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Reform on the Ropes – Prison Reform

Currently, the Louisiana prison system is served by 11 state prisons. Some years ago, the State of Louisiana built three essentially identical prisons – the Allen, Avoyelles, and Winn correctional centers – which served as something of an experiment. The Avoyelles correctional center was run and staffed by State employees. The Allen and Winn correctional centers were run by private companies under 10-year contracts – the GEO Group and Corrections Corporation of America – both of whom are experienced companies that run prisons all over the country.

Consistent with what you might expect as a conservative, the prisons run by the private corporations proved to be run just as efficiently and effectively as the Avoyelles prison, only much cheaper. Currently, the Louisiana Department of Corrections is paying $42.30 per inmate per day to house prisoners at Avoyelles. The private companies are housing prisoners at the Allen and Winn facilities at an average of $31.50 per day, providing another data point in support of the conservative belief that there is almost nothing a private company cannot do better and more efficiently than the government.

Given the successful experience the State has had with the Allen and Winn prisons, Governor Jindal has proposed to outright sell all three prisons to private companies as part of a combined bid for a contract to run the prisons for a 20-year contract. The Department of Corrections has had the prisons appraised for a total of $101M. Governor Jindal has proposed to spend at least some of this money to help defray the initial startup costs of converting Medicaid to a coordinated care network system – a move which has been opposed by Jim Tucker (more here). However, in addition to the infusion of approximately $100M in cash to the State’s strapped financial system, the Department of Corrections estimates that operating all three prisons privately will save approximately $211M over the next 20 years in operating costs (as compared to running them with state employees). Additionally, the Department estimates that selling the prisons will save the state approximately $81M in capital/maintenance costs over the next 20 years as well – a total 20-year savings of almost $300M.

Republican Speaker of the House Jim Tucker, perhaps predictably, by this point, has proposed a shorter-term solution to the problem, a one-time cut off the top of the Department of Corrections’ budget in the amount of $27.5M. In addition to the fact that Tucker’s plan does not make fiscal sense in the long-term, in the short term it could lead to disastrous consequences that could imperial Republicans’ election chances in Louisana in 2012.

Louisiana already has an extremely efficient prison system, consistently spending among the least per-prisoner of any state in the United States, about half the national average per-prisoner cost. Tucker’s claim that the prison system can afford a flat $27.5M is not necessarily true. Many people are apparently unaware that a lot of the things a prison system provides to its prisoners are not “frills” or optional, but rather are court mandated. Failure to comply with a lengthy series of requirements imposed by federal precedents can and will result in courts ordering massive releases in prisoners.

Lest you should doubt this fact, just a week ago the Supreme Court ordered the release of tens of thousands of prisoners from the California prison population due to overcrowding. As conservatives, we might grouse about these decisions and the requirements imposed by the courts – but the Louisiana Department of Corrections does not have the discretion to ignore the guidance of the courts and continue to hold prisoners when Federal courts have ordered their release. The Louisiana Department of Corrections has stated that the $27.5 million in cuts will primarily have to come from a reduction in staffing of 900 positions, which will necessarily result in the outright closing of 5 prisons (including all of the three prisons mentioned above), which will require the early release of at least 2000 offenders.

It goes without saying that such a move would potentially create a political nightmare for any Louisiana Republican who supports it, given the possibility for 2000 separate Willie Horton incidents. A one-time cut of $27.5M would additionally be political indefensible given that it would not even result in the greatest short-time “bang for the buck” – the governor’s proposed program would result in approximately $100M in revenue in the first year just from the sales of the prison alone!

It is difficult to understand Tucker’s objection to the sales of the prisons, apart from the fact that he does not want to use the money to fund the CCN startup. One Louisiana Republican official told me that he was in a meeting with Tucker in which Tucker (who apparently has a real estate business background) stated, “if it f**cks, floats, or flies, you lease it, otherwise you own it.”

This axiom makes business sense in the private sector for a number of reasons. First, in the private sector, you are entitled to take advantage of tax deductions for depreciation on real assets and certain capital improvements. However, Louisiana as a state government cannot take depreciation on assets. Additionally, as a private business, holding on to real estate assets long-term allows you historically (with the notable exception of the last three years) to take advantage of the nearly-inevitable increase in real estate prices over time. Louisiana would theoretically be able to take advantage of this; however, apparently their Speaker of the House plans to prevent them from ever actually realizing profit on such sales by blocking them - apparently, Jim Tucker believes that the State of Louisiana should just own all its real estate assets in perpetuity, regardless of price fluctuations – a decision that no sound businessman (including Tucker himself) would make for his own private business.

The Louisiana GOP has a choice – a short-sighted one time cut of $27.5M which will cost Republicans politically, or a long-term reform which will provide the state with approximately $100M almost immediately and $300M over the next 20 years. The fiscally conservative choice is clear.

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