How Cameron County's entrepreneurial jail scheme costs taxpayers

I've written before about the folly of counties building extra jail space in hopes of engaging in entrepreneurial incarceration, either taking in federal prisoners or inmates from other counties. The blog Texas Prison Bidness points out a terrific example out of Cameron County at the state's southeastern tip of how that strategy can backfire. The Cameron Sheriff has begun to ship local, pretrial inmates three hours north to Nueces County in order to honor federal detention contracts which were originally pitched as profit centers but now are proving problematic.

Cameron County Commissioners thought they were being clever when they overbuilt their jail in order to lease the extra space to the feds, but it turns out they've outsmarted themselves. Here are the details from the Nov. 20 Brownsville Herald:

The inmate transfer is necessary for Cameron County to meet its commitment to the U.S. Marshals Service to provide space for 300 federal inmates in the county’s jail system, County Judge Carlos H. Cascos said.

Under a 1998 contract between Cameron County and the U.S. Marshals Service, the county agreed to provide space for 300 federal inmates at any given time in exchange for $3 million to help pay the cost of a new county detention center, Cameron County Detention Center No. 3.

The contract is for 15 years and will expire in 2015.

The Intergovernmental Cooperative Agreement was signed by Eduardo Gonzalez, the former director of the U.S. Marshals Service, along with Hiram Arthur Contreras, the former U.S. Marshal for the Southern District of Texas, Gilberto Hinojosa, a former Cameron County judge, and Sheriff Omar Lucio.

Cameron County receives $36.35 from the federal government per day for every federal inmate it houses in a county facility. If it were able to maintain that 300-inmate figure, the county would receive $9,414.65 per day or more than $3.4 million per year for housing the federal prisoners.

As of late this week, the county had 76 federal inmates housed in its county jails. However, the federal government wants to be guaranteed that 300 beds are available for federal inmates at all times.

In the past, the county has had to transfer some of its federal inmates to other counties to make room for Cameron County inmates.

Although the county will pay LCS $48 per day, per inmate, the cost is lower than what the company usually charges, Lucio said.

So thanks to this entrepreneurial jail deal, Cameron County now gets paid $36.35 per day to house federal inmates and must pay $48 per day to house their own, local pretrial detainees three hours away. And that doesn't include extra transportation costs to bring inmates back for court dates, etc.. A Herald commenter pointed out the absurdity of the proposition:

Cool...they are going to pay LCS $48 per day per inmate so they can take in $36.35 per day from the Feds to take their inmates. And Cascos says this is a good deal. (Math must not be his strong point...)

While they are in a mood for great bargains, I'll offer to start supplying all the County office supplies at only 25% over what they are paying now. Call now!

Ironically, though, despite the obvious flaws in this approach, Cameron County seems committed to further entrepreneurial jail building. Instead of looking for ways to reduce the number of pretrial detainees or seeking contract revisions to house fewer federal prisoners, they're currently in the midst of adding jail capacity so they can keep up their federal contracts. It's highly questionable whether that would really make sense for an actual entrepreneur in a free market setting, but the commissioners court is playing with OPM (other people's money - taxpayers' to be exact), so the fact that entrepreneurial jail building is a long-term economic loser hardly matters - they're worried about the next election cycle.

I'm a believer in free markets but history has blunted some of the sharper edges of free market philosophy. It has its place but it has its limits. Following John Maynard Keynes, my personal belief is that there are "public goods" and private goods depending on the particular characteristics of the product and the market through which it's delivered.

Prisons are public goods. There's no free market because there's only one customer, really: the government (at whatever level), or more broadly, the taxpayers. In the long run, an entrepreneurial approach to incarceration by government inevitably invites conflict - as it has in Cameron County - between public officials' duty to taxpayers and their contractual market obligations. In the most extreme case I'm aware of, Gregg County after Hurricane Rita had to turn away local arrestees in order to fulfill rent-a-bed contracts that soaked up too much of their capacity.

Building and operating prisons and jails are and should be government functions, and it would prevent a lot of problems if counties would restrict themselves to building facilities that meet the obligations of their own jurisdictions, not misguidedly treat them as potential profit centers.

See past, related Grits coverage:

• Rent-a-bed policies, not Rita, responsible for Gregg County jail turning away prisoners
• Prison privatization ginning up local controversies
• Do Limestone and McLennan Counties need three jails apiece?
• McLennan County seeks profit over public safety with privatization schemes
• Grayson County Judge pushing irresponsible jail building scheme