Legislature(2003 - 2004)

05/01/2003 03:35 PM Senate STA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
         SB 195-CERTIFICATES OF PARTICIPATION FOR JAILS                                                                     
                                                                                                                                
CHAIR  GARY  STEVENS announced  there  was  a proposed  committee                                                               
substitute (CS) before the committee.                                                                                           
                                                                                                                                
SENATOR JOHN COWDERY  made a motion to adopt CSSB  195 \D version                                                               
as the working document. There was no objection.                                                                                
                                                                                                                                
CHAIR GARY STEVENS explained the  bill would provide certificates                                                               
of participation (COP)  for the upgrade and  expansion of certain                                                               
jails that are in need of expansion or replacement.                                                                             
                                                                                                                                
There are 15 community jails  throughout rural Alaska and four of                                                               
them are  at the top  of the needs  list. The community  jails in                                                               
Dillingham and Kotzebue  are top priority due to  the high demand                                                               
for their services  while the North Slope  Borough Community Jail                                                               
needs more beds  and has no room to expand.  The Kodiak Community                                                               
Jail  needs  to  be  replaced  because it  is  old  and  in  poor                                                               
condition.                                                                                                                      
                                                                                                                                
The bill  would provide COPs  to be issued  and each of  the four                                                               
municipalities would  receive $4,000,000 provided they  agreed to                                                               
match the funds.                                                                                                                
                                                                                                                                
JERRY  BURNETT,  Director  of  Administrative  Services  for  the                                                               
Department of  Corrections, agreed that the  four community jails                                                               
were of top priority. He pointed  out that community jails are an                                                               
integral  pre-trial component  of the  state correctional  system                                                               
and  that the  need  for expansion  is  critical. The  department                                                               
requested federal funds for all  four through both OMB (Office of                                                               
Management and  Budget) and the Alaska  Congressional Delegation.                                                               
They took  no position  as to whether  COPs were  the appropriate                                                               
financing method.                                                                                                               
                                                                                                                                
SENATOR  GRETCHEN  GUESS asked  whether  federal  funds would  be                                                               
available in the next year.                                                                                                     
                                                                                                                                
MR. BURNETT said they didn't know.                                                                                              
                                                                                                                                
SENATOR COWDERY asked if the  maintenance appropriations were for                                                               
the entire jail or just the additions.                                                                                          
                                                                                                                                
MR.  BURNETT replied  the annual  3.3 million  additional funding                                                               
would be  for the additional  capacity. The  department currently                                                               
has  about $4.8  million  for community  jails  in the  operating                                                               
budget and they currently operate 153 beds.                                                                                     
                                                                                                                                
SENATOR COWDERY asked  if they would try to  standardize the size                                                               
and design of the facilities.                                                                                                   
                                                                                                                                
MR. BURNETT  replied he was  unaware of any  standardized design.                                                               
Although they wouldn't oppose it,  some of the jails were already                                                               
designed.                                                                                                                       
                                                                                                                                
SENATOR  COWDERY asked  if there  was a  benefit to  constructing                                                               
larger facilities initially.                                                                                                    
                                                                                                                                
MR.  BURNETT said  he  couldn't  speak to  that,  but this  would                                                               
alleviate some  of the  overcrowding in  the state  facilities in                                                               
Bethel and Nome that are  currently operating at over 100 percent                                                               
capacity.                                                                                                                       
                                                                                                                                
SENATOR COWDERY asked if these were all pre-trial facilities.                                                                   
                                                                                                                                
MR.  BURNETT said  the  primary  use of  community  jails is  for                                                               
pretrial  or  short sentences.  The  four  community jails  under                                                               
discussion are all  in communities that have a  superior court so                                                               
the people  housed in those  jails must  appear in court  in that                                                               
community.                                                                                                                      
                                                                                                                                
SENATOR COWDERY asked if need is tied to population growth.                                                                     
                                                                                                                                
MR. BURNETT  said the  number of people  in the  state facilities                                                               
has increased  at a higher  rate than the population  growth, but                                                               
there is a strong correlation.                                                                                                  
                                                                                                                                
SENATOR  GRETCHEN GUESS  asked if  fewer  inmate transfers  would                                                               
result in a savings.                                                                                                            
                                                                                                                                
MR. BURNETT said there are  bi-weekly transfers between community                                                               
jails and the  facilities in Bethel and Nome  and sometimes there                                                               
are more  frequent transports due to  overcapacity. Expanding the                                                               
jails  would  reduce  transfer  costs,  but  actual  savings  are                                                               
difficult to define.                                                                                                            
                                                                                                                                
SENATOR COWDERY asked for the average length of stay.                                                                           
                                                                                                                                
MR. BURNETT didn't have that data with him.                                                                                     
                                                                                                                                
CHAIR GARY STEVENS said the  Kodiak City Manager probably had the                                                               
information.                                                                                                                    
                                                                                                                                
DEVIN  MITCHELL,  Debt Manager  for  the  Department of  Revenue,                                                               
explained the bill authorizes the issue  of up to four COPs. They                                                               
are  leased back  securities  of  the State  of  Alaska that  are                                                               
subject  to appropriation  for repayment.  They  are A-rated  and                                                               
garner low  interest rates.  They have a  15-year term  and, with                                                               
the current low interest rates,  they would probably return about                                                               
4.5 percent  interest on  the borrowed money.  In the  bill, this                                                               
correlates to about $1.6 million annually.                                                                                      
                                                                                                                                
The community  would have a trustee  act on its behalf  to take a                                                               
title-interest  in the  jail. In  the event  the state  failed to                                                               
appropriate, the trustee  would take the facility  and attempt to                                                               
make  bondholders whole.  Also at  issue is  additional State  of                                                               
Alaska  debt as  it correlates  to  its bond  ratings. The  state                                                               
recently  issued  $461 million  in  general  obligation debt  and                                                               
although it's unlikely  that SB 195 would rise to  the level that                                                               
it would impact  state ratings, if much more  money were involved                                                               
the  department would  probably ask  that ongoing  revenues match                                                               
ongoing expenditures.                                                                                                           
                                                                                                                                
CHAIR GARY STEVENS noted the total  payments for the full term of                                                               
the COPs are estimated to  be $24,000,000 rather than $30,000,000                                                               
as in previous years due to the change in interest rates.                                                                       
                                                                                                                                
MR.  MITCHELL agreed  then pointed  out that  the numbers  in the                                                               
bill  were  estimated  higher  than  the  current  rate.  Because                                                               
today's interest  rates are  extraordinarily low,  the department                                                               
cushioned the figures to avoid an underestimate.                                                                                
                                                                                                                                
SENATOR  COWDERY  asked if  privatization  would  save the  state                                                               
money.                                                                                                                          
                                                                                                                                
MR. MITCHELL replied he  know nothing about prison operations.                                                                  
                                                                                                                                
LINDA FREED,  Kodiak City  Manager, testified  via teleconference                                                               
in strong support of SB 195. On  behalf of the state, the City of                                                               
Kodiak operates  a community  jail for  the entire  region. Under                                                               
the current  contract, the city  is liable for any  activity that                                                               
occurs in the  jail and although they have  a cooperative working                                                               
relationship  with  the  Department of  Corrections,  the  city's                                                               
liability is rising as the building ages.                                                                                       
                                                                                                                                
Increasing  the number  of  beds to  20  would provide  expansion                                                               
capability  into  the future.  They  hope  to  be able  to  house                                                               
prisoners for up  to 30 days in the new  facility instead of just                                                               
10 days. The city would be  able to house special needs prisoners                                                               
and operate more efficiently.                                                                                                   
                                                                                                                                
The city  is unable to underwrite  the entire cost of  a jail for                                                               
the state, but  they are happy to  work through SB 195  and pay a                                                               
cost  share.  They  are  committing  the  land,  the  design  and                                                               
engineering  and  they are  willing  to  bond under  their  local                                                               
capacity as long  as they have some commitment from  the state to                                                               
pay back the debt service on  the portion of the building that is                                                               
committed to the jail.                                                                                                          
                                                                                                                                
5:05 pm                                                                                                                       
                                                                                                                                
SENATOR COWDERY asked if the current building is unsafe.                                                                        
                                                                                                                                
MS. FREED replied  the building isn't unsafe, but  the roof needs                                                               
to be  replaced and there  are problems with the  foundation. The                                                               
city has  determined it would  be more cost efficient  to replace                                                               
this and several other old  city buildings rather than continuing                                                               
to make repairs.                                                                                                                
                                                                                                                                
TAPE 03-25, SIDE A                                                                                                            
                                                                                                                                
SENATOR COWDERY asked about prisoner escapes.                                                                                   
                                                                                                                                
MS. FREED reported they have had no problems with escapes.                                                                      
                                                                                                                                
SENATOR FRED DYSON made a motion  to move CSSB 195(STA)\D and the                                                               
attached   fiscal   notes    from   committee   with   individual                                                               
recommendations. There being no objection, it was so ordered.                                                                   

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