement of a certain correctional facility in the City of
Bethel; giving notice of and approving the entry into lease-
financing agreements for that project; and providing for an
effective date."
This was the first hearing for this bill in the Senate Finance
Committee.
JOHN MANLEY, Staff to Representative Harris, testified that
Representative Harris has been acting as the lead proponent of this
legislation in the House Finance Committee because the facility
would be located in his district. Mr. Manley read a statement into
the record as follows.
This bill authorizes construction of a government-owned and
privately managed one-thousand bed prison at Whittier and a
96-bed expansion of the Yukon-Kuskokwim Correctional Center in
Bethel. That was the Governor's number one priority in his
bill.
For the past eight years, we have sent thousands of prisoners
and millions of dollars to Arizona, displacing Alaska jobs and
losing economic benefit of spending those dollars in Alaska.
Our eight-year experience with private prison services in
Arizona has been a tremendous success and there's no reason we
cannot duplicate the success in Alaska.
As you're aware, we have tried this private prison concept in
South Anchorage, Delta Junction, and last year in Kenai. The
difference this year is we have a community that's done its
homework and wants the project. In over 12 hours of testimony
before the House and Senate, not a single resident of Whittier
has testified against the prison. Eighty percent of the
registered voters have actually signed a petition urging the
City [of Whittier] to move forward on the project.
As you know, Whittier is only 50 miles by highway from
Anchorage-approximately the same commuting distance as the
Mat-Su Valley. Whittier's proximity to Anchorage goods,
services and human resources, as well as its deep-water port,
and abundant utility infrastructure, makes the site both cost
effective and feasible.
This bill will create over 325 union construction jobs, 228
temporary indirect construction jobs, 225 permanent prison and
jail jobs, and over 200 permanent indirect jobs. At least
that's what we're estimating.
Mr. Manley referenced a handout that lists the comparative capital
and operating costs of the Governor's statewide expansion plan to
the Whittier facility plan [Copy on file.] He continued reading his
statement.
This bill will allow prisoners to return home from Arizona to
a prison that is situated near the program resources necessary
for effective rehabilitation and to provide relief to regional
jails by allowing sentenced felons to be transferred out of
regional jail beds.
AT EASE 9:52 PM / 10:00 PM
Senator Green indicated she had a concern with this legislation and
requested the bill be held until the following day to allow her an
opportunity for further consideration.
Senator Ward "moved Committee Substitute House Bill number 498…"
Co-Chair Kelly interrupted, noting that a witness was present and
waiting to testify.
Senator Ward continued, "…I hate to do that, but I do move
Committee Substitute House Bill number 498 Finance amended out of
Committee with individual recommendations and accompanying notes."
Senator Hoffman objected.
MARGO KNUTH, Commissioner, Department of Corrections, testified to
the concerns of the Administration regarding this legislation. She
pointed out this bill proposes the construction of a private prison
that would entail a 25-year contract for 1,000 beds at a cost of
$32 million annually. She stressed that this bill "targets one
portion of our population-the need for prison beds," but leaves
unmet the regional need for jail beds and community jail beds. She
therefore, remarked that this legislation does not provide an
economical proposal. She explained that 100 bed expansions would be
necessary for both the Fairbanks facility and the Mat-Su Pre-Trial
facility, and additional expansions would also be needed in other
locations to create beds to house inmates awaiting trial and
inmates serving short sentences. She noted it is not economical to
transport prisoners from remote areas to a centralized location.
Ms. Knuth asserted the process of gaining approval for the proposed
facility has not been open and competitive as established in the
State's procurement code. She suggested a cost-based competitive
process is integral to insuring that the State is receiving "the
most bang for its buck."
Ms. Knuth spoke to concerns of establishing Whittier as the
location of a private prison facility. She informed that the local
population is approximately 190 people and that the community lacks
the proper infrastructure to operate a 1,000-bed prison. She listed
fire protection, police protection, utility services, secondary
employment, housing for employees and families, as some of the
infrastructure necessary.
Ms. Knuth remarked that the Governor's proposed "regional approach"
legislation and other legislation sponsored by Senator Green are in
the better interest of the State of Alaska.
AT EASE 10:05 PM / 10:15 PM
DEE HUBBARD, Resident of Sterling, testified via teleconference
from an off-net site in Sterling about her efforts to place a
question before Kenai area voters as to whether the residents would
support a private prison facility in that community. She pointed
out the voters in the Kenai election rejected such a proposal, as
have voters in Wrangell in a separate election.
Ms. Hubbard surmised that Cornell Corrections of Alaska, Inc. "went
shopping" for a community to support the construction of a private
prison facility for the company to operate. She pointed out the
absence of a significant competitive bidding process and detailed a
letter sent by the company to the City of Whittier, which the City
utilized almost verbatim in an ordinance adopted on November 5,
2001. She continued describing other events demonstrating that a
competitive bidding process has not been employed.
Ms. Hubbard warned of the economical costs to the State as a result
of a binding contract with Cornell Corrections whereby the State
would be obligated to pay the company for beds not housing State
prisoners. She furthered that the company could transfer inmates
from other states to fill these empty beds and thus collect
additional fees.
FRANK SMITH testified via teleconference from an off-net site in
the State of Kansas that he has followed this legislation as it has
progressed through the Legislature. He was troubled because
"practically half the statements" made by proponents of a private
prison in Alaska, "have been nonfactual." He reiterated that the
process has not been competitive and indicated he has obtained many
documents proving this. He noted a competitor of Cornell has
offered to construct the same facility for $17 million less than
the amount Cornell proposes.
Mr. Smith remarked that the City of Whittier is a poor location for
any type of prison as it is "unstaffable" and the infrastructure is
"dismal" as there are no sewer facilities. He furthered that the
facility would be built next to a tank farm, thus raising
environmental concerns.
Mr. Smith referenced a front-page article in the Wall Street
Journal detailing the "troubled recent history" of Cornell
Corrections [copy not provided].
Mr. Smith surmised the only reason the Legislature is considering
this bill is because of campaign contributions received by a few
legislators.
Co-Chair Kelly interjected that it is inappropriate to testify
about campaign contributions.
Mr. Smith apologized and spoke of prison riots due in part to
under-trained and low paid correctional officers, asserting that
the operations of Cornell Correctional of Alaska, Inc. is
"unprofessional".
SFC 02 # 98, Side B 10:24 PM
Mr. Smith urged the Committee to reject this legislation.
Senator Leman requested the witness' affiliation.
Mr. Smith replied he is a citizen activist, an author of a recently
written chapter on Native Americans in private prisons for a
Canadian publisher, as well as an opinion article in the Anchorage
Daily News and is involved in research and service provision in
criminal justice for 30 years, including running programs in the
Palmer Pre-Trial facility and the Sutton prison. He emphasized he
has no financial interest in the outcome of this legislation.
AT EASE 10:26 PM / 10:31 PM
RICHARD VAN HATTON, 16-year correctional officer for the State of
Alaska, and President, Correctional Officer Chapter of the Public
Safety Employees Association, testified via teleconference from an
off-net site that every public vote on this matter has been
defeated by a wide majority. He stated the City of Whittier is a
poor choice for such a facility as it would be unable to provide
security in the event it was needed.
Senator Ward called for the question on the motion to report the
bill from Committee.
Senator Green objected and pointed out the Committee has not
discussed the certificates of participation, the sole source
process, the actual costs of the project in addition to the amounts
indicated in the fiscal notes, as well as other concerns. She
remarked that a financial obligation of this magnitude warrants
further hearings.
Senator Olson noted that although he has heard testimony in
opposition to this bill from witnesses who do not live in Whittier.
He asked if a resident of Whittier could testify as to the adequate
infrastructure.
BEN BUTLER, Mayor, City of Whittier, testified in Juneau that the
infrastructure issue has been researched and it has been determined
that electrical power is available through a new power line
installed in the Whittier Tunnel. He informed that the City
currently utilizes 14 percent of available power and that the
prison facility would utilize half the total available power. He
continued that natural gas is now supplied to the community and
ample water is available. He said no new roads would be
constructed, thus road maintenance costs would not increase. He
pointed out that septic treatment would be conducted on site and
that these expenses are included in the proposed costs of the
facility. He expressed, "we have a pretty good fire department in
Whittier," noting state of the art fire equipment is stationed at
the Whittier Tunnel and that an emergency plan would be employed by
the prison facility.
Mr. Butler detailed the process whereby the city government issued
a request for proposals (RFP) on a private facility to be located
in Whittier after the ballot initiative for such a facility in the
Kenai area failed. He asserted that this process was deemed by
legal advisors to be comparable to State-issued RFPs.
Mr. Butler emphasized that no Whittier residents have voiced
opposition to this legislation. He stated the intent to add value
to the State from the Whittier Tunnel by diversifying the economy
in Whittier.
Senator Wilken was concerned with large fiscal note and the legal
opinion issued by the Division of Legal and Research Services. He
questioned the construction of a 1,000-bed prison in a community of
190 residents.
A roll call was taken on the motion to report the bill from
Committee.
IN FAVOR: Senator Ward, Senator Austerman, Senator Hoffman, Senator
Leman, Co-Chair Donley and Co-Chair Kelly
OPPOSED: Senator Olson, Senator Wilken, and Senator Green
The motion PASSED (6-3)
CS HB 498 (FIN) am MOVED from Committee with $165,500 fiscal note
#3 from the Department of Corrections and zero fiscal note #4 from
the Department of Revenue.
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