Privatization Offers Solution for Michigan Prison Quandry

Despite California’s rejection of an offer to house some of its inmates in Michigan’s empty Standish Maximum Correctional Facility, Michigan policymakers are still shopping around for offers from other states or the federal government.

I seriously doubt that Michigan will have much luck in this pursuit, however, and for a very simple reason—why would a state contract with another state to hire more costly public-sector employees when they can get the same service for less money by contracting for space in private prisons?

California offers an interesting example. As an emergency effort to relieve severe overcrowding in its prisons, California began contracting out for roughly 8,000 beds in out-of-state private prisons in the recent past. They took that experience—a sense of what’s out there on the market— with them to Michigan, where Chris Christoff and Kathleen Gray at the Detroit Free Press report that:

[…] California prison officials told [Michigan State Corrections Director Patricia] Carsuso on Monday the Standish prison would be too expensive and lacked the needed medical facilities.

Translation: California knows it can get better facilities at a better rate elsewhere, because it’s already doing so.

Here’s a thought: maybe Michigan would get a better deal for taxpayers by just selling the Standish prison to a private prison company. That would not only allow the prison to stay open, but it would also allow the state to unlock economic value that’s currently trapped in the asset (real estate value, tax revenues shifting from public to private operation, etc.) because, well, it’s a tax-exempt government asset.

If Michigan doesn’t need this prison, then just be done with it and sell it already. Policymakers shouldn’t be grasping at straws trying to keep a dying prison—one that policymakers already decided to shutter once this year—on life-support.

Indeed, wouldn’t many Michigan taxpayers find it odd that they were being asked to subsidize more corrections employees than the state really needed (and their long-term retiree pension and health care costs) in order to provide beds for prisoners in other states? Many would rightfully see this as unreasonable mission creep.

Seems to me that my proposal makes more sense. Sell the prison, keep many of the jobs there, unlock the trapped asset value, generate tax revenue from a private operator. Win-win all around. The state’s current efforts only (and predictably) focus on the “preserving jobs” part, without the other massive benefits you’d get with privatization. At a time when fiscal responsibility should be paramount, it doesn’t make sense for the state to try to enter a new enterprise to avoid making necessary cuts. Michigan taxpayers would be better served if there were more options on the table.

Reason Foundation’s Annual Privatization Report 2009
Reason Foundation’s Prisons and Corrections Research and Commentary