Privatization may not see the light of day
(Published: Nov. 9, 2009)
By Paul Davenport
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PHOENIX — Arizona’s plan to turn over its prisons to private companies in exchange for a $100 million upfront payment is having trouble getting off the drawing board, with the plan behind schedule and private-prison operators showing little, if any, interest.
The privatization effort is required under a law enacted last summer as lawmakers struggled to close a huge budget shortfall. It directs the state to award a contract to one or more private companies to run an unspecified number of prisons for $100 million.
It emerged as Republican lawmakers cast about for alternatives to Republican Gov. Jan Brewer’s proposal to increase the sales tax to avoid deep cuts to state program.
An official who worked on the law told The Associated Press that the $100 million figure was based on hope, not certainty.
The prison concession provision doesn’t specify which or how many of the state’s 10 prison complexes would be included, what would happen to current state employees or the length of a contract. An early version specified a term of 50 years and identified three prisons with approximately 11,000 beds.
The Yuma prison complex was excluded from the law at the insistence of a Yuma legislator.
State officials were supposed to provide an initial batch of information to potential bidders on Oct. 1, but missed the deadline. But even without that, there appears to be little interest among private-prison companies.
Corrections Corp. of America, the nation’s largest private-prison company, “is not focused on that,” said Louise Grant, a CCA vice president. Grant said CCA is interested in pursuing traditional private-prison deals with states and would review any Arizona request. However, “it’s very questionable whether or not we would participate,” she said.
Another operator, Boca Raton, Fla.-based GEO Group, declined to comment, citing corporate policy. A third, Management & Training Corp. of Centerville, Utah, issued a noncommittal response.
Arizona is among many states that contract with private companies to house state inmates, but officials and industry observers say the large upfront payment request may be unprecedented.
“That is such a new idea. The model hasn’t been done,” said Leonard Gilroy, a Reason Foundation official who champions privatization of government services. Gilroy questioned whether Arizona’s plan would be attractive enough for potential bidders in the industry.
“It’s sort of like ‘we want you to do an operational contract and loan us $100 million,”’ Gilroy said. “I don’t know if there’s enough there to sweeten the pot for the private sector.”
Democratic legislators have questioned whether the state should turn control of violent maximum-security offenders, including murderers on death row, to private operators. Little is known about how the plan would be implemented, including whether it would include the Eyman prison complex in Florence that includes death row.
Citing procurement confidentiality, state officials declined to release a draft of the document they plan to send to bidders.
Corrections Director Chuck Ryan declined multiple requests for an interview in recent weeks. But he told legislators during a May hearing that it was “very concerning” to consider privatizing a major prison complex that houses nearly all death row inmates and 1,000 other dangerous inmates.
Privatizing death row involves taking a chance, Ryan said. “It won’t stand the headline test in my opinion.”
A leader of a union representing prison guards criticized the plan and suggested that public safety could be at risk.
“They’re trying to replace us with lower-paid guards, to handle sex offenders, murders, rapists, inmates with very volatile gang connections,” said J. “J-Rod” Rodriguez, vice president of the Arizona Correctional Peace Officers Association.
Senate Appropriations Chairman Russell Pearce, R-Mesa, said during the May hearing that the prisons concession had been proposed by House Republicans during budget negotiations and was based on “very good numbers” from an investment firm.
However, a top House Republican aide said lawmakers and legislative aides came up with the idea as a way “to monetize state assets,” such as Indiana and Chicago have done with toll highways.
“Well, Arizona doesn’t have toll roads and there aren’t a lot of assets that can be monetized. That was sort of the genesis of the idea,” said Grant Nulle, House director of fiscal policy.
There was no research by an investment firm or anybody else, Nulle said. And the $100 million payment appears unlikely.
“Based on preliminary feedback, we may find it difficult to generate an upfront payment of this magnitude,” legislative budget director Richard Stavneak wrote in an Oct. 22 memo.
Even if the state does receive good bids, it will take most of the fiscal year to try to implement the idea, so lawmakers shouldn’t count on getting the money in time to help close the current budget’s shortfall, Stavneak said in a recent interview.
An Update on Prison Privatization
By Luis Ebratt, Director
As our AZCPOA members are aware, from the outset, the Governor emphatically opposed straight privatization. In all the meetings AZCOPS had with the Governor’s Office, we were assured on multiple occasions that Gov. Jan Brewer would not sign a privatization bill. Several key legislators in appropriations also said there were other alternatives to privatization.
Initially, the Governor held firm and AZCOPS applauded her commitment following her veto. However, the news after the last budget round was not as good, to say the least.
All politicians involved buckled to meet deadlines and partisan pressure. It appears that a hybrid approach to privatization is the result. The prisons will be opened to vendor bids for operation and outright sale and lease-back of other facilities.
AZCOPS will be trying to collaborate with DOC officials and will provide substantial oversight in the RFP process as it moves forward. This process is lengthy and cumbersome, and AZCOPS Legal plans on making it even more so.
There is time. Privatization will not take place overnight. What our membership needs to do is stay involved in the political process. 2010 is an election year. All of AZCOPS needs to use its collective strength to fight this both legally and at the ballot box.
AZCOPS reports voting record of lawmakers on prison privatization bill
The vote on HB 2010 authorizing the privatization of state prisons is included below. The bill passed both the House and Senate and was signed into law on Sept. 3rd by Gov. Jan Brewer.
There were no Aye votes by Democrats in either chamber. Of note, four Republicans in the House voted against the bill and they should be thanked for their efforts.
Those who voted for the bill must hear from AZCOPS members now and at the ballot box in 2010. Click on the name of each legislator to send email.
Additional contact information can be found here:
How They Voted…
A Call for Political Involvement
Senate vote on House version
Y=17 N=8 Not Voting=5
|S. Allen(R)Gorman(R)Gould(R)C. Gray (R)
L. Gray (R)
|Aguirre(D)Landrum Taylor(D)Hale(D)Alvarez (D)
Burton Cahill (D)
|C. Allen(R)Miranda(D)Lopez(D)McCune Davis (D)
House vote on House Version
Y=31 N=15 Not Voting=14
Jim Weiers (R)
Jerry Weiers (R)
|Burges(R)Biggs(R)Chabin(D)Chad Campbell (D)
Young Wright (D)
Cajero Bedford (D)
Cloves Campbell (D)