YAKIMA, Wash. (AP) - The first sign of trouble came in a telephone call just before Christmas.
Yakima County Corrections Director Ed Campbell learned from his staff that the city of Federal Way was pulling its 30 inmates out of the Yakima County jail system.
Auburn followed in quick succession, withdrawing 60 prisoners.
Despite earlier assurances from his 35 King County city customers that they would renew most bed rental contracts set to expire Dec. 31, the exodus was on.
When it was over, Campbell found himself with roughly 30 contract inmates - from what had been 300 - and what could be a $7 million or deeper hole in his $32 million budget. The loss nearly equals what the county spends every year to operate the assessor, treasurer, auditor, county clerk and planning departments combined.
Campbell calls it the most difficult time he and the department have faced.
"I believe we are going to have to go through some restructuring. I'm not certain we will fill all the vacant beds," he said.
County officials face some tough decisions about how to close the gap, which is made more difficult by an obligation to pay back the bonds sold to build the new jail near State Fair Park - the very purpose of which was to house contract inmates. The bond payments plus money Campbell must set aside for capital improvements amount to about $3 million.
By laying off 33 people, eliminating five vacant positions and renegotiating some contracts for jail services, Campbell will cover about half the losses.
What happened to Yakima County reflects a broader trend throughout the state and the nation as inmate populations drop.Campbell and Yakima County simply got underbid in what has become an increasingly competitive marketplace as counties look to narrow gaping holes in their budgets by contracting out an increasing number of empty beds.
More than ever, money is now driving the rental business.
The trend is critical to Yakima County because it relies on bed rentals to cover its costs.
The department operates on its revenues, including $10 million from general county tax dollars to support housing county inmates.
Bed rental contracts with county cities, King County, the state and federal governments and miscellaneous revenues from telephones, inmate commissary and other sources make up its budget.
"There is a lot of pressure on the market because jurisdictions are struggling," Campbell said. "There are fewer inmates out there and more jurisdictions selling."
Chelan County jail chief Phil Stanley said the decline in inmate populations is a sign of the economic times as counties find cheaper alternatives to incarceration through home detention and pretrial release.
One major source of jail inmates - driving on a suspended license - has been decriminalized."There has been an effort to try to reduce the number of bed days in jails to save money," said Stanley, whose county rents out about 90 beds. "The jail budgets for counties have become very expensive."
The whole dynamic likely will change even more when a consortium of seven south King County cities opens an 800-bed jail for minor offenders in Des Moines, Wash., south of Seattle, in September.
The facility, South Correctional Entity (SCORE), will take all misdemeanor offenders from the seven cities - Auburn, Burien, Des Moines, Federal Way, Renton, SeaTac and Tukwila - at projected daily rates of $112 in 2012, according to Penny Bartley, director of the SCORE jail.
All seven cities were part of the group that signed agreements to house prisoners in Yakima County in 2002.
Other cities in the county can use the new jail, but they will be required to pay a higher rate, something over $120 per day, according to a representative of cities not among the seven.
With that new jail moving toward completion and beds opening up elsewhere, the negotiations between Yakima County and the cities became more complex and more fluid as individual cities made their own decisions about their needs and where those needs could be accommodated, city representatives said.
County officials say they were caught off guard by the pullout decisions. They thought they had offered an incentive to cities by letting them out of a prior requirement that they rent a minimum number of beds.
"There was this hope that all things would be the same and the contract would continue as is. There were dynamics that changed and there was nothing we could do about it," said County Commissioner Mike Leita. "We couldn't stop other counties from building beds and we can't stop Snohomish County or Benton County from subsidizing bed rates."
When the dust settled, the King County inmates were spread across the state. Many are in Snohomish County; some are in Chelan and a lesser number are housed in Okanogan County. In all three cases, bed-rental rates are a third or more below what Yakima County is charging this year.
Snohomish County has signed contracts worth $1.5 million with at least seven cities in King County for a total of more than 135 beds, and more contracts are pending.
Chelan County picked up new contracts with Federal Way and Kent as of Jan. 1, adding them to Kirkland, which already had inmates housed in the Chelan jail.
Maj. Doug Jeske with the Snohomish County sheriff's office said he began spreading the word last summer that the county was in the market and had beds to rent. The news traveled throughout King County just as the cities were continuing to talk with Yakima County.
Catherine Cornwall, a policy analyst for the city of Seattle, said Yakima County had proposed a rate increase in 2009 for renewal of the contracts. Campbell lowered the price after taking over Corrections late that year.
But as talks progressed, the cities were looking for alternatives, Cornwall said.
"Operationally, a drive to Everett is a lot easier. The rates were more competitive," she said.
Cornwall said Seattle appreciated the service it received from Yakima County during the seven-year contract, but that's little solace to Yakima County officials as they look to reduce the yawning budget gap.
They have several options: eliminating programs instituted at the request of the King County cities, reducing the jail's contribution to cover maintenance costs, more layoffs, using reserves, or finding new bed rental customers.
As a start, the county has closed three units of the new jail near State Fair Park since the King County inmates left.
While possible, more layoffs beyond the 33 already announced are at the bottom of the list, county commissioners said.
"I would tell you there are more palatable opportunities than staff reductions," said Leita, who has dealt most with the jail since he took office in 2005. "Whether we can achieve that is yet to be determined. We are reluctant to go to that alternative because we have invested a lot of money into our corrections officers."
Campbell isn't giving up on the rental market. He said he is talking to three of what he described as large agencies, including one in Idaho, that could bring in 150 rental inmates.
He expects to know in two weeks whether those rentals are possible. If they are, the county's problems mostly will be solved. Absent that, the agency will have to make more cuts to fill the remainder of the budget gap.
One thing is for sure. The county won't cut rates to compete with Snohomish County, where the daily bed rate is $62.50, and Okanogan, where beds cost $55 per day.
Yakima County is charging $99.80 per day to the few King County cities that remain under contract. County officials suspect other counties are charging rates that don't cover the actual cost.
Leita said the county won't get into a bidding war because it would require county government Ñ taxpayers Ñ to cover more of the cost.
Another possibility, he said, would be for the county to market its beds to more serious offenders. He said the SCORE facility and other jails are marketing space designed for misdemeanor offenders, opening up what he called a niche market for higher-level offenders.
"We are spending $7 million to harden our (downtown) facility to make it more secure," he said. "We might choose to bring in some of the less desirables at a premium price."
In any event, the county faces difficult choices.
"Our issue right now is for the next three months we have to make some hard, short-term decisions to keep the ship upright," Leita said.