Key data to help you make your decision on the county’s proposal to borrow $97 million to build a new jail:
Amount borrowed: $ 97,000,000
Annual Interest Cost: $ 4,850,000 (Based on 5% coupon)
Total Interest Cost Over Bond Term: $ 145,000,000 (30-year term)
Total Whatcom County Incarceration Expense:
1998 (actual): $ 4,996,850
2015 (budget): $ 13,637,274
Avg. Annual Whatcom County Incarceration Expense Increase 1998-2015: 6.1%
Avg. Annual Consumer Price Index Inflation, 1998 to 2015: 2.8%
Projection 1: Annual Incarceration Expense, 2027: $ 24,300,000
(Including bond interest and inflation of 3%)
Projection 2: Using inflation at the rate the county has been increasing incarceration costs 1998-2015 (6.1%) gives Total Annual Projected Incarceration Expense, 2027: $ 29,340,000
Graphically, the county’s proposal under projection 2 is shown above.
I’ve spent my 30-year career as a plant, division, and business unit controller. Evaluating capital projects was about 25% of my job. Rarely have I seen such an extreme case of attempted fiscal misappropriation as the current proposal for a new jail. If the sheriff and executive and County Council have their way, this thing could bankrupt the county. It is really that bad.
Since 1998, the county’s incarceration expense has increased at over twice the rate of inflation. Now, the county is proposing to continue increasing this expense by locking us into a massive expansion in capital cost and attendant facility and transportation costs. They propose to finance this new jail with a tax increase that uses 100% of the available taxing authority for Public Health and Safety – leaving precisely zero for fire, EMS, emergency preparedness, addiction counseling, or public health nurses – it will all go to building up the incarceration-industrial complex in our County.
The remaining hurdle is that they need to get voter approval for the tax increase. But when you look at the numbers, the new jail just doesn’t pencil out. And it doesn’t appear the county has made any attempt to reduce costs, or even explain why incarceration costs have increased so much relative to inflation. Rather, they have signed a $7.1 million contract with an out-of-state consultant (DLR) to design a Cadillac jail. They have purchased land behind RDS recyclers on Labounty Road for $6.1 million, which appears to be about four times the assessed value.
Where is the need? Crime rates are down in Whatcom County (see graph below). In 1998, there were 148 violent crimes and 2,113 property crimes, for a total of 2,261 crimes. In 2012 (the last year data is available on the FBI website), there were 158 violent crimes and 1,130 property crimes, for a total of 1,288 crimes. That’s a decrease of over 43%. Yet during that same period, the county increased its annual incarceration expense from $4.997 million to $11.685 million, a 234% increase. We already have a problem with runaway costs and it appears the county plans to double down on this trend. For the next 30 years, the county plans to spend as much on annual bond interest as our entire cost of incarceration in 1998 – just under $5 million per year.
The county is trying to justify a new jail because the old jail is unsafe. What happened to all the money we have been providing for upkeep? Why wasn’t the old jail properly maintained? Why should we give more money to the sheriff and the county administration when they appear to be spending it so imprudently?
Financial Data: Whatcom County Finance Dept.
Audited Annual Reports 1998-2013; Budgets for 2014 and 2015.
Jail Proposal from Whatcom County New Jail Facility Use Agreement
Crime Statistics: FBI Uniform Crime Reporting Statistics
Jail Planning and Contract Information: Whatcom County Executive “New Jail Information”
Prepared as a Public Service by David M. Camp, cpa WA Licence # 30879
Underlying Projections available in tabular form on request.
This article is copyright by the author under Creative Commons Licence CC BY 3.0 – Share with attribution.
Comments by Readers
Tip JohnsonOct 02, 2015
And then there is the estimated doubling of Sheriff’s staff to cover all that driving back and forth. It doesn’t account for the extra costs of attorneys, bail bonders or family with bail or wanting to visit having to drive out to a remote location not served by transit.
Just a bad idea.
Long ago, when cities figured out that slaughterhouses shouldn’t be in town, they soon figured out they also shouldn’t be so far away as to escape public scrutiny. I think jails might be the same.
Jails should be near the courthouse. According to a recent report, 67% of the incarcerated are pretrial status. That effectively means they are innocent - until proven guilty. We should treat them that way.
Walter HaugenOct 02, 2015
Way to drill down into the data David! Well done!
Dick ConoboyOct 03, 2015
I would be careful in using comparisons with the consumer price index. There is little reality between what the CPI tells us and what normal Americans experience when they pay for goods and services. The government has been jerking around the CPI for decades. Chris Hedges writes in 2009, ” The consumer price index, used by the government to measure inflation, is meaningless. To keep the official inflation figures low the government has been substituting basic products it once measured to check for inflation with ones that do not rise very much in price. This sleight of hand has kept the cost-of-living increases tied to the CPI artificially low. The New York Times’ consumer reporter, W.P. Dunleavy, wrote that her groceries now cost $587 a month, up from $400 a year earlier. This is a 40 percent increase. California economist John Williams, who runs an organization called Shadow Statistics, contends that if Washington still used the CPI measurements applied back in the 1970s, inflation would be 10 percent.” http://www.truthdig.com/report/item/20090406_resist_or_become_serfs
The so-called chained CPI is even worse as a calculator of price increases. Michael Hudson states in 2013, “It’s not really a cost of living index. It’s a “cost of lower living standards” index. Yves Smith calls it the catfood index. Here’s what it does. Suppose that you have to switch away from eating steak or eating meat or eating fish to eating canned tuna fish or canned beans. That’s considered a price reduction. If the chained index is done “properly,” anti-labor economists can cut Social Security by 50 percent. Here’s how. If people stop taking cabs and begin to take buses, that’s considered a lower cost of living. Well, what if they buy a bicycle? All Obama has to say is, “Look, folks! If you really want to save money, get a bike.” That’s what Margaret Thatcher said. That was one of her campaign slogans: “Get a bike!” So all of a sudden, the transportation in the cost of living goes down to zero.” http://michael-hudson.com/2013/04/obamas-catfood-reform/
David CampOct 03, 2015
Dick - Sure there are problems with CPI - but despite its weaknesses, it’s pretty much the only measure of inflation we have. Without some kind of measure, it’s impossible to measure the economy - do you have an alternative?
Let us not make the perfect the enemy of the good.
Dick ConoboyOct 03, 2015
I would say that if you don’t have good data, don’t make the comparison. Hedges article says that the CPI should be around 10% by the standards of the 1970s. Maybe one reason the economy is so f*cked up is that we keep using bad data.
So maybe the CPI is not a useful tool in this jail argument.
Joy GilfilenOct 03, 2015
Thank you for making some sense of this situation from an economics standpoint, David. This is one of the reasons that building that jail is a disaster for the taxpayers…the numbers do not pencil, and no good businessperson would endorse this expenditure; especially when there has been no discussion of of alternative economic options, no discussion of ways to curtail these costs, nor discussions of return in investment to the taxpayers.
David CampOct 04, 2015
@Dick - Thousands of economists compromising the greatest economic minds in the world devised and manage the measure of inflation - it is key to any economic argument. SO rather than quibble about an abstruse topic in which neither you nor I have any expertise, but which is a key measure of our economy accepted and used pervasively in our government and industrial decisions, do you have any actual relevant argument to bring to bear or do you just want to nibble and quibble around the edges?
Dick ConoboyOct 04, 2015
Yes, I remember all those thousands of great economic minds who let us know about the crash of 2007. I am not an expert but I read enough to tell me there is a problem with the CPI. That it continues to be used as a key measure within our economy is a sad commentary on our inability to say the emperor has no clothes. That being said, your other arguments against the jail are right on. I think you know that I am not a supporter of the tax.
David CampOct 07, 2015
@DIck - I’m an accountant, not an economist, but I’ll bet ten dollars against one Lafeen’s donut you can’t find me one single person who can predict when a crash will occur, not even Omar the Magnificant and his turban of wonder.
Dick ConoboyOct 08, 2015
This is not a question of predicting the time of a crash but that economic factors and practices are those that will lead to an eventual crash. Mainstream economists, mostly from the Chicago/Friedman school, preached exactly the practices that got us into the last crash. None of those practices have been curtailed but almost nobody, including our Chicagoan prez BO, is admitting that something is radically amiss and that the economy will tank again.
David CampOct 09, 2015
@Dick - We are now so far off topic I’m beginning to suspect your motive is to waylay the discussion. However, your argument is a classic case of killing the messenger - economists try to describe and measure the economy in order to support policy decision-making on a rational basis, and to forecast the future based on the trends they have identified. That they routinely fail to predict the INEVITABLE boom-bust cycles of our capitalistic social order is hardly surprising, nor even a valid criticism - the causes are so complex and so based on mass psychology that predicting timing is a fool’s errand.
That said it is clear to me that powerful people have levers they can use to trigger recessions - and they do, usually for personal profit. DO you doubt, for example, the contribution of high oil prices to the crash of 2008? At the beginning of the Bush II administration, gas was $1.30 a gallon - at the end, after taking out Iraqi oil production* with trillions of our money, gas prices were $4.50 a gallon and the global oil companies had made more profits in 2004-2008 than any corporations had made in the history of the world. It seems to me that the Houses of Bush and Saud benefited mightily from this and hard not to conclude they conspired to increase the world price of oil for their own profit.
*The decrease in Iraqi oil production after the US invasion of 2003 represents between 0.75% and 1.5% of global crude production. This may seem small but prices are made AT THE MARGIN - small supply movements up or down have a larger effect in a commodity market with little price elasticity of demand like oil. COnsider the current world oil price - an increase in US production of about 2 million BPD of Bakken oil has caused prices to plunge to about where they were at the beginning of the Bush II administration in 2003 dollars.