Rep. Lundy Opposes Sale of Ohio Prisons, Calls Privatization Plan “Profitization”

May 3, 2011 — A group calling for a moratorium on the sale of five prisons says there are too many unanswered questions with respect to the cost models, the Request for Proposal and budget language to move forward with the plan. At a recent press conference, called the sale “the Deal of the Century” for private prison companies but a “raw deal” for Ohio taxpayers.

“This is a budget buster that puts Ohio taxpayers on the hook for more money and more risk than has been estimated,” said Lundy. “Not only has the savings been miscalculated, but a closer look at the RFP reveals that the state will be doling out millions of dollars in training, IT services, medical costs and now an Administrative Operating Fee to the private companies.”

In particular, Lundy said changes to the House Substitute Budget Bill makes this a “sweetheart deal” for the private prisons. “Not only will private contractors be sold the prisons for pennies on the dollar, now it appears private prison vendors will be exempt from a number of taxes,” he said.

In addition, Lundy said the $200 million price tag for the five prisons included adjacent land and equipment that was never adequately appraised and that, in effect, is being given away.

Zach Schiller, Research Director for Policy Matters Ohio, as well as researcher and journalist Bob Paynter raised questions about whether or not the state has shown that the private prisons currently operating in Ohio have shown a savings. By state law, private prison vendors must show a 5 percent savings over comparable state prisons.

A study conducted by Paynter for PMO concluded that Ohio had “fallen well short” of proving that the two private prisons operating in Ohio demonstrated a savings.

Jay McDonald, President of the Fraternal Order of Police of Ohio, expressed concern over the repercussions for local law enforcement, since jurisdiction for the prisons appears to shift from the Ohio State Highway Patrol to local law enforcement. “At a time when local governments are taking hits in their budgets, our local law enforcement does not have the resources to deal with this increase in demand. We can barely keep up with demand in our local communities now, much less have responsibility for investigating riots, assaults and all the other crimes inside these prisons.”

OCSEA represents approximately 34,000 state employees who work in a wide range of security, regulatory, administrative, direct care, maintenance, customer service and other positions, including 10,000 who work in the state prison system. For more information, contact Sally Meckling, 614-865-2602 or 614-404-3881 (cell).

Here are the comments made by Rep. Lundy this afternoon:

We are here today to alert all of Ohio about the Governor’s Yard Sale!

The governor and the Republican majority here in Columbus will be holding a yard sale, but this yard sale isn’t about old mowers and toaster ovens, it’s about valuable assets owned by Ohio taxpayers.

Most importantly, the sale of these valuable assets will put Ohio families and their local communities at risk.

The governor and republican majority continue to push, in this budget process, for the sale of five state prisons. Much like the old phrase used over a decade ago, ”It’s the economy stupid” it’s about the economy this time as well. Why would Ohio in the middle of a recession sell valuable assets? Any business leader in Ohio will tell you that you buy low and you sell high. The governor talks about moving at the speed of business. I would suggest he exercise moving at the “common sense” of business, because this idea is insane.

Who wins when you sell low? The buyer does. Who loses when Ohio sells its prisons in the middle of a recession, the taxpayers do – big time! Plus, this is “one time money” that only hurts the structural stability of Ohio’s budget and will hurt our bond rating and future ability to manage our challenges in Ohio.

The governor needs to realize he is no longer working for Fox News. The “spin” needs to stop. Ohioans are being told the state will make $200-million dollars to help our budget crisis. What Ohioans aren’t being told is that there are still bonds to be paid, debt on improvements and we will basically be throwing in furniture, supplies and the land. Taxpayers beware! Ohio will not gross $200-million dollars on this deal because there are bills to be paid and items of great value that will be simply thrown in like “floor mats” at a car dealership to close the deal. So stop the spin governor. Stop the spin.

This yard sale is so bad for Ohio that it should have a new word to describe what this is really all about – “profitization” to “profitize” not privatization or privatizing. Once “profit” becomes the motive, taxpayers, specifically Ohio taxpayers will lose.

The substitute budget now adds tax breaks and tax deductions for those who buy these prisons. I will be offering an amendment to make sure they will in fact pay property taxes, should the sales move forward. My fear is the buyers will set up 501c3’s or REIT’s to avoid paying property taxes to local communities. The governor and republican majority seem to have no concern at all about this. Remember it’s about profit.

Profit means lower paying jobs for those who will work inside these facilities. Profit means workers will probably pay more for health insurance. When workers take home less money, they have less of an ability to contribute to the local economy. I thought this was the “jobs bill.” A “jobs bill” shouldn’t be forcing Ohio workers to race to the bottom for lower paying jobs. “Profitization” has its price!

Lower wages mean more turnover and less qualified workers to serve as corrections officers. Profit means fewer guards working inside the private facilities. Do Ohioans really want what could amount to “rent a cops” guarding and keeping inmates from escaping?

I will continue to fight this “profitization” of our prisons. The buyer wins and taxpayers lose when we sell in the middle of a recession. The taxpayer wins when we keep our valuable assets and run them not for profit. The governor and republican majority need to call off this crazy yard sale. Public Prisons are getting the job done, supporting our local economies and keeping our communities safe.

As we work on the final House version of the budget bill, I believe the governor and republican majority should consider the following:

This yard sale should be called off, public prisons are doing the job and doing it well. The only motivation I see here is that they want “one-time money” and that is irresponsible for our state’s financial future.

The yard sale of these five prisons should be called off. Business common sense dictates that you don’t sell valuable assets in a down economy.

The yard sale should be called off. If not, pull out all of the tax breaks and deductions and make sure these corporations do in fact pay taxes to the local communities in dire need of revenue. Make sure these corporations can’t create loop-holes through a non-profit status or REIT to avoid paying a penny of property taxes.

If this truly is “the jobs budget”, don’t we want to protect good paying jobs in Ohio? Why do we want to force Ohio workers to make less money and hurt their ability to support their families and their local economies?

We have a responsibility to always protect the citizens of this state. Understaffed private guards in these facilities in the future could lead to serious physical harm to the workers. And lower paid, higher turnover, less qualified guards, create the potential for escapes, putting communities at risk.

“Profitizing” prisons is bad public business. I am urging the governor and republican majority to call off the yard sale, and do what is right for Ohio’s families.