Bill would let companies run 3 AZ prisons

Republican legislative leaders are crafting a plan to farm out operation of three state prisons to private companies as a method of balancing the budget.

Rep. John Kavanagh, R-Fountain Hills, said he believes companies would pay the state at least $100 million in upfront cash for the right to operate the prisons. That would help lawmakers deal with an anticipated $3.3 billion deficit this coming year.

And Kavanagh, who chairs the House Appropriations Committee, said the annual savings to the state for operating these three facilities could be $40 million.

At this point, lawmakers are looking at the state prison in Yuma, which houses about 2,300 inmates, the Perryville facility, which has more than 4,000 beds, and the Eyeman unit of the state prison complex in Florence, which at last count had close to 5,000 inmates.

The proposal is likely to get a fight from Democrats - and not just on philosophical grounds.

Senate Minority Leader Jorge Garcia, D-Tucson, called the savings "funny money." He cited studies done by an outside consultant for the state Department of Corrections which show that, when all elements are considered, it actually costs taxpayers less to have the state operate prisons than it would to have them run by private companies.

Senate President Bob Burns, R-Peoria, said he put little stock in that report, saying it was prepared during the administration of then-Democratic Gov. Janet Napolitano, who never was a supporter of private prisons.

The idea of privately run prisons is not new. The state already contracts with private companies to house some inmates.

But those deals involve facilities that private companies build on their own, with the state paying a specific daily charge for each inmate housed there. This would involve turning over already built - and paid-for - state facilities to private companies to operate, with the price the state pays based on bids received.

At last count, about 4,300 of the state's more than 40,000 inmates were housed in private prisons in Arizona. Another nearly 4,900 are housed in private prisons in other states.

Current Republican Gov. Jan Brewer said she believes it is appropriate to house inmates in private prisons "in certain circumstances."

The plan, scheduled for a vote Wednesday in the Senate Appropriations Committee, essentially builds on existing efforts by Republicans to plug the gap between anticipated revenues this coming year and expenses.

State sales and income tax collections have taken a nose dive as the national and state economies have gone into a recession, people are being laid off and consumers are buying less. GOP budget crafters are relying heavily on cuts to spending.

One new wrinkle is a plan to reduce state aid to cities and counties by up to $190 million.

Burns acknowledged that transfers some of the state's fiscal problems onto local governments, which have their own revenue issues. But he said the state's problem is so big that it cannot afford to share as much as it has in the past in what it collects in vehicle license taxes.

Republican legislators have generally frowned upon a proposal by Brewer to bridge the gap with a temporary tax that would raise $1 billion a year for three or four years. But House Speaker Kirk Adams, R-Mesa, said all options - including taxes - remain on the table.

Sen. Russell Pearce, R-Mesa, said lawmakers are looking at one other way to get more dollars: hire back some of the auditors and collectors the state let go earlier this year from the state Department of Revenue. How much that could raise, however, is debatable.

House Democrats have said more staffers could bring in $150 million. Kavanagh puts the figure at $50 million; Pearce said $35 million would be more realistic.

Kavanagh acknowledged that the size of the deficit could force lawmakers to adopt some accounting maneuvers that really do not solve the problem. These include taking certain expenses due in the coming fiscal year and pushing off payment into the following budget year, a move that technically "balances" the books as constitutionally required but does not actually cut spending.