Douglas County laying groundwork for debt to fund jail expansion; plan won’t need voter approval
photo by: Mike Yoder
The Douglas County Commission soon will get details of a new county jail expansion plan that could commit future commissions to annual bond payments of up to $2.9 million, even though the plan wouldn’t require a vote of the public.
Details of what Undersheriff Gary Bunting will recommend for the jail and its cost are not yet known. After Bunting gave a presentation last month on current jail conditions with a recommendation against installing temporary modular units, the County Commission asked him to return with a preliminary jail expansion plan this month. Assistant County Administrator Sarah Plinsky said last week that Bunting’s presentation was not yet scheduled to go before the commission.
Commissioners have said the expansion would not be as comprehensive as the $44 million, 178-bed expansion county voters rejected in May with the defeat of Proposition 1. Commissioners have not put a dollar amount to how large the expansion could be; however, $2.9 million for annual debt payments would be enough to finance tens of millions of dollars worth of improvements, if commissioners chose to do so. For comparison’s sake, the $44 million expansion rejected by voters was scheduled to be paid for with a $3 million per year debt payment for 20 years.
What commissioners have said is that they want a new jail expansion to reflect their priorities of finding sustainable solutions that:
• Provide enough beds to end the need to “farm out” 60 to 80 inmates daily to the jails of other counties.
• Provide space needed for re-entry and work-release programs.
• Allow room to properly separate inmates of different security classifications.
The commission’s instructions for Bunting to develop jail plans came after Plinsky shared with the board a report on use of revenue from the 1-cent sales tax voters approved in 1994 to debt finance a jail expansion. Although no decision has been made, commissioners agreed the budgetary tradeoff Plinsky detailed provided a means to leverage for debt financing the $2.9 million made available in the 2019 budget to address jail overcrowding.
The option wouldn’t use the actual $2.9 million commissioners set aside in the 2019 budget to debt finance jail improvements. The County Commission can’t obligate that revenue from property taxes and fees to debt-finance capital projects without voter approval. Use of those general fund sources would limit jail improvements in 2019 to $2.9 million or compel the county to build up a cash balance over several years to fund more extensive upgrades. That is how the county paid for the $7.95 million improvements at the Douglas County Fairgrounds.
The option Plinsky presented would place the $2.9 million in the county’s general fund to pay for ongoing county operations and transfer “up to” an equal amount of revenue from the 1-cent sales tax out of the county’s general fund to the capital fund to finance jail improvements.
The referendum language voters approved in 1994 specifically authorizes use of the county’s 1-cent sales tax revenue for jail improvements.
The county received $7.17 million in 2017 from the 1-cent sales tax, Plinsky said. Half of the tax’s annual revenue is placed in the general fund, where it helps reduce the amount of property tax revenue needed to keep the county running. The other half is transferred to the county’s capital fund to make annual payments for bonds issued for the county jail, Public Works Building and the 911 Communications Center.
Dave MacGillivray, of the county’s financial consulting firm Springstead Inc., told commissioners last month the county has a very good bond rating. Plinsky said she anticipated the interest rate on any bonds backed only by sales taxes would have as low an interest rate as a general obligation bond, which would be backed by all the county’s revenue sources.
This year’s two bond referendums provide context to what “up to” $2.9 million in annual bond payments could finance. The $44 million jail expansion that Proposition 1 would have funded required an estimated $3 million annual payment on 20-year bonds, County Administrator Craig Weinaug said. The $11 million behavioral health campus to be funded with the quarter-cent sales tax voters approved last month will require an annual payment of $750,000 on 20-year bonds.
The lengthy commitment of bond payments is a concern, said Patrick Wilbur of the Lawrence Sunset Alliance, a taxpayer watchdog group that opposed Proposition 1. A future county commission could end a cash-in-hand approach to jail expansion, but all future commissions would be committed to making annual bond payments until that debt was paid off, he said.
“It does tie up future commissions,” he said. “There’s nothing illegal or underhanded about it, but they should acknowledge they are debt financing the expansion.”
As a group, the Lawrence Sunset Alliance was prepared to support the use of temporary modular cell units, so that farmed-out inmates could be brought back to the county where they could take full advantage of the jail’s re-entry program. The county might not need a permanent jail expansion because of the success of its re-entry program in reducing recidivism, Wilbur said.
Bunting told commissioners last month that modulars were not a good solution to jail overcrowding because they were not as secure as traditional cell blocks and would cost more to install and operate than the county is now paying to farm out inmates.