COVID-19 help a key a part of Alabama’s plan for brand spanking new prisons

Officials in Alabama say $ 400 million in federal funding from a COVID-19 relief bill will be an important part of the plan to build two new men’s prisons as it will reduce the debt the state is taking on the projects.

The American Rescue Plan Act, the largest of several relief acts passed by Congress during the pandemic, allows states to replace tax revenues they lost due to the pandemic and gives states flexibility in how that money is spent.

The state is said to receive a total of $ 2.1 billion from the bailout plan signed by President Biden in March. Alabama and other states got half their money this spring. The $ 400 million would come from that amount. States will receive the second half of their bailout funds in May next year.

State Treasury Director Bill Poole said last week the state is still finalizing calculations to determine how much it will claim in lost revenue according to a formula included in the bailout plan.

“We’re assuming that number will be north of $ 400 million,” said Poole. “As far as I know, no state has certified their calculation. This calculation is very complex so we want to make sure we are accurate and compliant before we certify. But it will be a considerable number, is our expectation. “

It will be the legislature’s decision to use the bailout plan money, just as it would for money the state received from the CARES bill, a coronavirus relief bill passed by Congress in 2020. The legislature has until the end of 2024 to commit the rescue plan money and spend it until the end of 2026.

Governor Kay Ivey told lawmakers last week that they will have a special session beginning September 27 to review the prison construction plan, which is contained in a bill developed by her administration and legislative leaders.

The bill provides for new prisons with 4,000 beds for men in Elmore and Escambia counties. Elmore County Jail would have specialized facilities for medical and mental health care, substance abuse treatment, and educational programs.

Four smaller prisons would be closed – Elmore and Staton in Elmore Counties, Kilby in Montgomery Counties, and the Hamilton Facility for the Old and Infirm in Marion County.

The bill approves a loan of up to $ 785 million to pay for the two new prisons. A summary of the Legislative Services Agency bill states that other resources would come from the American Rescue Plan Act and the state’s General Fund.

Rep. Steve Clouse, R-Ozark, Chair of the House General Fund Committee, will support the bill. Clouse said the plan is to use at least $ 400 million in bailout funds, plus about $ 150 million from the state’s General Fund, in addition to the bond issue.

Clouse said using the bailout funds will save the state money on interest as it will reduce the size of the bond issue, which will be for 30 years. Clouse said annual payments on a $ 785 million bond will be approximately $ 50 million.

That’s barely half of the $ 94 million or more the state expected in annual leases under an earlier plan for three new prisons. This plan failed because the developers who leased the prisons to the state did not receive funding. After that, the legislative leaders and Ivey developed the new plan.

“We have been preparing for this proposed leasing program over the past few years, which should cost $ 94 million,” said Clouse. “We have put our law enforcement budget into shape in order to be able to make these payments. So now, the $ 785 million bond, that’s around $ 50 million a year. So that gives us some space to grow here. “

The reduced bond debt will help lawmakers invest money in a new prison capital improvement and maintenance fund. Regularly funding the maintenance would help prevent the neglect that contributed to the deterioration of Alabama prisons, officials say.

The fund should also help pay for a second phase of construction and renovation without borrowing more, Clouse said. The second phase includes renovating Donaldson Prison in Jefferson County, Limestone Prison in Limestone County, and one of the prisons in Barbour or Bullock Counties, and a new women’s prison in Elmore County to replace Julia Tutwiler.

Senate minority leader Bobby Singleton, D-Greensboro, said he supports the concept of combining federal funds, state funds and borrowed money, and believes this is the most viable plan for building prisons yet. Lawmakers have debated plans to build prisons since the Robert Bentley administration in 2016.

“We’re putting a maintenance budget on so we don’t end up in the same situation we are in now,” said Singleton. “So, I think this is probably the best plan of any plan I’ve seen so far.”

Rep. Chris England, D-Tuscaloosa, who is also chairman of the Alabama Democratic Party, said last week he did not support the use of American Rescue Plan funds for prisons and asked if the federal government would allow it.

“I cannot imagine that funds distributed to help states recover and deal with the coronavirus and this pandemic could be used to build prisons,” England said. “I could think of thousands of different things that money should be spent on instead of on buildings.”

However, Clouse said states can use the rescue plan funding, which is counted as lost revenue for prisons and most other purposes.

“There’s a lot of leeway in terms of usage,” said Clouse. “The only two things they state that you can’t use it to finance a tax cut or support your retirement fund, which we’ve never had a problem with in Alabama.”

Jana Ingels, public relations officer at the state finance ministry, responded by e-mail to the question of whether the lost revenue from the rescue plan could be used for prisons.

“The American Rescue Plan Act provides a formula for making up for government lost revenue during the COVID-19 pandemic,” said Ingels. “The funds resulting from this calculation can be used for almost any purpose, with the exception of expressly prohibited uses such as deposits in pension funds or offsetting tax cuts.”

Ingels said the Treasury Department, which works with the Legislative Services Agency, “is confident that there is at least $ 400 million available to lawmakers based on the lost revenue calculation.”

Ivey was asked today why the prison project is a good use for the US $ 400 million rescue plan.

“So we don’t have to borrow so much money and pay all the money back,” said Ivey.

The governor said the question of whether the money would be better used at this point was “speculation”.

If lawmakers approve the use of the $ 400 million in the prison rescue plan, they still have decisions to make on the rest of the $ 2.1 billion.

Noting that lawmakers have until the end of 2024 to commit the money and that it doesn’t have to be spent until the end of 2026, Treasury Director Poole said lawmakers shouldn’t rush those decisions. He proposed allocating the first half of the bailout plan funds during the 2022 legislature and the second half, which Alabama won’t receive until May, during the 2023 legislature.

“When you think of all the anomalies, all the glitches and all the things that are happening, I think we are conservative and very methodical and practical and in no rush to use these funds,” said Poole. “I think we certainly have a priority when it comes to prisons. We have a number of priorities when it comes to health issues. But we also have time on our side at this point. “