The Real Cost of Prisons Weblog

The impact of Census counts of incarcerated people on funding streams for local governments is far smaller than the political impact, but it is worth exploring how funding is effected and who gains and who loses funding from the practice. In contrast to the political effects, the transfer of 0.5% of New York City's population upstate is, when dropped in the giant ocean that is the budget processes of the federal, state and local governments, a tiny ripple that is difficult to see long before it reaches the shore.

These budget processes are not commonly understood, and the resulting confusion impairs an honest debate about reforming the Census Bureau's method of counting incarcerated people.

This article will make two critical points:

1. The way the Census counts prisoners does not significantly reduce the funding available to the urban communities where most prisoners come from.

2. The financial Census benefit to prison towns comes not from the places that prisoners come from but at the expense of other rural communities without prisons.

As discussed in the article Eric Lotke and I wrote in the Pace Law Review, while Census data does play a role in the distribution of more than $1.5 trillion each decade in federal aid, the vast majority of this aid is completely unaffected by where prisoners are counted within a state. The two largest programs, Medicaid and Highways, amount for 74% of the total and are completely unaffected. The majority of the remainder are highly tailored programs that target the program to the need. Simply put, most government programs are smart enough to base a program for poor school age children on a formula that includes not the total population in a county but the number of poor school age children.

There are funding streams that are less sophisticated, but the losers aren't urban citizens. For example, the U.S. Department of Agriculture distributes $60 million annually to impoverished Appalachian communities via a formula that includes the total population. The completely unanticipated result is to reward communities that build prisons by giving them a larger share of the $60 million Appalachian aid pie.

Stop and think who loses here: The victims are not the urban communities that supply the prisoners because they are not eligible to apply for this money. The real victims are the poor Appalachian communities that see the prison communities more quickly draw down the very limited $60 million fund.

As we described in the Pace Law Review article, most of the money redirected by prison census counts is raised in specialty taxes (liquor taxes, cigarette taxes, recreational park usage fees, hunting-fishing licenses, etc.) and county sales taxes. Not all states have these revenue sources, and in the big picture this is small change, but it is important to see who pays for the windfall received by some.

Dutchess County, NY, can provide a detailed example. In 2003, the town of Fishkill and the small City of Beacon argued over whether the prison counted in one town was really in the other because $85,000 in county sales tax revenues was at stake. Although the prisoners were from New York City, neither the prisoners nor New York City had a valid claim on these funds.

This was not a state sales tax being distributed within the state on the basis of population, but a county sales tax being distributed on the basis of population within the county. The county sets the tax rate -- about 3% of each purchase -- and keeps that money locally. As a result of their "population" based formula, towns with elevated populations due to prisoners get an extra share. So if that money doesn't belong to New York City or to the prison towns, to whom does it belong?

That money belongs to every other town in the county that does not have a prison. The towns with prisons get a windfall, and every community without a prison is deprived of about 1.7% of the tax receipts it would otherwise receive. (See table on website).

It is in fact true that if the Census started to count prisoners as residents of their legal and pre-incarceration addresses, there would be an impact on funding for rural communities. There would be little change in the money that urban communities receive, and towns with prisons would see some decline in their revenue. But most critically, a fairer count of the population would result in an increase in the funds received by the many rural communities that do not have prisons.

As I'll be describing in more detail in the coming weeks, most urban and most rural people have something to gain from changing how prisoners are counted in the Census. But the biggest difference is in political clout, not funding.

RESOURCES:

Pace Law Review article mentioned above: http://www.library.law.pace.edu/PLR24-2/PLR218.pdf

Data table showing estimated change to annual county sales tax income in each city or town in Dutchess County if state prisoners were not included in the population totals for the cities, towns and the county and describing methodology:http://www.prisonersofthecensus.org/news/fact-8-12-2005.shtml