California State Senate Fails to Pass Prison Health Construction Bond: Federal Court Receiver Demands $3.5 Billion, With More t

[courtesy of California Progress Report]

By Frank D. Russo

The California State Senate has just adjourned, having failed to pass SB 1665 (Machado) which would have authorized $7 billion in bonds to pay for prison health care construction that the federal court receiver indicated he needs in order to bring California’s system into constitutional compliance with orders in cases pending against the state. By a vote of 24 to 15, with 27 votes needed for the two-thirds required for passage, the Senate failed to pass this bill, despite passages from a letter from the receiver read on the Senate floor by Senator Machado. The only votes for the bill came from Assembly Democrats.

The stage is set, given the reaction of the receiver, which his office has indicated will be his only public commentary today, for the receiver to go to court for an order that funds be immediately paid by the state of California, thus worsening the state’s deficit for the current fiscal year and severely impacting it in the 2008-09 fiscal year beginning July 1 which has an estimated $15 billion deficit without further cuts or revenue.

We will report more on developments on the prison and budget crisis, including the apparent demise of a settlement of the prison overcrowding lawsuit which the parties had hoped would be formalized tomorrow. Senator Machado told the Senate that this settlement was “DOA.”

For now, here is the information as released by the receiver:

J. Clark Kelso, Federal Receiver for the California Prison Health Care Receivership Corp. has issued the attached letter to the Department of Finance (Attached as “Genest Letter”)

The release of this letter will be the Receiver’s only public commentary for today. The following are excerpts of the letter:

What happens next?
Absent favorable action today on SB 1665 (Machado), it is my intention to file with your office a demand that the State of California commit to setting aside $7 billion in the Receiver's account to be used for the Health Care Facility Expansion and Improvement Programs provided for in the Receivership's Strategic Plan, "Achieving a Constitutional Level of Medical Care in California's Prisons."

How does this affect California’s Budget?
SB 1665 was introduced to provide cost-effective bond financing for these construction programs, financing that would avoid the need to adversely impact the General Fund for the next three years. In my judgment, given the disastrous condition of the State's General Fund and budget, SB 1665 is the only fiscally responsible approach for providing the necessary financing.

I remain hopeful that the Senate will act favorably upon SB 1665, and that I will not be forced to ask you to immediately sweep all available funds and to take other extraordinary reallocations of funds to provide financing for my construction program. However, I can no longer stand idly by while the State continues its pattern of prevarication.

How much money is needed and by when?
I will be needing to commit $70 million immediately (Le., in the current fiscal year), and anticipate needing $3.43 billion during FY 2008-2009, $2.0 billion during FY 2009-2010 and the final $1.5 billion during FY 2010-11.