Supply-side economics explains that tax increases reduce Americans’ incentive to work and invest. In effect, the policies work counter-productively by reducing the amount of labor taxpayers supply, leading to decreased government revenues overall. It is no secret that people respond to incentives by adjusting their behavior to garner the greatest benefit. With this understanding, Texas lawmakers recently applied conservative, supply-side economics concepts to corrections spending by incentivizing judges and prosecutors to use alternatives to prison to hold offenders accountable and reduce re-offending.
In January 2007, Texas’ Legislative Budget Board (LBB) projected Texas would need another 17,000 prison beds – a project that would cost $2 billion over five years to build and operate, but a different path was taken.
Lawmakers heard from judges and prosecutors that their reluctance to use alternative sanctions for more nonviolent offenders was not that they didn’t think the sanctions could work to protect public safety, but rather that these alternatives were not available when needed, even though communities could immediately send an unlimited number of offenders to prison on the state’s dime. For many community sanctions and treatment programs, the waiting list exceeded six months, meaning offenders would be required to reside in county jails during the waiting period. As such, there was a powerful fiscal disincentive for local jurisdictions, which bear county jail costs, to wait for state-funded diversion program slots to open up. The incentives simply did not align with what is most cost-effective overall for taxpayers and public safety.
To avoid the $2 billion price tag for new prisons, lawmakers adopted a $241 million plan to expand the capacity of alternative supervision and treatment programs. Today, Texas has 7,000 fewer inmates than LBB originally estimated if no policy changes were enacted. While the LBB forecasted a 6 percent increase in prison sentences in 2009, the actual number declined by 6 percent, presumably as judges and prosecutors redirected suitable offenders to alternatives and reported greater confidence in probation departments bolstered with the state resources for smaller caseloads and closer supervision.
Most importantly, Texas has hit its lowest crime rate since 1973, proving it is possible to reduce both crime and incarceration.
Legislators now face a different problem: a large budget shortfall. Costs must not simply be avoided, but reduced. The state’s successful juvenile justice reform points the way forward.
In 2009, lawmakers reduced funding for Texas Youth Commission (TYC) lockups by $115 million and redirected $47 million of the savings to juvenile community-based probation programs. Counties were required to meet a statewide commitments-reduction target in order to receive a share of the funds. If the target was not met, juvenile probation would be required to return funds to TYC.
Every participating department met their reduction goals, resulting in a 36 percent decline in TYC commitments in FY2010 alone. Moreover, juvenile crime has declined in the state’s major metropolitan areas. This session lawmakers must implement this model in the adult system.
Traditionally, the criminal justice system grows when it fails. Instead, Texas must now reward results by giving counties that reduce the number of nonviolent prison commitments a share of the state’s prison savings. This allocation is based not just on sending commitments, but also on reducing re-offending among probationers, increasing the share of probationers on restitution payments, and increasing the share of probationers who are employed. Texas should also incentivize offenders by giving probation officers greater authority to provide swift and sure sanctions and incentives, such as increased reporting for bad behavior and a shortened term for exemplary conduct.
In so doing, Texas can incentivize positive results and continue to be a national model for conservative criminal justice reform. In December 2010, Right on Crime – a nationwide initiative led by the Texas Public Policy Foundation – launched with the support of conservative leaders, such as former Speaker Newt Gingrich, former Attorney General Ed Meese, and former “Drug Czar” William Bennett. Building on Texas’ recent success, Right on Crime is working with policymakers across the country to implement tough and smart policies that reduce both crime and costs to taxpayers.
Texas’ work is far from finished. We know incentives affect behavior and results, both in the criminal justice system and among offenders, and the supply of effective alternatives to prison is critical to breaking the cycle of crime without breaking the bank. By better aligning corrections funding and community supervision policies with our goals of public safety, cost control, and victim restitution, Texas can continue to prove that being right on crime means not being too tough on taxpayers.
Marc A. Levin, Esq. is the Director of the Center for Effective Justice at the Texas Public Policy Foundation, a non-profit, free-market research institute based in Austin.