BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
704 (Denham)
Hearing Date: 04/27/2009 Amended: 04/02/2009
Consultant: Jacqueline Wong-HernandezPolicy Vote: None
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BILL SUMMARY: SB 704 eliminates specific appropriations from
the Budget Act of 2003 and the Budget Act of 2008, to the extent
these funds have not yet been spent.
This bill eliminates Item 5240-301-0660 of Section 2.00 of the
Budget Act of 2003 (Chapter 157 of the Statutes of 2003). It
also eliminates Item 5225-301-0660 and 5225-491 of Section 2.00
of the Budget Act of 2008 (Chapters 268 and 269 of the Statutes
of 2008) relating to the state budget. These statues authorize
funding for the planning and construction of a new Condemned
Inmate Complex (CIC) at San Quentin State Prison.
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Fiscal Impact (in thousands)
Major Provisions 2009-10 2010-11 2011-12 Fund
Repay interim financing $18,360
General
Delete appropriations Possible cost avoidance of
up to $300,000* General**
detailed above
*Cost avoidance depends upon whether a new condemned inmate
facility must be built, even if this specific appropriation is
deleted.
**Issuance of lease-revenue bonds to be repaid from the General
Fund.
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STAFF COMMENTS: This bill meets the criteria for referral to the
Suspense File.
The Budget Act of 2003 appropriated $220,000,000 in
lease-revenue bond authority to plan and build a new CIC at San
Quentin State Prison. The Budget Acts of 2004 and 2005
re-appropriated the funds, the Budget Act of 2006 appropriated
$172,000,000, and in late 2006 the project was stopped
temporarily after the plans were completed, and there was no
appropriation in 2007. After completing the initial plans,
funded by an interim financing loan from the Pooled Money
Investment Account (PMIA), CDCR determined that the project
would require an additional $136,000,000 to complete. This sum
was later appropriated in the Budget Act of 2008.
This bill specifically halts two different appropriations that,
under current law, are authorized to construct a new CIC at San
Quentin State Prison. This bill would rescind the authority to
sell lease-revenue bonds, totaling up to $336,000,000. Deleting
the appropriations avoids future debt, but does not transfer
fund to the GF, as the appropriation was not made from the GF
nor were actual funds ever transferred for this project.
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SB 704 (Denham)
The exact amount of potential cost avoidance is unknown because
it depends upon:
1) Whether a new CIC should be built at another location.
2) Whether, if construction is stopped now and must be
started at a later time, having to build a new CIC in the
future might be even more expensive.
3) The debt-service cost of the lease-revenue bonds that
would be issued under current law.
4) The anticipated construction schedule.
The State Treasurer's Office notes that the initial borrowing
from the PMIA must be repaid and would be repaid by lease
revenue bonds over the life of the project. Halting the project
would make that bridge loan due in 2009-10. This bill would halt
the project, and CDCR would have to repay the $18,360,000 PMIA
loan in 2009-10.
The CIC construction project was intended to alleviate Death Row
crowding issues, as it is current practice to separate condemned
inmates from the general population. CDCR has also raised
concerns about the safety and security of the San Quentin
facility, including Death Row. There is, however, no specific
court order to build a new CIC. DOF notes that there are medical
beds associated with this construction, which were counted
toward the number required by the Federal Receiver, and that
failing to build a new CIC further exacerbates prison
overcrowding. DOF contends that this construction is also
necessary to complete CDCR's mental health plan as approved by
the Coleman Court.
Nonetheless, this specific new construction has been
controversial. The LAO advised against building a new CIC at San
Quentin in both its 2003 and 2008 budget analyses, and
encouraged exploration of other sites. The 2003 analysis calls
for an audit by the Bureau of State Audits, which was later
completed, and found that CDCR did not conduct sufficient
research into all possible locations for the new CIC that might
be less expensive to build and maintain.
In the LAO 2008 budget analysis, the Analyst specifically calls
into question the additional appropriation of $136,000,000,
citing that it finds no evidence that construction costs have
risen so substantially as to justify this additional expense.