Proposed New County Lockup - Financial Analysis

A look at the proposal in historic financial context with projections and several questions for the proponents.

A look at the proposal in historic financial context with projections and several questions for the proponents.

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The Whatcom County administration, working with the Sheriff’s department (which is responsible to run the county lock-up) has proposed to spend $121.5 million to build a new jail in the County. They propose to finance the debt by using 100% of the available Public Health and Safety taxing authority – a sales tax increase of 0.2%, which only requires a simple majority to pass, unlike a property tax increase to pay for a capital project, which must be approved by a super-majority of 60% of Whatcom citizens. This article is intended to provide financial background information for people to use to evaluate the proposal.

1) Jail Operating Cost History

The operating costs of the County jail are accounted for in a separate fund – this is a requirement of governmental accounting. There is one notable exception – interest costs on the debt incurred to build the jail are not included in the jail fund. All the figures below are sourced from Whatcom County Finance Dept. website: 1998-2013 are actual figures; 2014 and 2015 are budgeted figures. 

Year  Jail Operating Costs  Percent Increase:

1998      $4,996,850 
1999      $5,327,787                6.62%
2000      $5,729,679                7.54%
2001      $6,298,170                9.92%
2002      $6,889,604                9.39%
2003      $6,973,780                1.22%
2004      $7,426,716                6.49%
2005      $8,277,406              11.45%
2006      $9,857,598              19.09%
2007     $11,035,201              11.95%
2008     $11,277,454               2.20%
2009     $11,871,606               5.27%
2010     $11,915,034               0.37%
2011     $11,926,428               0.10%
2012     $11,684,834              -2.03%
2013     $12,298,860               3.22%
2014    $13,128,822                6.75%  budget
2015    $13,637,274                3.87%  budget

Compound Annual Increase in Jail Operating Costs, 1998 – 2015:  6.08%

More on this below but one note – jail operating costs have increased at over twice the rate of inflation over the past seventeen years.

2) Prospective Jail Operating Costs

These figures reflect the following assumptions: 1) 3% annual jail operating cost increase based on 2015 budget as base; 2) $97 million in debt to build a new jail bearing interest at 5% (this is according to the County’s “Jail Facility Use Agreement” presented to the City of Bellingham); and 3) borrowing beginning in 2017. This is how the numbers run out to 2027:

Year  Jail Operatg Cost  Pct Incr.  Interest Cost  Total Jail Expense

2016    $ 14,046,392             3.00% 
2017    $ 14,467,784             3.00%       4,850,000        $ 19,317,784
2018    $ 14,901,818             3.00%       4,850,000        $ 19,751,818
2019    $ 15,348,872             3.00%       4,850,000        $ 20,198,872
2020    $ 15,809,338             3.00%       4,850,000        $ 20,659,338
2021    $ 16,283,618             3.00%       4,850,000        $ 21,133,618
2022    $ 16,772,127             3.00%       4,850,000        $ 21,622,127
2023    $ 17,275,291             3.00%       4,850,000        $ 22,125,291
2024    $ 17,793,549             3.00%       4,850,000        $ 22,643,549
2025    $ 18,327,356             3.00%       4,850,000        $ 23,177,356
2026    $ 18,877,177             3.00%       4,850,000        $ 23,727,177
2027    $ 19,443,492             3.00%       4,850,000        $ 24,293,492

These are admittedly estimates – and they may be low, as I used a jail expense inflation rate of less than half what it has been over the past seventeen years. Ballpark summation -  the County will have managed to increase the costs of running the County Lockup from under $5 million per year in 1998 to over $24 million per year in 2027. Again, this is over twice the rate of inflation over this period. And they do not include the increased expense that will be loaded on all the people who have relatives and clients in jail – they will have to drive where they now can walk.

3) Analysis

Where to begin? I think a few questions to those responsible for this proposal are in order:

1) What caused you to increase spending on the jail by more than twice the rate of inflation from 1998 to 2015, in an era of declining crime rates?

2) How is it that you justify the “need” for a new jail on “unsafe” conditions when you have been spending money for the past fifteen years as if you were doing remedial maintenance but in actuality doing what?

3) Where is the Needs Assessment required for a capital project of this magnitude?

4) Where are other alternatives evaluated – for example:
     a. the cost of repairing and upgrading the existing jail?
     b. The availability and costs of alternatives to incarceration for non-violent criminals?

5) Where is the cost-benefit analysis?

6) Why do you think it is a good idea to take 100% of the available taxing authority for Public Health and Safety to pay for this thing and leave zero for EMS, zero for Fire Protection Services, zero for addiction counseling, zero for public health at all, zero for water quality, zero for anything but locking people up?

These are the kinds of questions we need answers for before we open the checkbook. So far, the County administration is proceeding as if entitled (“We need a new jail! We need a new jail!) – this kind of stuff really brings out my inner Republican – how is this not an out-of-control tax-and-spend bureaucracy? How can any fiscal conservative look at this white elephant in the making and not be up in arms (figuratively speaking)?

The law enforcement community needs to get creative in more ways than just figuring out how to spend more tax dollars. How about figuring out how to reduce the cost of incarceration? How about consulting with someone other than a jail salesman – how have other jurisdictions reduced their incarceration costs? What are best least cost practices?

Kudos to the City of Bellingham’s Mayor Linville and Counselors for holding this thing up. It’s not, as the County administration seems to believe, a train rolling down the track but rather an airy dream supported by wishful thinking. We poor citizens hold the purse strings on this. Don’t let go!

This article is covered under Creative Commons Licence CC BY 3.0 – Share with attribution.

Prepared as a public service by David M. Camp, cpa WA lic#30879

About David Camp

Citizen Journalist • Member since Jul 12, 2009

David Camp is a cpa (Canada'86, USA'96) and MBA (Schulich'88) who toiled thirty years in the corporate salt mines, counting beans and telling stories to the auditors and whatnot. Now [...]

Comments by Readers

Dan Pike

Jun 22, 2015

Thanks for this analysis, David. As I have posted on numerous forums, and tod many, many folks since 2008, the jail as planned and located makes no sense financially, ethically, from a safety analysis for both inmates and corrections staff, or from the perspective of addressing the problem rather than building ever-larger warehouses.

I’m wondering where you got the 3% inflation assumption—was that your assumption? I’m curious, because historically public safety has experienced inflation at a rate considerably greater than the CPI; you 3% rate looks low to me by a factor of 25% or more (i.e., the annual rate would be more accurate for jail costs if assumed to be 4% or 5%). In addition, I am curious what the contingency is in the budget. The reason I am raising the question is that it is standard to have a contingency allowance of 15% or more for unanticipated expenses; these almost always show up to some degree, because the information at the time of planning is imperfect. If the contingency is inadequate (think Bertha in Seattle as a current example of things going wrong), and we have already used all our sales tax capacity, then cities and the County are faced with cutting other programs, or being saddled with a worthless albatross of a facility that is unusable, but still requiring extensive cash inputs.

Thanks for getting a needed conversation-starter out there.

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Barbara Perry

Jun 22, 2015

Thank you David Camp.  I would like to see how the population of the county goes up with the jail costs or if it does.  So far, Joy Gilifen is the only candidate I have heard who has spoken out against this stupid jail.  Thank heavens she decided to run against Lousy. 

By the way, I think it is more of a republican mind set to vote for a corporate jail than a democratic.

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David Camp

Jun 23, 2015

@Dan - I used a 3% inflation factor because it seems to me to be reasonable that governmental expenses should increase at no more than the rate of inflation. I question your assertion that public safety expenses should increase at a rate greater than inflation - why should this be so, especially considering that crime rates are at a 50 year historic low. Public Safety expenses should be going DOWN with crime rates. Something is very wrong when government expenses, that is, mostly the salaries of unionized government employees, are going up faster than inflation. Where is the accountability? Where is the fiscal discipline? Where is the prudent management of the public finances? Not much in evidence here…..

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Dan Pike

Jun 23, 2015

David, I agree that it seems reasonable that public safety inflation should mirror that of the broader CPI, but that has not been the experience. This is for a number of reasons. For example, I worked hard to hold the line on wage inflation—including my own—while in office, and managed to get most groups to accept flat contracts, including public safety groups (police and fire), during the great recession. However, that was so unusual that I had Mayors from all over the state asking how we accomplished it. Uniformed groups can deal with an impasse by going to binding arbitration. That arbitration hearing is decided by someone from outside the City, who looks at comparable wages in peer cities. Because contracts in each city are on a different schedule, and because the arbitrator is immune from any fiscal downside to his or her decision, the outcomes of arbitration almost always increase the wages faster than the rates you use as your assumptions.

Another factor to consider is that the new jail will be an expansion; new employees will be brought in. New employees will get step increases on a regular basis, in addition to COLAs, for a period of seven to ten years or more. That adds considerably more upward pressure. These are but a couple of examples as to the why’s of the safety sector inflation running considerably higher than that of the broader CPI. For example, in 2007 the County signed a multi-year contract (four years, I think) providing a 5% COLA for each year of the contract—at a time when true inflation was very nearly zero%. And as a comparable for some other areas, that contract likely resulted in large raises elsewhere in the ensuing years, which will in turn impact the next contracts here, and so on.

This is why it is critical to understand how you are going to pay to staff a facility—over time, without impacting funding for other programs—before you go and build a white elephant like this.

The fiscal picture you paint is bleak, yet to me it looks optimistic.

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David Camp

Jun 24, 2015

Dan - thanks for elucidating the sad factors contributing to our runaway tax-and-spend incarceration infrastructure costs. I ran the numbers again using 5% cost inflation and under this scenario incarceration will cost us poor County taxpayers $30 million a year in 2027. That’s a six-fold increase in 30 years - almost three times the inflation rate.

How anyone who has a grasp of basic economics can think this is a good idea is beyond me.

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Walter Haugen

Jun 27, 2015

Even though the numbers are mind-numbing, it seems clear the “need” has been inflated. I am betting it has something to do with the prison-industrial complex and welfare for law enforcement.

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Luba Pekisheva

Jun 28, 2015

Amen, brother.
Another important point, I continue to see overlooked, is that how can we be sure that only criminals, be they violent or not, are, and will be kept in the jail? It takes an ethical judiciary to reign in the prosecutors zeal to win, at any cost, especially when this zeal, along with the dirty tricks that make it successful, is coupled with highly questionable access to ethical defense attorneys.

The mental health and addiction services are also hugely important, but please don’t forget the sane and sober, innocent/ not guilty/ pressured to plead guilty while innocent population of our jail. With the lack of checks-and-balances I’ve had my nose shoved in during my own wrongful conviction case (St v. Pekisheva 10-1-00939-9), I have reason to fear this population is substantial.

Sadly, the old jail is atrocious and people there do deserve a better facility, but keeping the new jail from being built until it is much smaller and addresses all important concerns, is the only hammer we voters seem to have for now.

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Joy Gilfilen

Jul 10, 2015

All of this is exactly why I am running to be the Whatcom County Executive.  Thank you David Camp for writing this piece, and for each of you commenters for speaking out on this. 

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