DALLAS – The Texas Senate Finance Committee voted to close a 2,100-bed, for-profit prison in Mineral Wells, citing a surplus of cells in a declining incarceration market.
Officials in the town 50 miles west of Fort Worth told the Fort Worth Star-Telegram that they would seek to have the vote overturned before the Texas Legislature ends its current session on March 27.
The vote to close the Mineral Wells Pre-Parole Transfer Facility managed by Corrections Corporation of America was a second attempt after a failed effort in the 2011 legislature.
In the previous legislative session, lawmakers voted to close a state-operated prison and left a number of privately operated lockups vacant.
CCA is one of the largest prison operators in the United States with 51 facilities and 92,500 beds in 20 states. Only the federal government and three states house more inmates.
Despite falling incarceration rates and an increasing number of empty jails and prisons, CCA Chief Executive Damon Hininger last month announced a quarterly dividend on its stock that represents a 165% increase over the same period last year. The dividend “reflects management's confidence in the future of our business and our commitment to generating value for our shareholders," Hininger said in a prepared statement.
CCA carries a corporate issuer rating of BB with a positive outlook from Standard & Poor’s. Moody’s rates CCA’s issuer credit Ba1 with a stable outlook. Fitch Ratings ICR is BB-plus with a stable outlook.
With a contract scheduled to run through 2017, the Texas Department of Corrections pays CCA $33.30 per inmate per day. At Mineral Wells’ full capacity, that would be about $25.5 million per year. However, the Mineral Wells lockup now houses about 1,600 inmates.
Private prison operators are responsible for about 9% of the incarcerated adults in the U.S.
S&P notes that changing attitudes and political controversies are factors in the ratings of CCA. Analysts cite the Florida Senate’s decision in February 2012 to block a plan to privatize 29 South Florida prisons. The plan met stiff resistance from unions, as well as from certain politicians and citizens.
In Texas, a union that represents prison guards has called for closing the Mineral Wells facility.
State Sen. John Whitmire, D-Houston, has led the charge to close the facility, citing poor reviews of the prison for allowance of contraband and escapes. Whitmire also said that Texans should celebrate the fact that the state is cutting spending on unnecessary services.
Mineral Wells Mayor Mike Allen said the city will fight to keep the facility in prison open. “They are a good corporate neighbor and I think they’re very important to this community,” he told the Mineral Wells Index.