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Governor Signs SB 65, But New Prison Awaits Fiscal Fix
Bringing Alaska Prisoners Home Will Depend on Fiscal Solution


July 24, 2004

Juneau, Alaska - Governor Frank Murkowski signed Senate Bill 65 into law on Thursday, establishing the means to provide much-needed prison space in Alaska and bring home prisoners who have been incarcerated in Arizona.

Sponsored by Sen. Lyda Green of Wasilla, SB 65 authorizes construction of a state-operated prison in the Matanuska-Susitna Borough, and expansion of regional correctional facilities elsewhere in the state. While the bill anticipates funding the work through bonds, it does not mandate any bond issues and gives the state until 2009 to decide on prison bonds.

"The need for improved and expanded correctional facilities in our state has been clear for more than a decade, and I am pleased to sign legislation that gives us the opportunity to potentially construct a state-operated prison in the Matanuska-Susitna Borough and expand other facilities," the Governor said.

"I will mandate that, before any general fund debt or other significant debt instruments can be issued, there must be a satisfactory repayment ability that will not jeopardize the state's AA bond rating. The responsibility to assure that the credit rating is not put in jeopardy is the joint responsibility of the Legislature and the administration. It should be further understood that my administration, including the Commissioner of Corrections and the State Bond Committee, will not initiate any action inconsistent with the state debt policy as articulated by the Office of the Governor.

"I made a commitment to Alaskans, to the Legislature and the credit rating agencies that I will not approve new bond measures that might imperil our favorable bond rating until our recurring revenues match expenditures. That commitment will not be broken."

Alaska's AA bond rating with all three major credit rating agencies means the state pays less interest on borrowed funds, lowering the cost for state and local government capital projects, and reducing the pressure on local property taxpayers. National credit rating agencies have warned that the state credit rating could be downgraded if the state issued new debt before addressing its inability to balance spending and revenue. Any downgrade would in fact be a hidden tax, the Governor said.

SB 65 and current state law provide a number of protections for the state's credit rating. SB 65 authorizes, but does not obligate, the Commissioner of the Department of Corrections to enter lease-purchase agreements to build or expand facilities. In addition, the Governor indicated that any such decision would be subject to approval by the Commissioner of Administration, and to a review by the commissioners of Administration, Commerce and Revenue as to any effects on the bond rating. No bonds would be approved by the Murkowski administration if such action is likely to result in downgrading of the state's credit rating, and none could be issued for a prison project at less than investment grade.

In addition, existing local correctional facilities in Kodiak and Dillingham could receive up to $2 million in state funds to expand only if the municipalities provided $1.5 million of their own. Finally, the Anchorage regional jail could be expanded only if financed by up to $30 million in federal receipts.

"The quick fix of sending Alaska prisoners to Arizona or shuffling them between facilities at home has gone on way too long," Murkowski said. "The result has been the placement of more and more prisoners into community housing alternatives and the constant transferring of prisoners between locations to ensure the integrity of the system, all of which run the risk of compromising the level of public safety provided to Alaskans."


Source of News Release:

Office of the Governor
Web Site


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