Private prisons: local governments win some and lose some


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One bright note of clarification that we picked up in today’s papers. Recall that when the administration gave themselves broad authority to privatize aspects of state Government, they also indicated that the operators of outsourced government functions would be exempt from state and local taxation (see our previous post). In House amendments, this provision was clarified, as paraphrased by the Plain Dealer, as follows:

Grants a sales tax exemption, income tax deduction and commercial activities tax exclusion on gross receipts for private operators who purchase prisons from the state as well as for JobsOhio’s purchase of the state’s liquor operations.

We weren’t sure if  the amendment’s silence on local taxes meant for the property tax, but according to a prisons spokesperson, it’s a tiny bit of good news for local governments:

Spokesman Carlo LoParo of the Department of Rehabilitation and Correction said local communities where private prisons are established will be compensated by receiving property-tax revenue. He said that could amount to as much as $1.5 million annually in Marion, where two prisons are proposed to be sold.

However, as safety officials in the article point out, local governments will have to spend money from other sources to pay for local public safety responses to any incidents that occur at privatized prisons. Currently, the Ohio Highway Patrol is responsible for responding to any incidents at state facilities, but the prisons will no longer be under this arrangement.

But hey, more property tax!

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