Rescue plan

Alabama says final federal rule allows use of bailout funds for prisons

A final rule released Thursday by the federal government on how states can use American Rescue Plan Act money does not appear to prohibit Alabama from using $ 400 million to help build two new prisons, the state finance department and the Legislative Services Agency said today.

The US Treasury Department’s 437-page rule governs the use of bailout money, a COVID-19 relief plan approved by Congress in March 2021.

The state finance department, part of Gov. Kay Ivey’s administration, said the state’s plan to use the money for prisons was unaffected, although the preview of the Treasury Department’s rule says prison construction is not eligible for bailout dollars.

Alabama officials say the prohibitive language does not apply to the category of spending the state uses for prisons. They say construction of the prison is permitted under other sections of the rule.

Congress passed the Rescue Plan Act to help states meet the health and economic costs of the COVID-19 pandemic.

The law allows states to use some of the money to replace tax revenue lost due to the pandemic. States have some flexibility in how they can spend these income replacement dollars. Alabama relies on this category for funding for the construction of the prison.

“During the initial review, the allocation of the replacement component of income from Alabama’s share in the State Fiscal Recovery Fund of the American Rescue Act for the construction of replacement beds for the Department of Corrections is unaffected by the US Treasury Department’s final rule that was released Jan. 6, ”the state’s finance department said in a statement today.

The Treasury Department’s preview of the final rule states that “the construction of new correctional facilities in response to an increase in the crime rate” is presumed to be an ineligible use of bailout money.

But the state’s finance department, in its statement today, said: “It is important to note that the references to prisons in the final rule are not in the context of the use of funds. income replacement.

Read the preview.

The Alabama legislature in October approved a plan to build two 4,000-bed men’s prisons using a $ 785 million bond issue, $ 400 million from the bailout and $ 135 million. million dollars from the general state fund. Construction on the new prisons in Elmore and Escambia counties is scheduled to begin this year.

Overall, Alabama is receiving $ 2.1 billion from the bailout. The state got half last year and will get the other half this year.

Kirk Fulford, deputy director of the tax division of the Alabama Legislative Services Agency, said Alabama used the formula provided by the Treasury Department to identify $ 536 million in lost revenue due to the economic downturn caused by the pandemic. He said that amount was set aside from Alabama bailout funds in a separate account, and that the $ 400 million for the construction of the jail came from there.

Lawmakers also allocated $ 80 million in bailout funds to hospitals and nursing homes in October. So overall, there is about $ 1.6 billion left to be allocated to the bailout funds. The state has until the end of 2024 to commit the funds, which must be spent by the end of 2026.

Fulford cited page 9 of the Treasury Department overview, which states that lost income funds can be used to pay for “government services.”

“Government services generally include any service traditionally provided by a government, including the construction of roads and other infrastructure, the provision of public safety and other services, as well as health and education services,” he said. ‘preview.

The Alabama ACLU, which opposed Alabama’s plan to build prisons and the use of bailout money for that purpose, said language that the construction of prisons was an ineligible expense reinforced his position that Alabama’s plan was inappropriate.

“Governor Ivey and other heads of state haven’t been successful in trying to build these prisons for years now, and even though they made a gesture to ask the Treasury Department if they could use this money for the construction of prisons, they never waited for an answer before rushing. coming up, ”JaTaune Bosby, executive director of the ACLU of Alabama said in a press release. “Now the department has released its final rules, and as we knew from the start, spending COVID-19 relief funds on prison construction is inappropriate, especially as healthcare workers, teachers, Small business owners and so many other people in Alabama are struggling during this ongoing pandemic.

“But it is not too late for Governor Ivey and the Legislative Assembly to do the right thing and stop this irrational plan, which is not effective in solving the real crisis facing the prisons of France. ‘Alabama and those in prison. They have all the power to change course, to reallocate those funds to what the Alabamians really need and to avoid the federal government getting involved – again. “

Legislative leaders and the Ivey administration have said new prisons are critical to reversing decades of neglect in Alabama’s corrections system. Alabama has not built a prison since Bibb Correctional Facility in the mid-1990s. The average age of the 14 prisons is 44.

The Justice Department sued Alabama in December 2020, alleging conditions in men’s prisons violate the Constitution. The allegations mainly relate to the level of violence in the prisons and what the DOJ says was the mismanagement and neglect that allowed the dangerous conditions to escalate.

“We have no illusions that the solutions will be easy, but we remain committed to resolving these issues and reiterate that the modernization of the facilities is a necessary step to improve the conditions and services of staff and prisoners. “the Ministry of Finance said in a statement. today’s statement.

The legislature is expected to consider how to use the remaining portions of the bailout funds during the legislative session that begins on Tuesday.

House Majority Leader Nathaniel Ledbetter R-Rainsville said this week lawmakers are awaiting Ivey’s proposals on how to use the money.