Florida Vote Halts Largest Private-Jail Plan in Geo Setback

Florida’s Senate blocked a plan to create the largest private-prison system in the U.S., handing a setback to a Geo Group Inc. unit that will instead seek to expand outside the Sunshine State, according to its president.

“There are still a lot of opportunities,” Jorge Dominicis, president of the Boca Raton, Florida-based company’s Geo Care unit, said after the vote yesterday in Tallahassee, the capital. “There are other states looking at doing similar things and you’re seeing things happening abroad.”

Dominicis declined to comment on whether Governor Rick Scott, a Republican, should use executive authority to privatize the prisons following the vote. Scott skirted the same question, saying he wanted lawmakers to pass the proposal.

Scott, 59, couldn’t muster enough support in the Senate, which rejected the measure, 21-19. The plan was projected to save $16.5 million a year, helping to curb a sixth consecutive annual deficit. As states cope with the aftermath of the longest recession since the Great Depression, asset sales and shifting traditional roles to companies has increased.

Since 2005, the number of state prisoners in private jails nationwide rose 16.7 percent, while the total prison population climbed 4.1 percent, according to U.S. Justice Department data.

14,500 Inmates

Florida would have moved 14,500 inmates from more than two dozen prisons and work camps into company-run facilities. The state, with a total budget of $69.6 billion, spends $268 million a year to run the lockups with 3,800 workers, according to a legislative analysis.

Had the proposal passed, it would have been “the largest single contract procurement in the history of our industry,” Geo Group Chief Executive Officer George Zoley said on an August conference call with investors. The company operates in the U.S., Australia, South Africa and the U.K., its website shows. Its shares fell about 5 percent to $17.75 at 11:05 a.m. in New York, the biggest drop in six months.

“This is an opportunity to save money,” Scott said before the vote. “We know there are a lot of other things we need money for, whether it’s education for our children, whether that’s health care, whether it’s other safety nets.”

Geo and Nashville, Tennessee-based Corrections Corp. of America, the largest U.S. prison contractor, both expressed interest in bidding for Florida’s prisoners.

The two companies operate six of the state’s seven privately run lockups.

Bill Unneeded

Both supporters and opponents said during Senate debate on the measure that technically, Florida law lets Scott approve contracts with private-prison operators. No governor has used that power, however. Republicans hold a 28-12 majority in the upper chamber.

Senator Mike Fasano, a Republican from New Port Richey who opposed the plan, said Scott should consider the Senate vote before attempting to privatize prisons.

“A clear message was sent by 21 of the 40 senators today: We do not want to privatize public safety,” Fasano said.

Debate in the Senate showed senators divided on whether companies run prisons more efficiently than the state.

Senator John Thrasher, a former state Republican Party chairman from Jacksonville and a sponsor of the bill, credited the lobbying of unions including the International Brotherhood of Teamsters, which represents prison workers, for the defeat.

“Unions have a strong presence and I think that a lot of members relate to that,” Thrasher said.

Florida, with the third-largest inmate population in the U.S., has about 11,000 in privately run prisons. Texas is the only state with more in such lockups, at 15,000, according to state and federal data.

Florida’s total prison population of about 104,300 trails only California’s 165,100 inmates and Texas’s 173,600, according to Justice Department figures.

(Updates with share price in seventh paragraph.)
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