Article: Crime is Good For Business

By Dan Morain, Sac Bee
Sunday, Sep. 1, 2013

Crime can be good for business.

After spending his first two and half years in office reducing prison spending, Gov. Jerry Brown announced his plan last week to comply with a federal court order that he limit prison crowding by increasing prison capacity by 8,000 inmates, at a cost of $315 million this year, $400 million next year, and more in years to come.

Rather than house the inmates in state-owned prisons, Brown intends to place 2,300 of them in a private prison outside California City, a threadbare Mojave Desert town 66 miles southeast of Bakersfield.

The prison’s owner is Corrections Corp. of America, a publicly traded company based in Nashville. The nation’s largest prison company, Corrections Corp. already houses 8,900 California prisoners in out-of-state prisons. California accounted for 12 percent of the company’s revenue last year, or $214.8 million, an amount that will increase if the California City deal wins final approval.

Brown hopes to lease the lockup facility and staff it with state workers, including about 2,000 California Correctional Peace Officers Association members. That explains why CCPOA president Mike Jimenez stood with other law enforcement representatives at the Capitol press conference as Brown announced the plan.

From where Corrections Corp. sits, the deal has been a long time coming. The company built the joint near California City for $100 million on spec. I visited the concrete and steel field of dreams in 1999 and found that the prison had almost all the amenities one would expect: impenetrable walls, unbreakable glass, unbendable bars and high-tech sensors embedded in the ground to guard against escape. The only thing missing was prisoners.

David Myers, a former warden from Texas, was the Corrections Corp. executive responsible for selling the prison’s virtues back then. He pointed to California’s ever-increasing prison crowding and the lawsuits over worsening prison conditions.

“It is spiraling down. Am I the only one who can see it?” he asked at the time.

State politicians did not come knocking and Corrections Corp. had to settle for federal prisoners. Even now, the facility is less than half-full.

The reason for politicians’ reticence was understandable, if not wholly noble. The California Correctional Peace Officers Association has made politicians’ stand on private prisons a litmus test, helping candidates who oppose for-profit prisons and whacking any who supported their use.

The union’s stated reason was that law enforcement should be a government function. I agree. But CCPOA also had an interest in making the fight a priority. Private prison operators don’t have contracts with the union that represents state prison officers.

Over the years, the union emphasized its stand with the currency of the realm, campaign money. In March 2002, the union gave Gov. Gray Davis what for the time was his largest single campaign contribution, $251,000.

Shortly before the donation, Davis handed out various goodies, signing a contract boosting officers’ pay, increasing pensions, and canceling contracts with five corporate prisons housing low-security inmates in California.

“As many of our members are aware, the whole concept of privatization has been a thorn in our side,” a CCPOA lobbyist told union members at the time. “That move is appreciated. It does follow through with promises made by Gov. Davis in past years on this subject matter.”

CCPOA’s political influence has waned somewhat in recent years, but the union remains a potent force and spent roughly $2 million to help elect Brown in 2010.

Corrections Corp. is a player, too, though not in CCPOA’s league. The company has given $654,000 to California politicians since 2010, including $50,000 to Brown’s initiative campaign to raise taxes last year.

Corrections Corp.’s pitch is that it saves states money by building the prisons, handling the maintenance and relieving government of having to pay workers’ pension and health care costs.

Certainly, California will save money by not having to build a 2,300-bed prison. But the Brown administration offered no indication that the California City prison will save the state a dime. By using state employees to staff the prison, there could be little if any cost savings on operations.
After the governor’s press conference, Jimenez told me that there would need to be capital improvements at the California City prison before his officers would start working there.

“There’s no electrified fence,” Jimenez said.

The installation of the lethal fence would cost $5 million to $10 million, according to the California Department of Corrections and Rehabilitation. The department also may construct gun towers, at $500,000 each, give or take.

Along with CCPOA and other police groups, Speaker John A. Pérez, Assembly Republican Leader Connie Conway and Senate Republican Leader Bob Huff all have embraced the governor’s idea. The missing link was Senate President Pro Tem Darrell Steinberg.

“It is money down a rat hole,” Steinberg said, echoing what Brown himself had said earlier this year.

Steinberg, predicting the Senate would not approve Brown’s plan as proposed, called for more money for job training, drug treatment and mental health care for inmates and parolees to combat recidivism. Without such spending, Steinberg said, California prisons will become overcrowded again, leading to more litigation, and he may be right.

In California City, Mayor Patrick Bohannon has other concerns. Corrections Corp. pays the town 50 cents per inmate per day, though there are fewer than 1,000 inmates now.

“The more inmates, the better it is for us,” he said. He worries the state might end that payment. If the state eventually buys the prison, he noted, the city also could lose the property tax payments that Corrections Corp. now makes.

“We have to work out the best we can,” Bohannon said.

However the fight ends up, Brown made clear one reality last week: Inmates are a commodity and prisons are a business. They provide jobs for prison workers, and income for lawyers who sue over conditions in which prisoners are housed.

Prisons also can provide a return on shareholders’ investment. In 1999, when Corrections Corp. opened the California City prison, its stock hovered at $10 a share. Now it sits at around $34, up slightly by week’s end. Business ticked up last week.

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