Senator: No legislative support for raising decal fee to fund new prison

LITTLE ROCK — Legislative support may be lacking for a proposal to raise money for a new prison by increasing the decal fee that Arkansas motorists pay when renewing their license plates, the chairman of the Senate Committee on State Agencies and Governmental Affairs said Tuesday.

Also Tuesday, a legislative researcher said a proposed $2 increase in the decal fee would not generate enough revenue to finance bonds for a proposed $100 million prison construction project. A spokeswoman for the state Department of Correction said the department is confident its proposal is on target.

Currently, the cost to renew a license plate in Arkansas includes a $2.50 decal fee. The state Board of Corrections has approved a legislative package that includes a proposal to raise the decal fee by $2 to finance bonds that would pay for construction of a new 1,000-bed prison.

During a joint meeting Tuesday of the House and Senate state agencies panels, Sen. Eddie Joe Williams, R-Cabot, chairman of the Senate panel, said he believes legislators should look at a variety of approaches to address prison overcrowding, including making use of existing buildings around the state to house prisoners, investing in more drug courts and adopting new programs to rehabilitate convicts and aid their re-entry into society.

“We’ve got to discuss those things in an open forum and make some decisions, and it might not be to build another 1,000-bed facility, I don’t know,” Williams said. “What I do know (is) I have yet to find one legislator who’s willing to raise the license fee for a vehicle to raise money. Not one.”

Robert Wilson, assistant director of the Bureau of Legislative Research, told the committees that raising the decal fee by $2 could be expected to generate about $5.34 million a year.

He said a 15-year bond issue for the project would require an annual cash flow of $8.17 million, which would require raising the decal fee by $3.06. A 20-year bond issue would require an annual cash flow of $67.2 million, which would require raising the decal fee by $2.52, he said.

Williams asked Wilson what the state would be looking at if it started the project in 2016. Wilson said interest rates would be higher.

“If you’re going to do it today, it appears as through $2 per decal will be short. If you’re going to do it two years from now, it makes it even worse,” Wilson said.

Department of Correction spokeswoman Shea Wilson said later that investment firm Stephens Inc. worked, as a courtesy, with the Arkansas Development Finance Authority to determine the amount the fee would have to be increased to finance the project. She said the proposal is based on the cost to finance a 30-year, not a 15- or 20-year, bond issue.

“The numbers that we looked at we feel will support the issue,” she said.

The committees also heard a presentation Tuesday by Nick Robbins of Pathway to Freedom, a Fayetteville-based nonprofit organization that provides programs to help reintegrate prisoners into society.

Robbins said the average offender in the U.S. serves 2.9 years per charge, but the average offender in Arkansas serves 3 years and 11 months. If Arkansas were to adopt a program that allowed prisoners to re-enter society a year earlier — using mentoring, personalized case management and re-entry classes — it could match the national average, he said.

For $10 million a year, the state could offer the program to 2,778 prisoners, Robbins said. He said that if that many prisoners were released early, the state would save $54 million a year.

Alternatively, if the state builds a new prison and does nothing to reduce growth in the prison population, “once that prison is built it will be obsolete immediately,” Robbins said.

The committees also received a report from the Bureau of Legislative Research containing a cost-benefits analysis of correctional interventions. The report stated that for certain types of offenders, rehabilitation and intervention programs can produce better returns for taxpayers than prison expansion.