Scheme to finance county jail with immigration detainees puts future Montgomery County finances at risk

Texas counties hoping that federal immigration detention dollars will subsidize local jail building need to pay closer attention to what's happening in national politics, where both presidential candidates strongly support comprehensive immigration reform. In particular, if elected President, John McCain says he will make changing US immigration policies his top priority, according to headlines today. Said McCain:

"It will be my top priority yesterday, today and tomorrow," drawing sustained applause.

"There are 12 million people here and they are here illegally but they are God's children, they are God's children," McCain said, pounding the podium for emphasis as he repeated the words.

The apparent inevitability of an immigration reformer assuming the presidential mantle makes recent financial decisions by some counties about their jails appear short-sighted, perhaps even doomed. Take Montgomery County, which will open a new privately operated jail in August. According to an editorial in the Montgomery County Courier:

county commissioners decided to build a new 1,100-bed facility in 2006, which essentially will double the number of jail beds in Montgomery County when the new facility opens Aug. 1.

The county decided on creative ways to pay for the construction of the jail annex and its operations, which will spare taxpayers additional costs. A nonprofit organization, Montgomery County Jail Financing Corp., was formed to fund the $42 million project. Commissioners make up the members of the corporation, which will build the jail through tax-exempt bonds and lease the facility back to the county.

In turn, the county will pay for the facility by housing federal inmates from the U.S. Marshal’s Service and Immigration and Customs Enforcement at an estimated price of $55 per day per inmate. At 70 percent capacity, the jail annex should pay for itself, according to county officials.

The combination of housing federal inmates and leaving enough bed space for local inmates helps the county pay for the facilities while creating bed space for local offenders. County officials say the contracts should pay for the facility, which will meet the county’s needs over the next 10 to 20 years.

The contracts with the federal agencies are expected to cover operational costs, insurance, $3.4 million in debt annually, as well as the contract with the management firm.

The GEO Group, a private security firm specializing in correctional facilities, will run operations at the annex.

A few years ago, commissioners considered contracting with The GEO Group to operate the existing jail, or at least its 400-bed wing that opened in 2005. However, Sheriff Tommy Gage developed a plan that enabled the county to hire more jail workers, which saved the county money compared with contracting with GEO. The county also contracted with the federal agencies to house nearly 150 of their inmates at the jail wing, enabling the county to bring in around $2 million annually and offset most of the costs of operating the jail wing.

So Montgomery County gets a jail on the cheap only if federal immigration detainees keep the new facility 70% full. If immigration reform passes, though, there's a good chance the recent massive expansion of immigration facilities will cease or even joltingly retract. The demand for new beds is caused by policies both presidential candidates now promise to change. I was quoted recently in the Nacogdoches Daily Sentinel making the same point about a proposed facility there:

Scott Henson, a public policy researcher who authors the Grits for Breakfast blog about Texas criminal justice, said the private prison industry as a whole faces an uncertain future in the U.S. The demand for prison beds to house immigrant detainees may decline with changes to federal policy dictated by the next president, he said.

"The rise in the need and demand for immigration beds is a result of very specific policies," Henson said. "Expansion in cases for Texas U.S. Attorneys in the last 3 years is incredibly dramatic. That was a choice. They could choose not to do it when the next president gets in.

"Who's the next president going to be, McCain or Obama? Both of them favor comprehensive immigration reform. Do you think their attorneys general are going to continue the high rates of prosecution? Probably not. Do you think that once we have comprehensive immigration reform, immigration detention facilities will be a viable investment? Probably not."

Immigration detention rose quickly and dramatically in recent years, but the ascension of a new president, a new crop of US Attorneys and the passage of comprehensive immigration reform could turn that trend around in a heartbeat. Under a President McCain or Obama, in 2-3 years time, who will be surprised if Montgomery County's projected $2 million profit on the jail turns into a $4 million annual debt payment for which the county is on the hook?

There's no free lunch in economics, and as it turns out that includes jail economics, too.