GOP Backed-Privatization Brings Rural America To Its Knees
This time of year, rolling west on I-40 in New Mexico toward Albuquerque, the fields are panoramic and golden. Bluebird sky seems to extend forever, interrupted only by the Sandia Mountains in the distance. Glance left, and endless tracts of land stretch as far as the eye can see, dotted with farm equipment or rundown properties. Billboards pock the landscape and often provide the only shade for long stretches at a time.
Twenty minutes south of the Pilot Travel Center in Moriarty, just off the interstate, is Estancia. You could point your car and get there without turning the wheel because it’s a straight shot down County Road 41. This is where the Torrance County Detention Facility is, and this is where an outsized portion of Estancia’s population was just laid off — all on the same day.
An hour southeast of Albuquerque, Estancia is home to 1,650 residents. A handful of streets intersect to form a tiny downtown area, with the prison three miles to the east. The county seat of Torrance County, Estancia is an agricultural hub and known for its vast pumpkin patches in the fall. Since 1990, farmers have co-existed with the ever-shifting population of the prison. Entrepreneurs have built small businesses to support it. The prison is the largest employer in Torrance County, and its employees have propped up the economy in Estancia for decades.
Declining Detainees = Declining Profits
The Torrance County Detention Facility was considered to be a model center by its operator, CoreCivic. Even so, shareholder profits take precedence. “Unfortunately, a declining detainee population, in general, has forced us to make difficult decisions in order to maximize utilization of our resources,” CoreCivic said in a statement. The facility has averaged housing 580 inmates, approximately 120 short of the number they say they need to stay open. Fewer ICE detainees at the border translated directly to a decline at the prison.
The closing of the prison is a hard lesson for the town of Estancia and Torrance County. Such a sparsely populated rural region in a relatively poor, sparsely inhabited state with a large Native American population means little leverage to negotiate. Shareholders will always win in these situations, where the parent corporation opens the purse strings to lobbyists regularly.
In 2016, CoreCivic spent just over $1 million lobbying for policies that would support maximum profits. In years past, they have spent upwards of $3.3 million on issues that span from law enforcement and crime to Native American affairs. In fact, CoreCivic has lobbied for privatization of BIA (Bureau of Indian Affairs) prisons regularly since 2004.
Rural towns such as Estancia will continue to find themselves on the losing end of privately operated prisons when they decide that more profits are to be found elsewhere. Corporations like CoreCivic can throw their weight around and make demands of rural towns who don’t have the sufficient tax and employment base to fight back.
Half The Budget…Gone
Recently on a Monday evening, local legislators convened with municipal leaders, county commissioners, school board members and concerned citizens. Estancia mayor Sylvia Chavez anchored the panel, along with her grandfather Bobby Chavez, mayor of neighboring town Willard and Moriarty mayor Ted Hart. Sylvia Chavez says Estancia will lose 60 percent of its tax revenue, along with $170,000 in annual utility payments — just like that — when the facility shutters.
In a statement released by Torrance County, the closure will have a negative impact of close to $700,000 annually and “roughly $300,000 in loss of taxes” for the County.
New Mexico has the lowest per capita property tax in the nation. Taxes are imposed on one-third of assessed value, typically between 80 and 100 percent of market value. As a state, it relies heavily on what’s called Gross Receipts Tax (GRT). These are taxes imposed on goods and services performed in-state. The GRT typically makes up a heavy portion of small towns’ budgets throughout New Mexico. A loss of 60 percent of annual GRT is absolutely devastating to a tiny town such as Estancia.
What this lost revenue means in practical terms is deep slashes to the public works, fire department and most painfully, the police department. Torrance County Sheriff Heath White estimates his budget will need to quadruple, and that hiring an additional eight people will be necessary to pick up the slack. Each hire comes at a cost of $150,000 when vehicles, benefits, training, and salaries are factored in.
“If one my deputies makes an arrest, I will pretty much lose that deputy for the rest of the shift,” White said in an interview with the Albuquerque Journal. “If I have another deputy make another arrest, I won’t have anyone on the streets.”
Bernalillo County detention center is the closest alternative to Torrance’s facility, roughly an hour’s drive, but it’s completely full. That means detainees will need to be transported to either Cibola or Santa Fe County. Transport will take at least six hours out of a ten-hour shift, says White. Since his budget is already determined for the year, they’ll either have to operate at a loss or wait to see if the County can come up with the extra funds for the additional staff they’ll need to hire.
Lost revenue coupled with an exodus of gainfully employed residents from this tiny town will also mean the closure of support businesses. Everything from restaurants to retail will be affected.
Profits Over People
Despite pandering extensively to rural voters during the campaign with promises that their voices will be heard, Donald Trump has shown his true colors time and again. His near-rabid frenzy to score a win — any win — for his young administration has taken obvious precedence over policy ramifications that would leave rural Americans out of luck. We’ve seen increasingly cruel attempts to strip rural residents of their healthcare, many of whom obtained coverage through the Affordable Care Act and Medicaid expansion.
Rural voters voted for change. Many did so out of frustration that their livelihoods have diminished over time. Others did so out of fear of a quickly changing world that’s become increasingly global. Many, whether they consciously acknowledged it or not, were trying to bring back a simpler and more prosperous America their elders told them about. All of them were hoping for a turn towards the better when they checked the box next to Trump’s name on the ballot.
However, in the months since his inauguration, Trump’s avid support for privatization and rewarding the wealthy has become Priority Number One. His musings on auctioning off air transportation, water services, broadband and even the nation’s collective healthcare have private corporations quivering with glee at the prospect of profiting off formerly public assets. And when the inevitable happens, they will step in and glean the riches while providing necessary—formerly public—services.
Rural Americans will always be on the losing end of this equation when services are privatized for profit. They will either end up paying unfair premiums that keep the private corporation in the black, or they’ll have diminishing access that will eventually spiral to zero.
Either way, the profits-over-people model keeps rural residents at a distinct disadvantage and perpetuates the cycle. Faced with an ever-widening knowledge gap and stagnant wages, rural Americans largely bought into Trump’s promise of “America First” policies that would ostensibly boost their livelihoods and make them feel a part of the conversation again.
Torrance County was no exception. This red county in a blue state swung overwhelmingly for Trump with 58.8% of the vote. Little did they know that less than a year later, their county’s primary source of revenue would be deemed unprofitable and closed. They may have been aware of Trump’s pro-privatization stance, but there was no reason to suspect their interests would be sacrificed for corporate gain just a few months into his term.
For-profit models such as this are inherently corrupt because producing maximum profits and providing necessary services are naturally at odds with each other. Last August, the Department of Justice announced that privately run federal prisons were less safe and less secure than government ones. This sent CoreCivic’s stock tumbling by 35 percent. With Trump’s election, it then jumped by 47 percent due to his support of privatization on the whole.
Outsourcing the imprisonment of people has an inherent conflict of interest. When the treatment of inmates depends heavily upon the bottom line, everything from meals to mental health is at risk of cutbacks. And there’s the much more insidious incentive to keep people incarcerated longer in order to maximize profit at the expense of human suffering.
Are We Condemned To Repeat The Past?
In the 1980s, privatization rode an optimistic wave fueled by the Reagan administration’s push towards smaller government. While countries worldwide adopted privatization of necessary services from utilities to transportation, the question remained whether profit-centric policies would leave people — especially the most vulnerable populations — behind.
For an example of how privatization played out, let’s look at Chile. Milton Friedman successfully sold his radical free-market policies to dictator Augusto Pinochet. Friedman’s “Chicago Boys” assiduously dismantled the work of democratically elected Salvador Allende after his death and Pinochet assumed power through a coup. Public assets were auctioned off at an alarming rate. Deregulation in financial and trade sectors, combined with the enormous wealth created by auctioning off public services, created a crisis of debt, corruption, and inequality. On top of this, unemployment skyrocketed.
The Chile of the 1960s had premium, accessible education and healthcare systems that helped expand its middle class. After Friedman’s policies reshaped the economy, the rich got exponentially richer while more than half the population experienced wage suppression, living near or below poverty. Sound familiar?
Thirty years after the Chicago Boys transformed Chile with their ideologies, the privatization debate rages on. When managerial accountability lies not with the public it purports to serve but with the shareholders, who is the logical winner? In the case of Estancia, the privately held prison and its tax revenue are only good for as long as profits hold.
While privatization has restored efficiency to many industries, incentives or competition are key. Incentives to act in the public interest, or a competitive market can help drive performance, lower costs and increase efficiency. However, correctional facilities are highly unlikely to operate in a competitive environment because private operators often insist on long-term contracts which protect them from encroaching competitors. And, as we’ve seen, they’ve got the money to send lobbyists to Washington to interfere on their behalf.
Privatization And The Religious Right
Free-market ideologues are currently in control of the federal government. We should not expect a fair and balanced review of the privatization debate with the Trump administration, given that he has nominated people with extreme views on the agencies they now lead. Take, for instance, DeVos and her drive to “build God’s kingdom” through education.
Many of Trump’s cronies, including DeVos and Vice President Pence, have close ties to the conservative think tank The Heritage Foundation. Heritage policy wonks had heavy representation on Trump’s transition team. To dismiss the work of The Heritage Foundation as a reasonable influence on the Trump administration would be a deadly mistake. And, to dismiss the religious right as quirky outsiders, would add fuel to that fire.
The Heritage Foundation’s extreme views on free-market enterprise, paired with the evangelical Christian right’s extreme views on church and state make it abundantly clear that our democracy is in a very tenuous situation.
What’s Next For Estancia?
For the employees of Torrance County Detention Facility, only about a quarter have expressed interest in staying with CoreCivic and relocating elsewhere. Many are rooted in the community and occupy inter-generational homes. Understandably, they don’t wish to leave.
Heeding the calls for help, state legislator Michael Padilla helped organize a large job fair with employers from around the region present. Longstanding non-profit Help New Mexico, Inc. represented the WIOA (Workforce Innovation and Opportunity Act) program that helps displaced workers find new opportunities.
The lack of an immediate economic solution will likely force residents to commute long distances to keep their families afloat. Businesses will disappear from the streets of Estancia without a gainfully employed population to support them. And, if history serves as any indicator, inequality and unemployment will catapult this small town into an economic depression.
Meanwhile, CoreCivic’s shareholders will move on to build their next profit center on the backs of a different rural town. We know one thing to be true: as soon as those profits dip, they’ll pull out and perpetuate the cycle.
At the end of the day, is privatization worth the risk?