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Could leasing be the answer to new state prisons?

Bill Britt

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Some lawmakers expressed alarm when Department of Corrections Commissioner Jeff Dunn revealed at a recent Contract Review meeting that the state was looking to spend $1 billion to build three new mega-prisons.

Less than two years ago, the Legislature rejected a plan by then-Gov. Robert Bentley to spend approximately $850 million on four mega-prisons. Now it seems the prospects of securing funding for a smaller project with a higher price tag is being met with skepticism if not outright revolt.

But there is another way Gov. Kay Ivey’s administration can acquire new prisons without legislative approval.

State governments increasingly are turning to private companies for new prison facilities through a build and lease agreement.

Kansas is moving forward with plans to have CoreCivic Inc., the nation’s largest private prison corporation, to built its new correctional facility and then lease it back to the state. CoreCivic announced it has similar projects in California and Oklahoma and is pursuing partnerships in other states.

Under the lease agreement, CoreCivic would not operate the facility but would merely act as landlord.

CoreCivic and its rival, GEO Group Inc., are seeing windfall profits under new tax rules enacted by President Donald J. Trump’s administration.

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According to a report in Finance & Commerce, “CoreCivic and GEO, the biggest U.S. prison companies, are classified as real estate investment trusts. That means almost all their profits from property-related operations are tax-free as long as they’re distributed to shareholders through dividends.”

Finance & Commerce also found, “The tax rules incentivize CoreCivic and GEO to build and lease detention facilities rather than only manage them.”

Dunn’s appearance at this month’s Contract Review hearing was to receive approval for an extension to a nearly $11.5 million contract with Birmingham-based Hoar Program Management, LLC, to complete a study that would result in a request for proposal to build the three facilities.

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Under a lease agreement, a company like CoreCivic will build prisons to the state specifications which is why even under a lease contract, the Ivey administration would need RFP which Hoar is tasked with delivering.

Two lawmakers who spoke with APR on background think that leasing prisons may not be the ideal solution, but it avoids much of the legislative in-fighting that doomed new prison construction in the past.

As one of the lawmakers explained, “During the Wallace era prisons and community colleges were built in specific locations as a sort of patronage system for the Governor’s buddies.”

Gov. George Wallace was known for generous hand-outs to his cronies, and in some cases, this meant building a community college campus or a correctional facility.

“Once a community has a college or a prison they are not going to want to give it up because it means jobs and votes for legislators, county commissioners, and profits for those up and down the food chain,” another lawmaker said.

Also convincing a supermajority of Republican lawmakers to approve a billion dollar bond offering seems unlikely with the Governor simultaneously pushing for a fuel tax increase.

One of the most significant and rarely mentioned accomplishments of the Legislative agenda enacted by the Republican supermajority has been the passage of prison reform bills, which have dramatically reduced prison overcrowding from 198 percent capacity in 2013, to 153 percent in 2018.

A report by the Council of State Governments found, “Alabama state leaders have appropriated $26.5 million in the FY2019 budget to support justice reinvestment legislation enacted in 2015. This includes $18.5 million to hire probation and parole officers and staff and expand behavioral health community-based treatment and services, as well as $8 million to support community corrections programs (CCPs). This appropriation brings Alabama’s total reinvestment between FY2016 and FY2019 to $95.6 million.”

Another result of Legislative intervention is the number of non-violent offenders has been reduced dramatically, going from a prison population of 35 percent non-violent to now under 14 percent. An unintended consequence of not locking up non-violent offenders is a very violent population inside the prisons, making it more dangerous for correctional officers.

While prison funding is up, and the overall population is down over the last four years, the aging facilities and understaffing is a persistent issue of concern.

In Nov. 2017, Gov. Ivey floated the idea of leasing built-to-order prisons. Now, at least a few of her supporters think it’s the time to utilize that option rather than trying to corral lawmakers into supporting a billion dollar bond to built three mega-prisons.

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Governor

Speaker McCutcheon standing with governor on gaming workgroup

Bill Britt

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During her 2020 State of the State address, Gov. Kay Ivey said she would be signing an Executive Order to establish a small working group to gather all the facts on how much money the State could gain if some form of gaming expansion occurred. She also asked the Legislature to give her time for the group to come back with an answer.

Whether lawmakers would grant Ivey’s request for time has been an important question swirling around the halls of the State House.

Speaker of the House Mac McCutcheon answered that question on Wednesday when APR reached out to his office with a request for clarification.

APR’s email wrote, “Speaker McCutcheon recently made the statements quoted below.”

“I am not a big gambling guy; but if you are going to vote for a lottery, that’s gambling, then don’t be a hypocrite and let’s get the biggest bang for the buck,” McCutcheon said. “Let’s address a lottery, the Poarch Creek Indians, and these counties that want a one-armed gambling. Put them all in a room and hammer out a deal.”

The Speaker warned, though, that if he cannot get a grand deal between all the parties on gambling, then there likely would not be any gambling bill brought forward in 2020.

“Does he still stand by these statements?”

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The following is the response APR received from the Speaker’s office:

“Since the Speaker made the statement, the Governor will be signing an Executive Order to bring people together to evaluate the facts on how much money the State could gain if some form of gaming expansion occurred. The Speaker will be working with the Governor in her efforts.”

Ivey said once the working group had completed its task, she would “bring these facts to the 140 members of the Legislature and the people of Alabama. And we will then, once and for all, be in a position to determine whether or not this is a path we want to pursue.”

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That McCutcheon is in  alignment with the governor should signal to all interested parties that no further movement on gaming legislation will happen until the working group has completed its evaluation.

Some have been slow to hear Gov. Ivey’s entreaty.

Even after Ivey’s call for more time to gather facts, the Poarch Creek Band of Indians continues to flood television, internet and social media with a massive advertising campaign touting their billion-dollar plan in exchange for a tribal-state compact and exclusive right to Vegas-style casino gaming in the State.

PCI lobbyists, including tribal council vice-chair Robbie McGhee, are being very pro-active at the State House.

On Tuesday, Madison County Republican Rep. Rex Reynolds said, “We’re gonna move forward on a lottery. We clearly got that message during our conference meeting yesterday. I think it’s the right thing to do. The people want to vote on a lottery and I think we need to give them an opportunity to,” according to a report by WAFF.

Rep. Steve Clouse, R-Ozark, the House budget chairman, recently said that he planned to file legislation that would create an education lottery in Alabama.

Clouse’s bill would create a paper lottery with scratch-offs and PowerBall options only.

Opinion | Prepare for more gambling debates in the 2020 Legislative Session

A day after Ivey issued her State of the State request to the Legislature to stand down on gaming, Senate President Pro Tem Del Marsh held a meeting with representatives of the Poarch Creeks and two of the State’s dog tracks to discuss moving ahead on a proposed lottery and gaming bill.

Marsh holds meeting with gaming interests day after Ivey calls for the Legislature to stand down on gaming

These various statements and actions have added confusion as to what is happening with gaming this session.

Now that McCutcheon has made his position known, maybe it will put to rest the rumors, activities and behind-the-scenes maneuvering that go against Ivey’s wishes.

 

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Education

Business, community leaders call on lawmakers to support Gov. Ivey’s push for more Pre-K funds

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Governor Ivey’s push for a $25 million statewide expansion of Alabama’s high-quality, voluntary First Class Pre-K program was endorsed today by business and community leaders from across the state. If approved by the state Legislature, the proposed funding increase would add at least 160 new classrooms next year and help enroll at least 2,889 additional four-year-olds.

The Alabama School Readiness Alliance Pre-K Task Force included its support for Governor Ivey’s budget request in its 2020 Legislative Recommendations. The ASRA Pre-K Task Force consists of more than 60 prominent leaders from the business, education, civic, medical, legal, philanthropic, military, and child advocacy communities.

In addition to increased funding in FY2021, the Task Force’s plan proposes a series of recommendations to fully fund the state’s First Class Pre-K program by the 2022-23 school year while maintaining the program’s benchmarks for quality and accountability. The Pre-K Task Force’s Recommendations are available in their entirety at https://www.alabamaschoolreadiness.org/asra-pre-k-task-force-recommendations/.

“We are not there yet, but the state is moving in the right direction to provide high-quality, voluntary pre-k to all families that want it,” said Mike Luce and Bob Powers, business leaders and co-chairs of the Alabama School Readiness Alliance Pre-K Task Force. “The Alabama School Readiness Alliance’s Pre-K Task Force is pleased that Governor Ivey is once again prioritizing additional funds to add more pre-k classrooms across the state. We stand with Governor Ivey and encourage lawmakers to appropriate the $25 million increase outlined in her proposal.”

For 13 years in a row, the National Institute for Early Education Research has ranked Alabama’s pre-k program as the number one state-funded pre-kindergarten program in the country for quality. Research by the Public Affairs Research Council of Alabama and the University of Alabama at Birmingham has found that students who participate in a First Class Pre-K classroom – regardless of demographics, zip code or school – are more likely to be proficient in math and reading than their peers.

The Alabama Department of Early Childhood Education manages the First Class Pre-K program. It allocates funding for the First Class Pre-K program through a competitive application process. Public and private schools, child care centers, faith-based centers, Head Start programs, nonprofits, universities, and other community-based providers are all eligible to apply. Potential providers can apply for three different levels of funding: an excellence classroom (up to $50,400), tiered funding (ranges from $86,904 to $100,008), and a new classroom (up to $120,000). Applications for First Class Pre-K classroom funding are due March 13 on the Department’s website, www.children.alabama.gov.

The ASRA Pre-K Task Force first proposed expanding voluntary pre-k access to all families in 2012. Since then, state leaders have incrementally increased the level of investment in Alabama’s First Class Pre-K program from $19 million to $122.8 million. In 2012, the program enrolled just six percent of Alabama’s four-year-olds. In the 2019-20 school year, nearly 40 percent of Alabama’s four-year-olds attend First Class Pre-K.

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Governor

Marsh holds meeting with gaming interests day after Ivey calls for the Legislature to stand down on gaming

Bill Britt

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Despite Gov. Kay Ivey’s call for the Legislature to give her “time to get the facts,” on a lottery and gaming before proceeding with legislation, Senate President Pro Tem Del Marsh summoned representatives of the Poarch Creek Band of Indians and two of the state’s dog tracks to sit down and discuss moving ahead on a proposed lottery and gaming bill.

Ivey seizes gaming issue

A day after Ivey’s State of the State, Marsh, along with Senators Bobby Singleton and Steve Livingston, held a conference with Robbie McGhee, PCI’s Vice-chair, Lewis Benefield, who operates VictoryLand and the Birmingham Race Course, and Nat Winn from Greenetrack to try and reach an agreement among the three gaming entities.

Marsh, at the Wednesday meeting, informed those gathered that they needed to come up with a compromise on the gaming issue so that legislation could proceed with a constitutional amendment on a lottery and gaming package this session.

Participants in the closed-door meeting declined to speak with APR about the content of their discussions. However, those who have knowledge of the conversation did relay some of the details to APR.

According to those sources, the group discussed what a compromise might look like, what tax revenue the facilities would be allotted to the state and locations sought by PCI.

Reportedly, the discussions were generally cordial and productive while lawmakers were present, but that the tone changed dramatically once the lawmakers left the room.

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Two sources with an understanding of events said that McGhee turned arrogantly defiant after the legislators left, telling the track owners that PCI didn’t need to compromise because they already have the votes necessary to pass their desired legislation. Benefield, Winn nor PCI would confirm APR‘s sources’ account.

Any lottery or gaming legislation requires an amendment to the state’s 1901 Constitution, which must be approved by a vote of the people. The governor plays no direct part in legislation that involves constitutional amendments.

PCI is demanding Class III Vegas-style gaming, which would require a tribal-state compact that must be negotiated under the authority of the governor.

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There is a way to bypass Ivey, although it is fraught with complications.

If the Legislature passed a constitutional amendment that includes a comprehensive gaming solution plus an authorization for the governor to negotiate a compact with PCI, then a potential federal-state showdown could occur.

The Indian Gaming Regulatory Act requires that tribe request the negotiation of compacts with states in which they intend to conduct Class III gaming. “States, in turn, must negotiate with tribes in good faith to develop such a compact,” according to a report in Indian Gaming Lawyers. “If the state refuses to do so, the federal government may intervene and potentially impose a compact if all other efforts to secure a compact have failed.”

In a report titled The Tribal Trump Card, Patrick Sullivan explores several cases in which tribes have sued various states under IGRA’s good faith clause.

If the tribe has the vote to pass its legislation, that is not publicly known at this time.

Others close to the tribe say McGhee’s remarks to the track operators should be ignored as he is still smarting from the billion-dollar “Winning for Alabama” campaign that is a bust for PCI.

A recent survey conducted for Alabama Republicans found that an overwhelming majority of likely Republican primary voters disapprove of any legislation giving the Poarch Creeks a monopoly. Those numbers skyrocket in the areas where PCI casinos currently exist.

Speaker of the House Mac McCutcheon has stated publicly that he wants to push for a grand gaming package that puts the issue to rest once and for all and also brings in a lot of money for the state. He has indicated that anything short of a grand plan will not get a hearing.

Do the Legislature and PCI want to challenge Ivey? That’s a daunting question for anyone who has watched her operate the levers of power over the last few years.

Whether Marsh’s meeting was meant to undermine Ivey’s call for time to “get the facts,” or a last attempt at a compromise is unclear. But what is certain is Ivey’s intentions to seize gaming issues and bring a solution to the Legislature in the best interest of the state.

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Governor

Ivey seizes gaming issue

Bill Britt

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Toward the end of her 2020 State of the State address, Gov. Kay Ivey snatched the issue of a state lottery and gaming from the hands of the Legislature.

“I will be signing an Executive Order to establish a small working group of some of Alabama’s most distinguished citizens, to begin working, to gather all the facts on how much money we could really gain if some form of gaming expansion occurred,” said Ivey.

Not only did Ivey take ownership of the gaming debate, she asked the Legislature to stand down.

“My challenge to the Legislature is: give us some time to get the facts and then, together, we will give the people of Alabama the information they need to make the most informed decision possible,” said Ivey. “Once they have done so — I will bring these facts to the 140 members of the Legislature and the people of Alabama. And we will then, once and for all, be in a position to determine whether or not this is a path we want to pursue.”

Not since Gov. Don Siegelman’s failed attempt to bring a lottery to the state in 1999, has any governor dared throw weight behind a lottery bill much less try to untangle the Gordian knot that gaming has become as a result of former Gov. Bob Riley’s bingo wars.

Riley and his compatriots upended years of established law that allowed electronic bingo in Macon, Lowndes and Greene Counties, which resulted in the Poarch Band of Creek Indians gaining a virtual monopoly over gambling in the state. Despite federal rules that prohibit the tribe from operating any games that are illegal in the state, the Poarch Creeks have thrived.

Over the last several months, the Poarch Creeks have engaged in a statewide advertising campaign to promote a billion-dollar payday for the state in exchange for a state-tribal compact and a guaranteed unfettered monopoly over Vegas-style gaming.

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Ivey’s announcement has put an end to any hopes of an immediate compact or other gaming legislation for now.

Lottery legislation requires an amendment to the state’s 1901 constitution, which must be approved by a vote of the people. The governor plays no direct part in legislation that involves constitutional amendments. However, any state-tribal compact must be negotiated under the authority of the governor.

For the last several years, the Poarch Creeks have blocked all attempts to pass a lottery and have resisted calls to negotiate in good faith with owners of the state’s dog tracks.

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Even as there was hope going into the 2020 session that PCI might come to the table for a comprehensive gaming solution recently, those hopes have been waning because there doesn’t seem to be any indication the tribe is backing down from its demands for an advantage over others players in the market.

There is also apparently no leader in the House and Senate strong enough to bring all sides together in a compromise.

Ivey has shown she is powerful enough to bring disparate groups together for a common solution as she did with the 2019 gas tax.

When it comes to the issue of gaming, the Legislature will most likely follow Ivey’s lead as it would be foolish to buck a governor with her approval and influence.

It is doubtful even the Poarch Creek’s money can stop Ivey.

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