Republicans in the Montana Legislature will walk into a special session next week with a new piece of leverage to avoid having to raise any taxes to make up for a $227 million hole in the state budget.
Friday morning Republicans announced they had enough signatures to expand the scope of a special session set to convene next week, opening it from a narrowly tailored call by Democratic Gov. Steve Bullock.
The wider agenda will include what’s rapidly become a key piece of any deal for Republicans: accepting roughly $30 million from the company that runs a private prison in Shelby in exchange for extending the facility's contract, due to expire in 2019.
The expansion needs to be approved in the House and Senate, where Republicans hold the majority.
Since 1999, Montana has contracted with a company now called CoreCivic to run the prison in Shelby, which houses about 660 prisoners. Since the start of the contract, the state has paid $9.17 per prisoner per day into a fund that can be tapped at the end of the contract to go toward the cost of buying Crossroads Correctional Center from CoreCivic.
Democrats have criticized the approach as a “sweetheart” deal that would take advantage of the state when it’s vulnerable. They hold that criminal justice reforms passed in the last session will eventually reduce the number of beds the state needs to house prisoners, and private prisons are not the best place to rehabilitate offenders.
The Legislature does not have the ability to negotiate a new contract with CoreCivic or accept the money; that must be done through the governor's office.
But Republican Sen. Llew Jones, who is from Conrad and whose district includes Shelby, said lawmakers can choose to not take up any of the temporary tax increases, fund transfers or other ways to generate cash the governor had proposed be debated during the special session called for next week.
Montana’s budget is unbalanced because revenue estimates adopted by lawmakers during the regular session, which ran from January to April, were far too high. That meant the state budget lawmakers drafted and passed assumed Montana would bring in much more in taxes than is now projected.
Revenues for the fiscal year that ended in June were $75 million lower than projected. Then came a historically expensive fire season, adding another $75 million to the tab.
When lower tax revenue from the current fiscal year is added in, Bullock's office says the governor must cut $227 million to bring the budget back into structural balance as required by law and set aside a mandated $143 million rainy day fund.
Instead of making up the full difference in cuts, Bullock proposed splitting the problem into thirds — $76 million from cuts he will make to state agencies, $75 million from temporary tax increases and $75 million from fund transfers and putting off payments to some state special revenue accounts such as a retirement program for judges that is over-funded.
Now that accepting $30 million from the company that runs the Shelby prison is on the table, Jones said Republicans can choose to not take up $30 million in Bullock’s tax or other proposals, in effect forcing the governor to either accept the money from CoreCivic and extend their contract, or make further cuts to state agencies to make up the difference.
“He can find the $30 million somewhere else or choose to get the $30 million from CoreCivic,” Jones said.
In a Thursday-night call with women lawmakers to discuss the cuts, organized by the group Carol's List, House Minority Leader Jenny Eck, a Democrat from Helena, criticized any extension of the contract, saying, "I don't think it's right to take advantage of the state when we're in a crisis to get a sweetheart deal."
CoreCivic is "trying to take advantage of a budget crisis to basically bribe the state into taking our money back … and lock us into another 10-year contract. This corporation is trying to take advantage of the situation to basically force us to accept a contract that is probably not in our best interest and we won’t have time to thoroughly vet," she said.
Sen. Mary McNally, D-Billings, said that ”I see this almost as blackmail. They’re taking advantage of a difficult situation and I don’t think it’s a good solution.”
On the call, Rep. Marilyn Ryan, D-Missoula, called out Jones and Rep. Rob Cook, R-Conrad, whose district extends to Shelby, without using their names.
“The two moderate Republicans who we are going to have to work through to get this through this process are from the area where Shelby is. The two moderate Republicans, that is their district. They have a concern that … that contract continue.”
Jones on Friday didn’t shy away from Shelby being in his district.
“It’s absolutely in my district and I represent the folks that work there, just like I represent the ag folks in my district. I am their voice. I am their representative and I believe they serve the district well. They are good stewards of the community and I should speak their voice.”
CoreCivic is the sixth-largest taxpayer in Toole County, with an annual tax bill of $444,000, according to the county treasurer.
Democratic Sen. Cynthia Wolken, of Missoula, said she doesn't want to see the state caught in a long-term contract right at the time it's trying to become more responsive to treating people who are incarcerated in the least-expensive setting, such as by providing treatment instead of jailing.
"We did a lot of modeling for the criminal justice reform bill package that shows we're on track, once policies are implemented, to bend the curve of our population growth."
Wolken, who led the criminal justice reform commission in the last interim, said things like a bill that will take low- and moderate-risk people out of jail while they await trial will relieve the need for beds at the state level by easing the burden locally.
A chemical and substance abuse treatment facility opening at the end of the year in Deer Lodge will offer 60 beds.
"The model in corrections right now is moving toward sorting prisoners by risk and need and treating people how they can best be treated and returned to communities if appropriate," Wolken said.
Republicans point out it's cheaper to house prisoners at Shelby — $82 per person per day versus $117.16 at the state prison in Deer Lodge in 2016, according to a Department of Corrections report.
Wolken, however, said that's not a fair comparison because the population in Deer Lodge has higher needs. That also means Deer Lodge is more heavily staffed.
"Shelby has the younger inmates that have less intense physical needs, and the Deer Lodge population has people that are sicker, have mental health needs, they have a geriatric treatment ability there. You cannot compare those accurately and say Shelby's a more efficient place."
Cook said the criticism of Shelby is a successful facility and criticism of the private prison model is misplaced.
“These guys haven’t failed,” Cook said. “It’s all hogwash. When you read that crap, ask yourself this: What other business is actually inspected by the competition?” Cook is references inspections by the Department of Corrections, which also operates the state prison in Deer Lodge.
Cook said CoreCivic has tried to approach the governor's’ office over the last several years to discuss the contract but did not gain any traction. He compared the Legislature's possible actions next week to a “corral” the governor would work from.
“I guess the best metaphor would be we have to build corral from which the only chute out of the corral is an extension” of the contract, Cook said. “It’ll be old-school, brute-force political. … We need to make it so the best decision the governor could make would be to extend the prison contract.”
He called criticism that the prison is in his district a “very easy way to muddy the waters,” saying he’d support a deal even if it wasn’t in his region.