EconSouth (First Quarter 2009)

Paying for Crime and Punishment

The turbulent economy is causing economic havoc, but it also promises to bring an unfortunate side effect—a rise in crime. How will cash-strapped state and local governments pay for the law enforcement to cope with the growing number of criminals and the prisons to house them?

hile the nation is preoccupied with its current economic woes, crime is taking a sizable bite out of the average American's wallet. In 2007 per capita income in the United States was $38,611, according to the U.S. Bureau of Economic Analysis, while the annual economic impact of crime was, by one estimate (described below), $5,125 per capita. In other words, more than 13 percent of Americans' income is allocated to crime-related expenditures.

These expenditures ranged from increased retail prices to offset shoplifting losses, to crime prevention measures like security cameras and surveillance systems, to funding the nation's prison and law enforcement industries. Perhaps the most visible of those expenditures is law enforcement, including the costs of making arrests and running prisons.

With the crime rate expected to increase while the economy sags, states in the Southeast face not only the challenge of funding space to house a growing number of prisoners but the even more pressing challenge of paying for more law enforcement officers to deal with the rising crime rate.

Related Links
On the Web:
U.S. Department of Justice's crime statistics
U.S. Department of Justice's prison statistics
Study on the costs of crime
Audio icon Podcast on the economic impact of crime (MP3 9:35)

Crime trending upward?
The $5,125 annual per capita cost of crime cited earlier is an estimate—adjusted for inflation using the consumer price index—of a statistic originally calculated by David Anderson, a professor of economics at Centre College. In 1999, Anderson's study "The Aggregate Burden of Crime," published in the Journal of Law and Economics, set the cost at $4,118. According to the National Center for Policy Analysis, Anderson's research was a landmark because it considered costs not included in previous studies. Some of the new factors were opportunity costs of time lost by victims, criminals, and prisoners, as well as the cost of private deterrence (such as home security systems) and losses related to the fear of being victimized. His model also included decreases in property values of real estate and buildings because they are located in high-crime areas as well as the costs associated with commuting to the suburbs to avoid crime in the city center.

In the decade since his study was initially published, Anderson said he doesn't think the numbers have changed much—with one exception. "My study was pre-9/11 and doesn't capture anti-terrorism expenditures," he said. But even if domestic crime expenditures have not risen, Anderson feels that one statistic—the crime rate—is probably changing.

"I do think that the economy has a strong effect on crime," Anderson said. "You see in the mid- to late '90s when the economy was picking up that crime decreased in many of the major categories. I think that without jobs, there are more people who are in desperate situations, more people who just don't have anything to do. If somebody's got a job, they're not on the street, bored, making graffiti, and robbing appliance stores. From what I see in the data, there is a significant correlation between the economy and crime. When the numbers come out for this year and next, I expect we will see an increase."

Putting police on the beat
At odds with the expectation that crime rates will rise is the decline in local revenues used to pay for the police to combat that crime. To date, research studies have failed to yield a universally accepted model demonstrating what effect the size of a police force has on crime rates. What is more of a certainty, according to Anderson, is that crime rates are higher in urban areas. Although the Southeast has fewer urban areas than the Eastern seaboard or the Midwest, many Southeastern cities are struggling to maintain, let alone increase, the size of their police forces given the current state of the economy.

Nowhere have the challenges of fighting crime been more visible or publicized than in New Orleans as it has battled back from the damage of Hurricane Katrina. A study published by CQ Press in November 2008 ranked New Orleans as the most violent U.S. city in 2007 on the basis of crime data reported to the FBI in six categories, including homicides. Although the city's homicide rate dropped 15 percent, from 210 in 2007 to 179 in 2008, New Orleans remains one of the most violent cities in the country, with one of the nation's highest per capita murder rates, according to the New Orleans Times-Picayune.

Combating crime has been only part of the challenge for the New Orleans Police Department. In June 2007, Time magazine chronicled many of the obstacles faced by the department, such as working out of trailers and facing stringent budgets. One anecdote recounted how officers at the city's 5th District police station took up a collection to pay for the cleaning of portable toilets outside their trailers.

Silhouette of a police officer with callout text

The city's problems prompted some neighborhoods to approve special taxes to pay for private patrols in the fall of 2008; in certain neighborhoods, National Guard troops conducted patrols for more than two years, according to the Associated Press. Although New Orleans has added 290 officers in the past two years, bringing the force's total to 1,500, according to Police Superintendent Warren Riley, that growth has been stalled. Effective Dec. 31, Mayor Ray Nagin implemented a hiring freeze for positions directly related to public safety, including police officers, firefighters, and emergency medical service personnel.

Elsewhere around the Southeast, many urban areas are balancing staffing needs with budget constraints. In Nashville, WKRN-TV reports that budget discussions are under way that could result in more than 200 police positions being cut because of a yearlong hiring freeze.

In Atlanta, the police department is still reeling from overspending its 2008 budget by $20 million, according to the Atlanta Journal-Constitution. Despite continuing budget pressures, Mayor Shirley Franklin has resisted layoffs of police staff. But the city has implemented other belt-tightening measures, such as police officers taking a 10 percent pay cut and taking a day off without pay every other week.

In central Florida, the Lakeland Register reported widespread reductions among many law enforcement organizations. In St. Petersburg, the Pinellas County Sheriff's Office is eliminating 25 law enforcement deputies and 36 correction deputies. The Bradenton Police Department is laying off two deputy chiefs and four lieutenants. The Sarasota Police Department is eliminating 20 officer positions and 10 civilian positions, while the Tampa Police Department is operating with 16 fewer positions following 2008 reductions.

Further downstate, Miami is actually increasing its public safety budget 0.4 percent from $1.399 million to $1.405 billion. However, public safety lost ground, falling from 30 to 28 percent of the budget, compared to other line items in the city's budget such as economic development, transportation, and culture and recreation, which saw their share of the budget increase.

Unlike most other urban areas in the Southeast, Jacksonville has been able to infuse money into its law enforcement efforts. Like New Orleans, Jacksonville had been plagued by high crime rates, with violent crimes soaring 21 percent between 2006 and 2007, according to city statistics. However, Jacksonville managed to increase funds for law enforcement and other crime prevention measures without raising taxes in its 2008–09 budget. By slashing budgets in many other areas, such as information technology and fleet management, the city came up with $30 million for public safety initiatives, including $13.5 million for the Jacksonville Sheriff's Office. Included in the budget plans was the creation of 80 new positions for law enforcement officers.

While many communities are having problems finding revenues to cover existing expenditures for law enforcement, much less increase staffing levels, one possible source of help may come from the federal government, in the form of the new stimulus package. In requesting stimulus funds for Atlanta, Mayor Franklin has indicated she would like to use part of that money to add 200 police officers, according to the Atlanta Journal-Constitution.

Behind bars
Apprehending criminals is one thing. Housing them is another. According to the National Council on Crime and Delinquency, the United States incarcerates the highest percentage of its citizens in the world, with a rate four to seven times higher than other western nations such as the United Kingdom, France, Italy, and Germany.

In the past decade, the number of state and federal inmates in the Southeast has grown at a rate faster than the nation's. According to the U.S. Department of Justice's Bureau of Justice Statistics, the number of state and federal inmates rose from almost 1.2 million in 1996 to nearly 1.6 million in 2006, a 33 percent increase. During that same period, the number of state and federal inmates in the six Southeastern states rose approximately 40 percent, from slightly more than 175,000 to almost 250,000.

The rate of increase varies among the six states. In 2006, Louisiana had the nation's highest rate of incarceration, with 835 out of every 100,000 citizens behind bars, according to the Bureau of Justice Statistics (see the chart). The post-Katrina departure of many storm victims was one factor because it lowered the state's population without a corresponding drop in the number of inmates. Still, a decade earlier, in 1996, the Bureau of Justice Statistics ranked Louisiana, with 611 out of 100,000 citizens incarcerated, second only to the District of Columbia.

At the other end of the spectrum, Tennessee was 13 percent below the national average, with 433 people out of 100,000 incarcerated in 2006, despite a dramatic increase in the number of prisoners. Ten years earlier, Tennessee was 30 percent below the national average, with only 293 out of every 100,000 incarcerated. Tennessee's jump in the incarceration rate was the result of a 67 percent increase in the number of state and federal prisoners—from almost 16,000 prisoners in 1996 to more than 26,000 prisoners in 2006. Although Tennessee's rate of increase led the region, all six states saw the number of state and federal prisoners rise 25 percent or more in 10 years. After Tennessee, Georgia's prisoner count increased 48 percent, followed by Mississippi (40 percent), Florida (39 percent), Louisiana (34 percent), and Alabama (25 percent).

Three strikes and you're out
One reason the number of prisoners has soared is the adoption of "three strikes" laws, which mandate that state courts hand down an extended sentence to persons who have been convicted of a serious criminal offense on three or more separate occasions. Five of the six Southeastern states have implemented versions of these laws, with Mississippi the only holdout. The Southeastern states have embraced the three-strikes laws more readily than the rest of the nation; only 25 states have adopted such laws.

Drawing of a thief

Since the state of Washington implemented the first three-strikes law in 1993, debate has raged over the laws' effectiveness in reducing crime rates and curtailing recidivism. However, the laws' effect on increasing the number of prisoners as well as the associated costs is quantifiable.

The Federal Bureau of Prisons reports the cost per federal prisoner is $70.75 per day for the 2008 fiscal year, a little less than $26,000 per year. This figure is higher than what Southeastern states spent on state prisoners, according to the Bureau of Justice Statistics' last survey of state costs in 2001, even after adjusting for inflation. In the region, Florida spends the most per prisoner at $24,545, followed by Georgia ($24,144), Tennessee ($22,133), Louisiana ($15,744), Mississippi ($15,555), and Alabama ($9,881). Alabama spends $61 annually (adjusted for inflation) per resident on state prisoners. Alabama is the only Southeastern state under the national average of $100 per resident. Georgia spends the most at $130 per resident, followed by Louisiana ($125), Mississippi ($113), Florida ($108), and Tennessee ($89).

Prisons: Good business or bad?
As the number of prisoners has risen, prison facilities have expanded to house them. According to a 2004 study published by the Urban Institute, "The New Landscape of America's Prison Expansion," the number of state prisons increased from approximately 600 facilities to more than 1,000 from the mid-1970s to 2000. The study focused on the 10 states with the greatest increase in facilities during this period; two of those states, Florida and Georgia, are located in the Southeast. Florida was distinctive in the study for having the nation's most dispersed system, with prisons in three out of every four counties. Only two of Florida's rural counties did not have a prison. In Georgia, the number of prisons more than doubled during the study period, growing from 18 to 42, with 14 of the new facilities located in rural counties. Nationally, rural areas have increasingly attracted prison construction. The study notes that in 1979 only 13 percent of rural counties had prisons, but by 2000 that figure had grown to 31 percent.

Growth in the Rate of Incarceration
Source: U.S. Department of Justice, Bureau of Justice Statistics

In many areas, the construction of a new prison facility is a welcome shot in the arm for the local economy. In 2006, Georgia opened pre-release centers, which transition lower-risk offenders back into the community, in four rural counties: Wilkes, Lamar, Appling, and Turner. According to the Washington, Ga., News-Reporter, Gov. Sonny Perdue and local politicians hailed the economic impact of these centers, with each employing 45 to 50 staff members, and each center's payroll putting almost $2 million annually into the local rural economy.

While some believe prison construction provides an economic boost to rural areas, that sentiment is not unanimous. One vocal critic is Douglas C. Bachtel, a professor of housing and consumer economics at the University of Georgia, who argues that prisons' impact on rural economies is often overstated.

"When you build a prison, it's a real sophisticated job," Bachtel said. "You do not hire a local contractor. You hire outside the area. When it comes to feeding the prisoners, you don't go to the local grocery store. You buy in bulk. Often time, you'll buy out of state on a state contract."

Bachtel pointed out that prison jobs require testing, and local applicants often don't pass these tests. Also, he notes, prisons are not especially appealing work environments, and there's a surprising amount of job turnover. Another problem is that a significant number of prison workers commute long distances. "Those workers take their paychecks back home so there is a significant amount of paycheck leakage [out of the rural community]," he said.

A team of sociologists from Washington State University and Ohio State University conducted a study that assessed the impact of both new and existing prisons on communities in more than 3,100 counties throughout 48 states between 1969 and 1994. Their research showed that the presence of a prison hindered economic development efforts, specifically in the creation of jobs and level of wages. Researchers at the Sentencing Project conducted a similar study on prisons in New York state between 1982 and 2001 with similar results. These studies also found that dollars spent on prisons lack the multiplier effect associated with some other types of projects. For instance, a study by Global Insight Inc. showed that every federal dollar invested in highway capital expenditures adds more than $2.50 to U.S. gross domestic product.

The key to unlocking the solution?
So perhaps the benefit to local communities from the anticipated federal stimulus money is multipronged. Not only could communities receive money to combat rising crime rates, but construction projects and jobs may help arrest that rise.

But if indeed the country is headed for an upswing in crime, the inescapable result is that it will still hit everyone in the pocketbook. Increased crime has plenty of costs to spread around, whether in the form of higher prices to offset shoplifting losses or funding for more law enforcement personnel or prison space.

Going forward, Americans and their governments must choose how to spend their money addressing crime. Once those decisions are made, the only question left will be how much it will all cost.

This article was written by Ed English, a staff writer for EconSouth.

Illustrations by Odie Swanegan