We need a new kind of politics. A politics of compassion. The United States of America has the highest rates of incarceration in the world. We incarcerate the majority of all women incarcerated in the world. When you look at statistics there are correlations between poverty and jail. While we need security and protection for our society, we focus energy on jailing people for nonviolent offenses like drug use or stealing vs. taking on ideologies of other developed nations who have been successful at addressing these nonviolent offenses. This isn’t a politics of justice as it was intended to be but this is a politics enforcing fear. A vulnerable citizen trying to survive has to live in fear that they will end up in jail due to lack of resources and skills.
Justice reform is certainly needed. We need to rethink how we view those who are poor and create solutions that inspire them to grow in the law abiding citizens who can contribute to our society. When we see the light in people they will see the light in themselves. I believe that when we change our views on the justice system we will begin to work towards a better and brighter future for everyone.
This topic has been discussed at various town halls in Dutchess County. The Poughkeepsie High School to prison pipeline has been a talking point and so has the fact that majority of those incarcerated are black when African Americans make up less than 10% of Dutchess County Residents. It pains me to even think of modern day institutionalize slavery and even worse the fact that some want to blindly ignore the problem and spread their ignorance.
We can have a politics of compassion. One where we learn from our mistakes and grow. I went to a Beacon Town Hall Meeting in June 2016. Where I challenged current practices and the financial validity of the “tax savings” the county had been promoting in the local news papers. The county factored in their Jail Expansion costs to be.
Unfortunately, the replacement of Dutchess County’s Jail has been approved, along with a new sheriff’s complex. The expansion was justified, Republicans said, because it will improve inmates’ living standards while saving taxpayers money.
The harsh reality is that the county has vastly underestimated the cost. Since understanding the relationship between your tax dollars and the bond market is a prerequisite for a legitimate conversation about the jail, let’s explore that.
County Executive Molinaro held a dozen Town Hall meetings to address such concerns, presenting us with a seemingly airtight solution in the form of a Bond Anticipation Note (BAN).
A ‘BAN’ works for small governments the way that taking out a line of credit works for a homeowner. Let’s say you’re a parent responsible for your child’s college tuition. That’s a big bill. As a homeowner, you can use your home equity, say $100,000 in a line of credit to pay it. But you only pay interest on the amount you’ve drawn down until your repayment period begins. That amount then converts to a loan, where you are responsible for both the principal and interest. BANs work the same way; the County’s note would be converted into a larger bond after five years.
At Beacon’s Forum, Molinaro said his BAN would save taxpayers’ money by paying “low interest” for five years and would then convert to a bond at a rate of 2.4%. The latter rate (after bonding) would ensure, he said, that Dutchess County taxpayers would see savings of $5.3 million a year following 2021, even including debt service. This is a great idea if it were true, but with current markets, this bond rate is highly unrealistic. The latest trends are showing a steady climb in bond interest rates.
In five years’ time, when Dutchess County’s new issues go through the primary market, the interest rate for investors will have to be attractive and competitive. The S&P 500 U.S. Aggregate Bond Index on Nov. 30th, 2016 was yielding about 5.66%, while the S&P Muni Investment Grade Index was yielding about 3.40%. Municipal Bond Market expectations are strongly suggesting 4% to 6% in 2021.
It is realistic, then, that the jail bond will be around 4.7%. $192 million (the maximum that could be bonded), with an annual debt service of $9 million over 30 years equates to an interest rate of 2.413%. Put simply, the supposed cost savings for the jail was based on a rate significantly below those trading with, like Dutchess, an AA credit rating. According to Morgan Stanley’s Bond Monthly Report dated November 16th, 2016, 30 year AA Muni Bonds are currently yielding 3.29%. That is also 87 basis points higher than what Dutchess County calculated for its repayment period.
So, based on current market trends, the cost is roughly $600,000 more a year than what was presented to taxpayers. Using conservative market assumptions for 2021, costs are $3 million more annually than what is budgeted. That halves the “savings” to $2.3 million dollars, however, with an expected 15% growth in the number of inmates per year, that $2.3 million disappears quickly.
Republican county government has enslaved our tax dollars to decades of high interest payments. This certainly benefits investors, and the private contractors who build and supply the new facilities as they will see plenty of profits but taxpayers will not.
If we wanted to be truly revolutionary, we could have followed the models used by The Netherlands, Iceland and Finland which have created cost effective methods to reduce jail populations, lower recidivism and crime.
Dutchess County didn’t “Think Differently” this time. Stand with me and my commitment to effect real and meaningful change. Let’s inject sensibility and compassion in to our Justice System!