Monday, March 28, 2011

'Private prison promises leave Texas towns in trouble'

You don't get something for nothing
You can't have freedom for free
You won't get wise
With the sleep still in your eyes
No matter what your dreams might be.
- "Something for Nothing," Geddy Lee, Neil Peart, Rush, 1978
NPR's John Burnett has a terrific story this morning with the same, alliterative title as this post that focuses on a subject familiar to regular Grits readers, but which definitely deserve national attention: Private prison companies that convince local governments to construct more jail space than they need then abandon them when there's no income to cover the debt. In West Texas at the Billy Clayton facility (named after a former Texas House Speaker), Burnett reports:
For the past two years, Littlefield has had to come up with $65,000 a month to pay the note on the prison. That's $10 per resident of this little city. ...

To avoid defaulting on the loan, Littlefield has raised property taxes, increased water and sewer fees, laid off city employees and held off buying a new police car. Still, the city's bond rating has tanked.

The village elders drinking coffee at the White Kitchen cafe are not happy about the way things have turned out.

"It was never voted on by the citizens of Littlefield; [it] is stuck in their craw," says Carl Enloe, retired from Atmos Energy. "They have to pay for it. And the people who's got it going are all up and gone and they left us... "

"...Holdin' the bag!" says Tommy Kelton, another Atmos retiree, completing the sentence.
Meanwhile, as Grits has been documenting for several years, the same this is happening in Waco, Johnson County, and elsewhere, with no end in sight. "According to the Bureau of Justice Statistics, the total correctional population in the United States is declining for the first time in three decades." As a result, speculative interest from private prison boosters is waning. In particular, says Burnett:
New Jersey-based Community Education Centers, which has been pulling out of unprofitable jails across Texas, issued a statement that "the current (jail) population fluctuation" is cyclical.

One of the places where CEC is canceling its contract is Falls County, in central Texas, where a for-profit jail addition is losing money. Now it's up to Falls County Judge Steve Sharp to hustle up jailbirds: "If somebody is out there charging $30 a day for an inmate, we need to charge $28. We really don't have a choice of not filling those beds," he said.

Another place where they're desperate for inmates is Anson, the little town north of Abilene, Texas, once famous for its no-dancing law. Today, Jones County owns a brand-new $34 million prison and an $8 million county jail, both of which sit empty. The prison developers made their money and left. Then the Texas Department of Criminal Justice reneged on a contract to fill the new prison with parole violators. The county's Public Facility Corporation that borrowed the money to build the lockups owes $314,000 a month — with no paying inmates. They've got a year's worth of bond service payments set aside before county officials start to sweat.

"The market has changed nationwide in the last 18 months or two years. It's certainly a different picture than when we started this project. And so we're continuing to work the problem," Jones County Judge Dale Spurgin says.
FWIW, I've opposed these crackpot deals ever since I first learned of them - years before the incarceration bubble finally burst and their fundamental flaws were exposed. The reason isn't that I disdain private prisons per se but the inherent instability of the financing structure underlying these something-for-nothing deals. You see, I've heard all this rhetoric before.

I happened to cut my teeth as a cub reporter in Texas during the aftermath of the Savings and Loan scandals in the late '80s, and these "free jail" deals remind me of nothing more than they do the road districts and MUDs created by local governments on behalf of speculators to secure government-backed financing for extending infrastructure to far-out private developments. Sometimes these schemes worked out and the districts were later absorbed rather painlessly. But quite a few others went bust, leaving cities and counties holding the bag for investments that were touted as paying for themselves. Whatever happened, the relationship between the eventual outcome of these deals and promises made on the front end by corporate "partners" in these public-private partnerships was virtually nil. The developers could always walk away, as is happening now with the jails, but the impact of default on local governments is politically and economically unacceptable. When the bill comes due, they have no choice but to raise taxes to cover the debt.

That's exactly what's happening in the counties described in this story, and anyone who witnessed those S&L-era failures of road and utility districts saw it coming a mile away. Jails aren't free. They're a fundamental government obligation paid for with taxes. Private prison companies, by contrast, are speculative, profit-seeking ventures with no inherent interest in either public safety or protecting local taxpayers. When hard times hit, they bail. And then, as if on cue, everyone acts surprised.

RELATED: From NPR this week:


MaxM said...

Am I being paranoid to think the wrong-headed budget cuts proposed for TDCJ are deliberate attempts to increase inmate population in order to help fill these empty jails and prisons?

Silent said...

The whole idea of a private corporation building or operating a prison is wrong to begin with. If an entity such as a government has the authority to prosecute and judge those who break the law, then shouldn't that entity also have the responsibility of administering and maintaining those who are convicted?
A corporations gaol is to make money. So when an endevor, such as building a prison or jail, turns out to be a money losing proposition, then that corporation will cut its loses and move on.

Gritsforbreakfast said...

Bingo, Silent. And ditto for road and utility infrastructure.

MaxM, your question assumes a level of coordination among actors that seems unlikely given the general thick-headedness and ham-handedness exhibited by those getting into these deals. I wouldn't credit these podunk counties involved with having their act together enough to have seen that many chess moves ahead. Maybe that's happening (perhaps through some of the private prison lobbyists behind the scenes), but until I see evidence, from my observation the crappy TDCJ budget results from two things: the agency's prisons-first fetish and a vacuum of legislative leadership to provide alternative cuts.

If TDCJ administrators cared about bailing these guys out they wouldn't have cut 1,900 county contract beds last year.

Don said...

This is exactly why I can't make any sense at all out of our Representative, Charles Perry, advocating more privatization to save money. I have two sisters and numerous cousins living in Littlefield, and I have lived and worked there, even in this prison. I know first hand what these guys at the White Kitchen are talking about. For Perry to talk about MORE private prisons does not even begin to add up, unless you count the millions of dollars these companies spend on lobbying. But Perry is brand new, and he is a religious fundamentalist, but seems to be as honest as they come. I don't get it.

Gritsforbreakfast said...

Don, I could see a budget-cutter thinking that closing some of the highest cost prisons and shifting them to lower cost privates might make sense. Some of the 19th and early 20th century units have very high costs per prisoner.

But it only would make sense if they simultaneously closed state-run units. And with rising gas prices, it still wouldn't make sense to contract with tiny rural units like Littlefield, Jones County, etc.. Transportation is a large but little-discussed TDCJ cost driver and the last time gas became too dear, it really put a lot of unexpected, short-term pressure on the agency's budget to have units in Dalhart, Fort Stockton, etc.. It's a buyers's market for contract beds, as the article says, and nobody wants to ship prisoners back and forth from BFE if they can avoid it.

That said, with respect to Rep. Perry, you shouldn't pay too much attention to the pronouncements of freshmen on such matters. I'm sure somebody told him at an ALEC conference or something that's what conservatives are supposed to believe, but all that tells you is that he hasn't yet wrestled with the subject concretely yet or pursued his suggestion too deep into the weeds. The array of practical options facing TDCJ and by extension, legislators, if they really want to achieve announced budget cutting goals, is, in fact, incredibly, lamentably limited.

Anonymous said...

That's "Neil PEART", not Pearl for heaven's sake.

Prison Doc said...

Private prisons are fine with me, but you have to leave them to the "pros"--naive county commissioners are most likely to just get burned along with their taxpayers.

BTW, a much better introductory song would be "Holdin' the Bag" by Moe Bandy and Joe Stampley!

Gritsforbreakfast said...

Fixed it, 10:59, just a typo. :)

Gritsforbreakfast said...

Good song suggestion, Prison Doc. Here's a link to a YouTube rendition of the tune.

As for the private prisons, if they want to construct facilities on their own dime, fine. It's the business model of relying on taxpayer subsidies - that they can and do walk out on when times get tough - that I find problematic.

Unknown said...

Personally, I don't really care for turing a strictly government fuction into a profit center - that includes prisons, traffic enforcement, even federal mercenaries.

I think some of it ends up being to socialize the risk and privatize the profits. This has happened with the 'private' prisons, to some extend the MUD's, and some of the stadiums.

Arce said...

The line in the report about the bubble peaking 18 months to 2 years ago is typical of the misrepresentations by the public officials who get conned by the prison company lobbyists (you should name all the key actors, please, including the lawyers and bond agents). The Bubble was predicted 30 years ago and predicted to peak in the first decade of this century. Our legislators made it a bigger bubble with the "tough on crime" stuff, and the U.S. has a higher percentage of its population in prison than any other country as a result. Imagine if half of that population was gainfully employed outside of prison -- a real economic boom.

minnesota criminal lawyer said...

The privatization of prisons seem like such a bad idea.. turning them into private enterprises.. I always knew justice had a price tag, I just thought we'd always be more subtle about it.

Audrey said...

GEO does contract prisons (Lockhart[TX] prison and others.) Their stock is traded on NYSE and is considered the most profitable in the industry. Does it make sense that TDCJ is having this budget crisis while the stockholders of GEO are enjoying the highest earnings ratio in the industry? I don't think the government infrastructure was meant to work this way.

Anonymous said...

I agree grits! they should build on their own. in these cases though the govt was DUMB enough to cosign now they get to eat it! Next time use a brain and inform the company if you think you can build here and sell your service cheaper than anyone else and STILL follow all doc regs. more power to you. BUT you will USE YOUR OWN MONEY!

The Homeless Cowboy said...

If you look back to the 1970's I believe you will find that TDC was the highest profit making prison system in the nation. What are the differences in policy and mindset between then and now. It was profitable for many people for many years, to lock up everyone they could. Now we are stuck with the remnants, all the salesmen and construction companies have made their money and the "Rubes" are sitting here wondering how to pay for it. No Max you are not being paranoid. They are grasping at straws and they need money so they will put anyone in jail for any reason they can if they can find someone to bill for it. Lobbyists are laughing all the way to the bank, business is booming, except for the small communities that have to cut services to their residents and delay fixing their infrastructures so they can pay for a bad decision made a few years ago. But on the bright side , it should only delay city, county services for another 10 years or so, no biggie, right?