equired to provide 25 percent of the costs of projects funded with the federal grants. If the state receives the entire $1.2 billion (requiring $400 million in state funds), about five new state prisons (11,000 beds) could be constructed. Rapid Increase in Annual Cost to Run the PrisonsAs shown in Figure 3, there would be significant General Fund costs, both for capital outlay and operations, to accommodate inmate population growth. The 1994 Budget Act provides $2.8 billion in General Fund operating expenditures for the CDC. In addition, the 1994 budget includes $360 million for debt service on general obligation and lease-payment bonds that have been sold for the CDC's capital outlay and deferred maintenance programs. If the state were to authorize and construct 15 more prisons over the next five years, debt service costs would increase by about $400 million in 1999-00. (This includes debt service costs for five authorized-but-unfinished prisons and assumes the state receives $1.2 billion in prison construction grants from the federal government.) The annual costs to operate these additional prisons would be about $1.5 billion. Thus, General Fund costs for the CDC in 1999- 00 would be about $5 billion (in 1994-95 dollars) an increase of nearly 60 percent in five years. In the current year, the General Fund cost of the CDC is about 7.6 percent of estimated General Fund revenues. For the CDC's expenditures to be an equal percentage in 1999-00, General Fund revenues would have to grow by an average of 10 percent per year. Given the state's current tax structure and economic outlook, revenue growth will probably not be this large. For example, in the 1980s when the state enjoyed relatively strong economic growth General Fund revenues increased by an average of 8 percent per year. It is therefore likely that operating the state's prison system will require an increasing portion of state revenues. ConclusionWith the enactment of the Three S...
