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Financial burden of how prisoners counted in Census falls on rural — not urban — communities

by Peter Wagner, December 8, 2005

Census 2000 found one out of every 200 residents of New York City in an upstate prison and counted them as if that was their actual residence. I have written extensively on this site about how this relatively small population transfer is magnified through the redistricting process to radically change the balance of power in New York in violation of the state and federal constitutions.

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 affected 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 disappears long before reaching 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, [PDF] 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 below table).

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.

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.
City/town name Percentage of Census 2000 population that is state prisoners Amount county sales tax income would change if prisoners not included in county population Percentage change in sales tax received if prisoners not included in county population
Amenia town 0% $3,703 1.7%
Beacon city 3.6% $0 0%
Beekman town 16.4% -$109,094 -14.9%
Clinton town 0% $3,668 1.7%
Dover town 0% $7,836 1.7%
East Fishkill town 0% $23,410 1.7%
Fishkill town 9.0% -$76,213 -7.4%
Hyde Park town 0% $19,075 1.7%
La Grange town 0% $13,657 1.7%
Milan town 0% $2,155 1.7%
North East town 0% $2,746 1.7%
Pawling town 0% $6,880 1.7%
Pine Plains town 0% $2,350 1.7%
Pleasant Valley town 0% $8,294 1.7%
Poughkeepsie city 0% $0 0%
Poughkeepsie town 0% $39,134 1.7%
Red Hook town 0% $9,522 1.7%
Rhinebeck town 0% $7,101 1.7%
Stanford town 0% $3,242 1.7%
Union Vale town 0% $4,159 1.7%
Wappinger town 0% $24,036 1.7%
Washington town 0% $4,338 1.7%

Note: The two cities in Dutchess County receive a fixed share of county sales tax revenue and are therefore unaffected by a decision to change how prisoners are treated for tax distribution purposes. All figures in this table are based not on Census 2000’s official results, but rather the results of the Count Question Resolution program. The Census counted many prisons in this county in the wrong spot, and those corrected numbers are used in the county for planning purposes. However, for purposes of redistricting, the prisoners were simply excluded rather than corrected in any way. Tax receipt figures for 2004 were the basis for all calculations. For more on tax distribution in Dutchess County, see Anthony Farmer, “Plans slice local sales tax share”, Poughkeepsie Journal, Feb 22, 2005, p. 1A .

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