Unifying State-County Corrections System

(from Maine Townsman, May 2008)
Kate Dufour, Legislative Advocate, MMA

Due to the efforts of the members of the Criminal Justice Committee and the state/county negotiations team, LD 2080, An Act to Better Coordinate and Reduce the Cost of the Delivery of State and County Correctional Services, was enacted and signed into law on April 18, 2008.  Although sometimes referred to as the "jail consolidation" bill, LD 2080 is more accurately described as the state-county corrections system unification legislation.  Enacted as an emergency measure, LD 2080 received strong support in both the House and the Senate, passing in the House by a margin of 108 to 27 and in the Senate by a margin of 28 to 3.     

As provided for in the law, the property tax dollars necessary to fund county jail operations are capped at the 2008 level, which is $62.5 million.  Any additional county jail expenses are to be funded with state resources. For example, in FY 09 it is projected that an additional $1.8 million will be needed in addition to the frozen FY 08 assessment. Until the bill was finally enacted by the Legislature, the revenue source for the state's $1.8 million contribution in year one of the unified correctional system was unknown.  However, after a meeting with the Appropriations Committee, it was decided that the state's contribution to the jail system would come from three state sources of revenue, including:

1) The elimination of five vacant state government positions, yielding $799,987 in savings to the state to be invested in the unified corrections system;

2) The creation of two revenue agents within Maine Revenue Services, responsible for auditing corporate income tax returns.  After accounting for the salaries and benefits associated with creating the new positions, the expanded auditing capacity is projected to generate $830,140 of new revenue; and

3) A $244,944 contribution from the state employee health fund. 

With the creation of this funding package, the Baldacci Administration and the Legislature honored a commitment associated with this proposal from the very beginning to freeze property taxpayer liability for county jail costs.  Although some members of the Appropriations Committee had recommended using municipal revenue sharing funds to cover the state's share of the system, the advocates of the property tax freeze, including Rep. Richard Sykes of Harrison and Sen. Earle McCormick (Kennebec Cty.) successfully fought against the proposed revenue sharing raid.  The funding package finally adopted by the Legislature illustrates the state's intent to fund its share of the program with state resources.

What LD 2080 Accomplishes

As enacted by the Legislature, the state/county unified corrections system legislation accomplishes the following: 

• Freezes property taxpayer exposure for funding county jail operations at the 2008 level.  As determined by a Department of Corrections (DOC) fiscal survey, the aggregate budgeted county jail expense (less revenue and debt service) was $62.5 million in 2008.  As enacted, counties are prohibited from assessing a property tax for the provision of jail services over the $62.5 million figure.  This element of the law provides taxpayer savings in the form of avoiding future increases in county jail costs.  Future increases in corrections costs, if any, will be funded with state resources. 

• Requires the property taxpayers to retire the debt in existence as of FY 2008.  According to the DOC, over the next 20 years the property taxpayers will invest $112 million to retire existing debt.  All existing debt is to be paid by the property taxpayers in the various counties that issued the debt.  As of January 1, 2008, ten counties, including Androscoggin, Aroostook, Cumberland, Hancock, Kennebec, Knox, Lincoln, Sagadahoc, Somerset and York, had jail related debt obligations.  Any debt issued after FY 2008 must be funded with state revenues. 

• Requires the state to fund future capital investments.  The state is required to use state revenues to fund new capital improvements and projects.  The property taxpayers are no longer responsible for funding future capital improvements to the corrections system.

• Requires the state to create a capital improvement account.  The plan requires the state to create a reserve account for the purpose of funding future capital improvements.  As enacted, the state is directed to set aside an amount equal to the 2008 debt obligation less the amount retired by the property taxpayers.  For example, in 2009 the property taxpayers will retire $10.20 million in pre-2008 issued debt.  In 2008, the property taxpayers' debt retirement obligation was $10.23 million, the difference -- just $30,000 in the first year --  in state resources would be set aside to fund future capital investments.

• Requires the state to create a transition reserve account to cover any increased county jail cost in the first year of implementation.  The law includes transition language requiring the DOC commissioner to submit a plan to the Governor for the inclusion of a $1.5 million appropriation in the state's next fiscal year budget (FY 2010) to capitalize the operating reserve account of the State Board of Corrections.   This provision addresses the concerns of the county representatives that in the first year of the consolidation plan state funds might not be available to fund increases in county jail operations.  The transition funding language was inserted into the law to articulate the Baldacci Administration's commitment to honor the state's side of the bargain, and those "transition funds" will come from a state revenue source not otherwise dedicated to municipalities or counties. 

• Creates a nine-member State Board of Corrections (SBOC) to oversee the state/county jail consolidation effort.  The members of the Board include a sheriff, county commissioner, two state agency representatives, a municipal official and four public members.  With the exception of the state agency representatives, all of the SBOC members are appointed by the Governor and confirmed by the Senate. 

The purpose of the SBOC is to develop and implement a unified corrections system that achieves efficiencies and improves the delivery of correctional services.   One of the more significant Board responsibilities is to determine how best to use existing facilities and resources.  For example, the Board is responsible for determining how to most effectively house special inmates, such as those with mental illness.  Under this scenario, the charge to the Board is to maximize resources by focusing the special services necessary to house inmates with mental illness in one facility, rather than requiring all facilities to provide the specialized services and programs. 

The Board is also responsible for determining which existing state and county facilities, if any, will be downsized or closed.  The Board, through a "certificate of need" process, is responsible for authorizing new construction projects.  

• Establishes the roles and responsibilities of the SBOC, state officials and county officials in the administration of the unified corrections system. 

• Establishes a budget adoption and review process for the adoption of county jail operations budgets and amends the county budget adoption process. The SBOC will annually set each county's jail operations expenditures that are allowed to exceed the frozen tax assessment amount.  The additional expenditures, if any, will be funded with state resources.  The SBOC will be responsible for reviewing and adopting county jail operations budgets.  County budget committees will continue to be responsible for participating in the development of non-jail operations budgets. 

• Amends the existing LD 1 formula.  As outlined above, increases in county jail operations will be determined by the SBOC and therefore no longer subjected to the LD 1 limit.  However, the growth in non-jail related tax assessments will continue to be regulated under the LD 1 limit process. 

• Creates an investment fund managed by the SBOC to compensate the state and counties for the provision of correctional services.  Sources of the fund include: 1) net savings resulting from the implementation of Board directed efficiencies (e.g., development of a statewide transportation system, etc.); 2) net savings resulting from the downsizing or closing of a state or county correctional facility; 3) County Jail Prisoner Support and Community Corrections funds, formerly provided to counties; 4) funds from other public or private entities; and 5) interest and investment income. 

• Creates the Corrections Working Group.  The working group is comprised of the DOC commissioner, president of the County Commissioner's Association and the president of the Maine Sheriffs' Association.   Through the development of a memorandum of understanding, the informal working group is charged with sharing information, discussing and resolving any issues or problems experienced in the daily operation of the unified corrections system, including the placement of inmates. In its effort to resolve issues and concerns, the working group is also authorized to consult with experts and stakeholders, including prosecutors, victim advocates and others.  

• Encourages, but does not mandate, counties to change their calendar year budget cycles to the state's July - June fiscal year.  In order to facilitate the process, the law includes a provision authorizing counties to issue a five-year tax anticipation note for a transition period to cover a fiscal year change.  In order to change from the current calendar year budgeting cycle to a fiscal year budgeting cycle, counties will need to adopt an 18-month budget.  That 18-month budget will temporarily shift additional costs (six-month's worth) onto the property taxpayers.  To mitigate the tax shift, the law enables municipalities to determine how best to fund the six additional months of expenditures.  As enacted, a municipality can choose to fund the additional costs all at once or to fund those transition costs incrementally over a period of time not to exceed 60-months.   The process adopted in the correction systems unification law is similar to the language found in a law enacted in 2002 enabling Sagadahoc County to change its fiscal year.

Next Steps, Establishing the Board of Corrections.

While the process to develop and enact the legislation was a significant task in itself, now the real work needs to begin, as the state-county unification plan is implemented.  The first task will be the appointment of the newly created nine-member State Board of Corrections. 

As provided for in the law, one member of the Board "must be a municipal official selected from a list of 3 nominations submitted to the Governor by a statewide organization representing elected and appointed municipal officers and officials."   Although it is expected that MMA will be called upon to provide a list of three nominations for the municipal appointment to the Board, the ultimate appointment decisions will rest with the Governor, Criminal Justice Committee and the Senate.  

Since the Board will have a role in overseeing the unified system, knowledge of the corrections system, an understanding of financing mechanisms and expertise in the area of systems management and organizational collaboration will be key for any appointee.  The members of the Board will also be asked to accomplish many tasks that could result in a significant commitment of time and energy.  In addition, the municipal appointee will have a vital role in ensuring that the property tax freeze is honored and that additional jail expenditures are funded with state resources that are not otherwise dedicated to municipalities and counties. 

To gather the names of interested municipal officials, MMA has sent out a "request for nominees" form to all municipal officers.   If you are interested in being considered for this appointment or know of a municipal official you believe should be considered, please contact MMA's Kate Dufour at kdufour@memun.org or 1-800-452-8786.



State-County Corrections Unification Bill Enacted
with Help from Our Friends 

Many thanks are due to the state and county officials that helped to develop the state/county corrections unification plan enacted this session as LD 2080, An Act to Better Coordinate and Reduce the Cost of the Delivery of State and County Corrections Services (PL 2007, c. 653).   Thanks to these people, Maine will benefit from a process that will provide a long-term benefit to Maine's taxpayers and significantly improve the provision of correctional services in the state. 

Members of the Criminal Justice Committee

Sen. Bill Diamond (Cumberland Cty.), Chair
Sen. Earle McCormick (Kennebec Cty.)
Sen. Roger Sherman (Aroostook Cty.)

Rep. Stan Gerzofsky (Brunswick), Chair
Rep. Patricia Blanchette (Bangor)
Rep. Anne Haskell (Portland)
Rep. Stephen Hanley (Gardiner)
Rep. Dawn Hill (York)
Rep. Bryan Kaenrath (South Portland)
Rep. Richard Sykes (Harrison)
Rep. Christian Greeley (Levant)
Rep. Gary Plummer (Windham)
Rep. Joseph Tibbetts (Columbia)

State/County Jail Consolidation Negotiations Team

Scott Story -- Waldo County Sheriff
George Jabar -- Kennebec County Commissioner
Robert Devlin -- Kennebec County Administrator
Mark Dion -- Cumberland County Sheriff
Philip Roy, Jr. -- Somerset County Commissioner
Bob Carlson -- former County Jail Administrator
Robert Howe -- Howe, Cahill and Company

Martin Magnusson -- Commissioner, Department of Corrections
Martha Freeman -- Director, State Planning Office
Karla Black -- Governor's Office 
Denise Lord -- Department of Corrections
Ralph Nichols -- Department of Corrections
Scott Ferguson -- Department of Corrections
Kate Reilly -- State Planning Office