Testimony is presented in behalf of a bill which would deem sale/leaseback of prisons, jails, or detention centers between a private entity and State or local governments to be a service contract for tax purposes, thus encouraging private sector involvement. The bill would unleash private capital and would allow State and local governments to use Federal tax incentives, saving taxpayers up to 22 percent of the cost of traditional financing. Testimony focuses on overcrowding in prisons which results in early release and/or probation of career criminals. The need for detention and stiffer sentencing of violent felons and recidivists is presented and discussed in terms of its impact on present prison crowding conditions and the necessity for constructing additional facilities. Witnesses from various New York State agencies advocate the construction of more prisons at the lowest possible cost, a consideration of large import for local governments. In a final statement by representatives of Errol Systems Inc., a prefabricated, modular prison construction system is described. It is stated that using this system could save 70 percent of the cost of conventional construction for minimum-, medium-, and maximum-security facilities.