SB 231-CORRECTIONAL FACILITY EXPANSION  MR. JERRY BURNETT, staff to Senator Lyda Green, sponsor of SB 231, noted that Senator Green was unable to attend due to illness. He explained that SB 231 provides a regional approach to expanding correctional facilities throughout Alaska. It provides for approximately 1200 prison and jail beds in a variety of communities throughout the state. The question of the need for additional jail beds has been settled by the legislature twice in the last five years. In 1998, the legislature passed legislation authorizing the Anchorage jail and an 800-bed facility at Delta, which was not built. In 2001, the legislature authorized another 800-bed facility in the Kenai Peninsula and that was not built. Clearly, the intent of SB 231 is to build community acceptance of expanded jail facilities and to work with the municipalities to finance and provide the facilities. He informed members that each of the municipal bodies named in the bill have sent resolutions in support of the bill. He offered to answer questions. SENATOR COWDERY asked if the number of beds in the bill represent the actual needs. MR. BURNETT said the numbers represent the need expressed to Senator Green by the Department of Corrections. She worked primarily with the Mat-Su Borough and the Department of Corrections to prepare SB 231. Some of the numbers, such as 64 additional beds at the Juneau facility, have to do with the type of facility and location. The Mat-Su Borough has three facilities: Palmer Pre-Trial; Palmer Correctional Facility; and the Point Mackenzie Farm. Each facility will have a different number of beds depending on the physical structure and the specific needs of the community. SENATOR COWDERY asked if prisoners are housed at particular facilities based on the severity of their crimes. MR. BURNETT replied there are medium security facilities and pre- trial facilities. SENATOR THERRIAULT said according to the bill the average capital cost for all beds may not exceed $155,000 per bed, adjusted for three percent inflation a year and asked how long this authorization will apply and whether it will just be on the books if a community chooses not to exercise it ten years from now. MR. BURNETT replied: As the bill is currently written, that would be the case and I believe that Senator Green is certainly amenable to making adjustments to that, either here or in the Finance Committee as this goes to Finance. There's a very large fiscal note that you might have noticed in your packet although the fiscal note somewhat exaggerates the extra cost here because you have to do something with these prisoners, assuming that there really are 1200 - a need for 1200 prison beds. The fiscal note doesn't discount the alternatives so something is going to be done with them. SENATOR THERRIAULT thought that issue should be addressed by the Finance Committee but suggested putting the authorization on the books with an adjuster so that 10 or 15 years from now someone can't build something that obligates the state. CHAIRMAN TAYLOR noted the annual three percent would have a compounding effect. MR. BURNETT said Senator Green would be amendable to re-wording that provision or include phase-in dates for the facilities in the bill. CHAIRMAN TAYLOR asked if Senator Green consulted with former Senator Frank Ferguson on this legislation. MR. BURNETT said he did not believe she did. CHAIRMAN TAYLOR took public testimony. COMMISSIONER MARGARET PUGH, Department of Corrections, verified that Margot Knuth was available via teleconference, and said they were willing to answer any questions. MS. MARGOT KNUTH, Strategic Planning Coordinator, Department of Corrections, thanked the committee for hearing SB 231 and said it represents a regional approach to expanding prisons and jails. The Administration supports the concept of regionalization. Alaska has distinct needs for both jail beds and for prison beds. SB 231 recognizes those two parallel needs and contains a select number of beds in the right locations. She noted the number of beds in Fairbanks and Bethel will just keep up with the jail needs of those communities. The expansion would allow those facilities to house pre-trial felons and inmates with short sentences. The expansion will not bring home prisoners from that area with lengthy sentences. Those inmates will serve their sentences in the state's prison facilities at Spring Creek, Palmer, or Wildwood. MS. KNUTH advised members that the provision for the Mat-Su Borough in SB 231 should refer to "facilities" because the number of beds identified would be placed in the Palmer Correctional Center, the Mat-Su Pre-Trial facility and the Point MacKenzie prison farm. COMMISSIONER PUGH informed members that error was corrected in the Community and Regional Affairs Committee Substitute. MS. KNUTH said SB 231 also includes four community jail projects, which are overdue. Alaska has 15 community jails and all of them need capital funds. The four in SB 231 were selected because they have the highest utilization rate. She stated SB 231 provides a good, holistic approach to Alaska's prison needs and should enable all of Alaska's prisoners to come back to Alaska, thereby keeping funds in the state. For those reasons the Administration is generally in favor of SB 231. She offered to answer questions. SENATOR THERRIAULT asked which jails are community jails. COMMISSIONER PUGH said the last four on page 2 (Dillingham, Kodiak, Kotzebue and the North Slope Borough). MR. DAVID GERMER, Assistant Manager of the Matanuska Susitna Borough, affirmed the Mat-Su Borough has three facilities within its borders and the Borough has experienced very few, if any, problems associated with those facilities. The Borough has found Department of Corrections employees to be good members of the community. The Borough also recognizes that various communities across the state have needs for expanded correctional facilities and believes it is important that those needs be addressed. The Borough supports the concept of expanding existing prisons, as well as jails. MR. GERMER noted that expansion was considered when many of the jails were first constructed. In some places, the infrastructure is already established. The Borough also understands from the Department of Corrections that the prisoners who are incarcerated close to their families and support networks have a better chance at rehabilitation than those housed a long way away. In addition, the economic impact associated with returning prisoners to Alaska should be shared statewide; rural and urban Alaskans should receive the economic benefits associated with jail and prison expansions. He repeated that the Borough's interactions with the Department of Corrections has shown the Department to be a very responsive agency. The Borough firmly believes that facility expansion should be publicly operated and managed. The Mat-Su Borough supports SB 231 because it appropriately addresses the overcrowded prisons and jails through a regional approach and it spreads the economic benefits across the state of Alaska. He noted the Ketchikan, Saxman, Fairbanks, Kenai, Juneau, Bethel, Kodiak, Seward, Mat-Su and Palmer governments have passed resolutions in support of SB 231. CHAIRMAN TAYLOR noted that Deven Mitchell was available to answer questions. MR. DEVEN MITCHELL, Debt Manager, Department of Revenue, told members there is one technical issue with the Spring Creek project. At present, bonds are outstanding for the Spring Creek facility so it would be difficult to issue additional bonds with a different structure if the City of Seward was going to be the conduit or issuer of those bonds. Those bonds will mature in 2006 so if the legislation has a sunset date for that project, it will have to be later than 2006 otherwise it would be excluded from the financing. CHAIRMAN TAYLOR said that goes back to Senator Therriault's question of how long the authorization will remain outstanding and whether the legislation should contain a time limit. SENATOR THERRIAULT asked for more detail about the Spring Creek situation. MR. MITCHELL explained: The Spring Creek facility has State of Alaska certificates of participation outstanding on it. They have been advanced, refunded once, and then [currently] refunded a second time so the bonds that are currently outstanding through 2006 couldn't be refunded again under the tax code. So, if you were to issue new bonds, there's already a lien, if you will, placed against the Spring Creek facility. There's a lease in place providing security to bond purchasers so you couldn't refinance with a different issuer until those bonds [reached] maturity. You could issue those bonds on a parity basis per the existing bond agreement but you'd have to have the same issuer, which, with this legislation, it would be the City of Seward. The current issuer is the State of Alaska. SENATOR THERRIAULT asked if that means that project would not be able to go forward until the year 2006. MR. MITCHELL said that is correct. MR. BOB HERRON, representing the City of Bethel, stated support for SB 231. He noted Bethel houses the Yukon Kuskokwim Correctional Facility as a regional jail. Bethel is a hub for about 20,000 who live in that region. The city council is in full support of the legislation and asks the committee to move the bill to the next committee of referral. MR. JOHN WILLIAMS, Mayor, City of Kenai, informed members he is representing the City Council and the community of Kenai who support SB 231 as written. He pointed out the City of Kenai is a first class home rule city with extra territorial powers so it has the ability to issue bonds and construct beyond its boundaries. He noted Wildwood is just outside the boundary of the City of Kenai but the city has legal authority to operate it. Mr. Williams said passage of SB 231 will put the issue of private prisons aside. The issues of prisoner location and post- incarceration location came up during a recent attempt to build a prison in Kenai. Those issues will be resolved as prisoners will be spread across the state. The use of existing infrastructure is very important at this time when the state needs to control the growth of government and expenditures. The issues associated with requirements to relocate Alaskan prisoners to Alaska will be taken care of. MR. WILLIAMS said the question of whether the community would support a prison has come up in former hearings. The community voted overwhelmingly in opposition to a private prison. However, he believes it is an absolute fact that the community will support the addition of 256 beds at Wildwood. He repeated the city council has discussed SB 231 at length and endorses the concept of spreading beds throughout the state. CHAIRMAN TAYLOR asked Mr. Williams if he is aware of any state prison facility ever built in Alaska where the state waited for an advisory vote from the community before it was built. MR. WILLIAMS said not to his recollection. CHAIRMAN TAYLOR said he doesn't remember any advisory votes on the Spring Creek or Lemon Creek facilities either. He noted that once a prison is built, every community that has one wants it expanded. Chairman Taylor thanked Mr. Williams and took testimony from Kodiak. MS. LINDA FREED, City Manager of Kodiak, informed members the Kodiak City Council and the Kodiak Island Borough passed a resolution in support of SB 231. Kodiak serves as the regional jail facility for all of the Kodiak Island Borough and part of the Alaska Peninsula. They appreciate the regional approach in SB 231 for all of the reasons previously stated. SB 231 is very significant for Kodiak as it is running a state contract jail in partnership with the state in a building that is over 60 years old. Kodiak is in a position where it either needs to rebuild or close the facility because of liability issues. At this point, Kodiak must pick up the entire liability cost for that facility. As the jail ages, the liability to the City of Kodiak and its taxpayers increases exponentially. The City believes that rebuilding the facility will be a cost saving measure for the state as well as Kodiak. Without this facility, the state will incur incredible transportation costs for prisoners. The City of Kodiak is committed to putting land into this project and it is hoping to build a multi-use facility with a police station so it will absorb some of the costs identified in the fiscal note. She urged members to pass SB 231 to the next committee of referral. MR. STEVE SWEET, representing Public Employees Local 71, stated support for SB 231 and said by expanding existing facilities, the state will save thousands of dollars by not having to duplicate existing infrastructures. He questioned why Alaskans can't use the $20 million to house prisoners in Arizona. Alaska contractors and residents should benefit by building the new expansions for the correctional facilities. He noted if the state hopes to rehabilitate prisoners, it is extremely important they be near their families for support. He stated the expanded prisons should be operated publicly, by professionals. It makes economic sense to expand existing facilities. SENATOR COWDERY asked Mr. Sweet if the administrative sections of the existing prisons would be adequate to cover the expansions or whether those sections will have to expand also. MR. SWEET said he believes there is adequate administration in place. SENATOR COWDERY announced that the committee would hold the bill until Chairman Taylor returned and that the committee would take up SB 302. CHAIRMAN TAYLOR said he is seriously concerned about the issue raised by Senator Therriault that there be some limitation placed on two provisions within SB 231. The first is the unlimited aspect of authorization and whether some parameters should be placed on that provision. The second concern is whether or not the bill should contain an automatic ratchet on the 3 percent. He felt that is a fiscal matter that should be taken up by the Senate Finance Committee. He then announced that he would hold the bill in committee and bring it up again the following day and adjourned the meeting at 2:58 p.m.