MONTGOMERY — After passing the House of Representatives on Tuesday, legislation increasing the amount of money the State of Alabama can borrow to pay for new prison construction is headed to Gov. Kay Ivey's desk for a signature.
Senate Bill 60, sponsored by State Sen. Greg Albritton (R-Range), would increase the maximum amount of bonds that may be issued by the Alabama Corrections Institution Finance Authority (ACIFA) from the current amount of $785 million up to the amount of $1.285 billion to facilitate the funding of the construction and renovation of prison facilities to replace existing bed space. This would increase the annual debt service obligations of the state's general fund by an estimated $30.5 million for 30 years.
SB60 was carried in the House by State Rep. Rex Reynolds (R-Huntsville), who stated that the bill related to constructing two prison facilities in the state, the costs of which have already blown through the initial appropriation.
In 2021, lawmakers approved $1.2 billion in funding for two 4,000-bed facilities in Elmore and Escambia Counties in response to a 2020 lawsuit from the U.S. Department of Justice concerning poor prison conditions.
Four hundred million dollars came from Alabama's allocation of the American Rescue Plan Act (ARPA), a federal COVID-19 relief package. ACIFA was authorized to issue up to $785 million in bonds. Another $185 million came from the state's general fund.
HB60 would allow the state to proceed with the planned construction of the Escambia facility since the Elmore facility is estimated to cost nearly $1.1 billion.
"Under existing law, the Alabama Corrections Institution Finance Authority is authorized up to $785 million for the construction of two mega prisons; one being in Elmore and one being in Escambia," Reynolds said. "Members, this is a bill that we hope we do not have to use, but it's a safeguard while we're in session to provide this authority to ACIFA to raise this to $1,285,000, and that's a $500 million increase."
"We anticipate a shortfall of about $650 million as we move into the Escambia Prison. We do have a phased-in approach that could be considered if we do that. We would have three budget cycles to fund that prison. So, again, we hope not to need this, but it was something that we need to put in place.
The bill faced criticism from Democratic lawmakers, who equally opposed the prisons' construction when the legislature first broached the ideas in 2021. The general tenor of the complaints, in addition to generally protesting the state's prison system, was concern over economic uncertainty in the state and nation.
State Rep. Barbara Drummond (D-Mobile) expressed concern with the state's future bond rating, which is currently at AA with the S&P and AA+ with Fitch Ratings.
"This question could come up three years from now and the bond rating would be assessed on the economic times at that time it's being considered, not today because we're not asking for the money today," Reynolds stated.
"You all feel we need to do this; 500 additional million dollars is a lot of money, and I am looking at the future for the State of Alabama," Drummond said. "Because, as you know, as well as all of us know, a year or so ago, we were flush with money, which were federal dollars coming into the State of Alabama, some of which we used for this very purpose. And that's what I'm trying to get at. From the business side, what is this going to do to Alabama's future bond rating?"
She continued, "With the supply chain issue and the current environment that we're in, all the federal dollars have dried up. And we are very dependent upon federal money coming into Alabama. When those dollars go away, I'm trying to figure out what is our future going to look like. I don't want any of us to be sitting here and we have no money. No money to deal with because we've allocated this."
Reynolds stated he was unaware of what the issuance of an additional $500 million in bonds would do to that rating. He also reiterated that he did not believe the additional bonds would be necessary and that the bill was merely a precaution.
"That's the conversations we'll be having when we come to an ACIFA committee to decide if we ever need this," Reynolds responded.
Despite the brief Democratic protestations, the bill passed with a vote of 74-16 with eight abstentions. The only "nay" votes came from House Democrats. Three Republicans voted to abstain.
Assuming it receives Ivey's signature, the bill's provisions will go into effect on July 1.
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