Prison privatization comes up short – new $114 million budget hole?
You may remember that the Kasich budget proposal featured the potential privatization of five state prisons. The administration estimated that the sale of prisons to private operators would result in $200 million for the state, with $50 million of that going to fill the general fund budget hole and the rest staying with the Department of Correction, whose budget was otherwise hit pretty hard.
Today we learned that the administration has reviewed the bids and found only one proposal worth acting upon: they will sell the Lake Erie Correctional Institution to Corrections Corporation of America (Current DRC Director Gary Mohr’s former employer) for $72.7 million. The other prisons will not be sold, but some operations will be privatized or merged with other facilities for an expected $13 million in annual savings.
So, doing the math, it looks like the state will net $86 million in proceeds from the plan, either in sale proceeds or savings, to help plug into the budget. But if they’d counted on $200 million, they appear to have come up $114 million short. When combined with tax revenue shortfalls reported for July, we’re starting to compound what appears to be a growing problem with the brand new state budget, possibly taking us a step closer to what the Governor predicted: a new budget featuring even more cuts.