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This Week’s Outsourcing Scan 4-11-2016

1) National: Next week, Enlace is organizing a National Week of Action for prison divestment. “The goal of the 2016 Week of Action the Prison Divestment Campaign is to reduce the lobbying power of the private prison industry by taking away their tax subsidies. We are pressuring the Joint Committee on Taxation to revoke tax-free REIT status for private prisons. This is a crucial step toward moving our communities out of the criminal justice and immigration enforcement systems.”
 
On Friday, Mike Ludwig of Truthout reported on how private prison companies use tax breaks and low wages to maximize profit from human incarceration. “The two largest private prison firms in the United States are exploiting a loophole in the tax code to secure millions of dollars in corporate tax breaks. Corrections Corporation of America (CCA) and GEO Group avoided a combined $113 million in federal income taxes in 2015 alone, according to an analysis of federal financial filings by the racial and economic justice group Enlace.”
 
Corrections Corporation of America has lobbied on federal tax issues for years. Their lobbyist on the issue, Jeffrey McMillen of Akin Gump, has also lobbied for right-wing megadonor and “vulture” funder Paul Singer’s Elliott Associates.
 
2) National: The Ninth Circuit has reinstated a gender discrimination, harassment, and retaliation pattern or practice action against the GEO Group brought by the U.S. Equal Employment Opportunity Commission and the Arizona Civil Rights Division.
 
3) NationalPublic Works Financing estimates that the U.S. water/wastewater privatization market was up 5% last year. It values the market at $2.2 billion. American Water, which did not respond to the publication’s survey, did tell PWF that “its backlog was a whopping $3.6 billion in 2015.” Of 79 overall contracts up for renewal, 18 were not renewed, 10 of these were lost to private competitors, and 7 reverted to public control. [Public Works Financing, March 2016; sub required]
 
Meanwhile, critics of the federal program for water infrastructure financing are pressing ahead, arguing that WIFIA loans undermine traditional infrastructure funding and would fail to help mitigate drinking water crises. “Our main concern with WIFIA is that unlike the [state revolving funds (SRFs)], this new program does not prioritize funding to 
communities most in need,” says Food and Water Watch Senior Policy Advocate Mitch Jones. [Water Policy Report, April 4, 2016; sub required]. Kate Reid of FWW has also spelled out “Guess Who WIFIA Is Really Going to Help?”
 
4) National/Indiana/Revolving Door NewsGrassroots Leadership’s Bob Libal blows the whistle on David Venturella, the GEO Group’s spokesperson for building a new immigration and processing center in Indiana. “Before joining GEO’s executive team, Venturella was a top official at Immigration and Customs Enforcement, the same agency that would be contracting for the new detention center in Gary. Venturella’s emails were highlighted in a USA Today article from 2013 that showed ICE’s effort to increase the number of deportations through aggressive enforcement mechanisms.”
 
The GEO Group needs a variance from the City of Gary to build the facility, and is “facing a fierce backlash from local activists who say GEO’s civil rights record makes it unwelcome.” The request is scheduled for consideration at 3 p.m. Tuesday before a Board of Zoning Appeals meeting at City Hall. However, the BZA’s recommendation is non-binding. “If it is rejected, GEO can seek approval from the city’s nine-member Common Council. Still, the project does not have the backing of Mayor Karen Freeman-Wilson who said GEO is returning because there’s interest from council members who support it.”
 
Opponents are urging people to join a protest tomorrow at 2:30 p.m. at Gary City Hall, just before the 3 p.m. zoning board meeting.
 
5) National/Michigan: In a detailed article on the technical and regulatory issues in the Flint water poisoning scandal, Ph.D. chemist Frank Mangravite weighs the pros and cons of publically and privately operated water systems. Among the points he makes: “A qualified private operator also would have technical resources, process-tracking software, ideas for operational and capital improvements, and clear accountability.” But “a municipally operated water utility has the potential of being outstanding and more flexible than a contract operator because it is not restricted to the services specified in a contract. However, Flint’s situation is grave and requires immediate improvement.” [Public Works Financing, March 2016; sub required]
 
6) NationalEight veterans’ organizations have denounced a scheme to dismantle and privatize the Veterans Administration. “We are greatly alarmed by the proposed straw man document that was developed and drafted outside the open commission process,” the groups said, “without the input or even knowledge of the other commissioners…What is most unsettling about the ‘proposed straw man document’ is the utter lack of consideration that veterans would want to improve and expand the VA health care system.” The document echoes “some proposals set forth by veterans advocacy group Concerned Veterans For America,” a Koch-backed organization that is trying to privatize the VA.
 
7) National: Jacob Hacker, the author of American Amnesia: How the War on Government Led Us to Forget What Made America Prosper, talks to Sam Seder about “why America lost our historical understanding of the mixed economy. How regulation helps grow economies and produce better outcomes. Why we are safer and wealthier because of government investment and regulation. Climate change is the biggest externality that we face and we need government to address it,” and “why we need to clean up politics to restore government. Government makes the pie bigger.” [Audio]
 
8) National: Students file a class action lawsuit against George Washington University over what they see as a woefully poor online program. The suit alleges fraud.
 
9) National: Leading road privatization consultant Mike Schneider of HDR says the industry is “wedged” between the political right and the political left. The right is “reluctant to spend public resources on public infrastructure,” and the left is “reluctant to allow the private sector to participate in infrastructure delivery and operation for fear of either violating the public interest or encouraging rampant ‘profiteering’ by private companies, especially those based offshore.” [Public Works Financing, March 2016; sub required]
 
10) Alabama: PBS Newshour produces a report on the state’s troubled prison system.
 
11) Florida: As Gov. Scott (R) signs a new P3 bill into law, ‘public private partnership’ advocates are concerned that oversight of tax-exempt bond issuance for P3s by the Division of Bond Finance may curb the market’s enthusiasm. “‘I’m viewed as anti-P3 because I will be objective,’ [division director Ben Watkins] said. ‘What I care about is financing in the cheapest possible way. You can have the benefit of the private sector on the design and construction, but tax-exempt financing is eminently more cost effective. The two are not mutually exclusive, and P3 proponents would have you believe they are.’” [Sub required]
 
12) Florida: Enterprise Florida, the state’s 20 year old economic development ‘public private partnership,’ is mired in crisis. “Alas, Gov. Rick Scott now wants to downsize Enterprise Florida’s staff and privatize its funding, presumably to limit pesky legislators from interfering further in future job-recruiting efforts.”
 
13) Illinois/International: As Chicago public school teachers stage a one day strike to protest budget cuts, school closures, privatization, layoffs, increasing class sizes, and other issues, Jeremy Mohler of In the Public Interest says “Friday’s strike was a powerful demand for what teachers and students across the country need most—more support and resources—but it was also a protest against a growing national crisis, the privatization of our public education system.” 
 
Louis Weiner, writing in Jacobin, ties their struggle to global labor action to defend public education. “Chicago’s teachers are not alone in redefining the rules of engagement with governments over school funding and ownership of public education. UK teachers will soon engage in a national one-day strike, followed by local strikes throughout the summer. From South Africa to Hungary, Kenya to India, teachers, parents, and students are resisting the dismantling of public education, the process of dispossession.
 
14) Indiana: Fitch downgrades bonds issued by the Indiana Finance Authority for the I-69 highway extension ‘public private partnership.’ Fitch’s reasons include the deteriorating credit quality of the construction company parent company (Isolux), and “a projected eight month delay to substantial completion, initially expected in October 2016, which was disclosed in the most recent construction update published in March 2016.” [Sub required]
 
15) IowaDavenport may privatize downtown parking enforcement at a council meeting this week. “AFSCME Iowa Council 61 President Danny Homan said in a statement to the Quad-City Times that ‘outsourcing’ the service ‘would diminish oversight because the city will no longer directly control the employees.’ Homan said the union has met with the city to ‘explore’ keeping the service in house.”
 
16) Maryland: As the Maryland Board of Public Works approves the deal for the Purple Line ‘public private partnership’ light rail line, The Washington Post wonders whether the $150 million annual subsidy built into the project may come back onto the taxpayer’s bill. “Elements of the plan entail robbing Peter to pay Paul, which may well sap the state’s transportation funding generally and trigger a search for new revenues. [Gov.] Hogan’s tightfistedness today could translate into tax increases a decade from now.” Maryland officials plan to siphon off revenue from the MARC commuter rail system to help pay off the P3’s debt.
 
17) Minnesota: Dan McGrath, executive director of TakeAction Minnesota, says reopening the private prison in Appleton will harm the state. “The debate over whether or not to reopen a private prison in southwestern Minnesota threatens to divide rural whites against people of color and Native Americans. And if it does, it’s the owners of that private prison—not our communities—who will profit.”
 
18) MontanaCorrections Corporation of America and Core Civic, its real estate arm, have offered to provide Lewis and Clark County with a quote for a detention center. However, “when the cost of the county constructing and operating a detention center over 30 years is compared to the cost of a private company doing that, the county will pay more because of the private company’s up-front costs of construction.” But “the American Civil Liberties Union has been working with the county, and county officials have said they don’t know how much longer the ACLU will remain patient because of the jail conditions.”
 
19) New Jersey: Salem County is considering outsourcing the jobs of the county’s 911 dispatching services and the medical staff at the Salem County Correctional Facility to private, for-profit companies. Communications Workers of America Local 1085 President Mike Blaszczyk says “we feel bringing in outside services is a disservice to Salem County.” Lt. Bob Gant, president of the Salem County Fraternal Order of Police, “told freeholders Wednesday night privatization has ‘failed miserably’ in other areas.”
 
20) Ohio: Westlake school board bills the Ohio Department of Education for money siphoned off to charter schools since fiscal year 2003. “According to district figures, the state provides $667 per student for Westlake public school children while allocating $5,800 for each charter school student. Board President Carol Winter feels that disparity is unacceptable and urges Gov. John Kasich and the Ohio General Assembly ‘to stop the unjust system of funding charter schools, which penalizes all local public school students in the state.’”
 
21) Puerto RicoNew Labor Forum’s Jennifer Wolff outlines the dire situation facing public service workers as a result of the financial crisis: “In the public sector, bulwark of the Puerto Rico labor movement, the situation is dramatic. Two fiscal emergency laws—Law 7 enacted in 2009 by pro-statehood Governor Luis Fortuño and Law 66 approved in 2014 by pro-Commonwealth Governor Alejandro García Padilla—have curtailed the size of public employment by either decreeing outright downsizing (Law 7) or mandating hiring freezes in the central government (Law 66). As a result, one in four government jobs has disappeared in the last six years, a loss of 67,800 posts between June 2009 and October 2015.”
 
22) Virginia/NationalIn a big win for plaintiff-consumers, Transurban proposes a settlement in a class action lawsuit in which it levied massive fines to drivers for missing toll payments. “Under the terms of the settlement, Transurban will give drivers 10 days, instead of the current five days, to pay missed tolls before penalties are tacked on. Some customers who shelled out hundreds or thousands of dollars will be eligible for refunds, and Transurban will roll out new initiatives to get customers signed up for missed toll email alerts. “We’re quite proud of the fact that we were able to convince Transurban to change,” said Kevin Stanfield, one of the plaintiffs.” A judge must approve the deal, and a decision is expected this summer. 
 
In the last half year, Transurban’s toll revenue on U.S. roads has risen 216%, according to one report. At the national level, the P3 industry has finally admitted it: “Early P3 projects budgeted enforcement as a profit center with the costs more than offset by the fines an penalties.” But this may have changed, says expert Jodi Hecht, in part due to “high costs of litigation and court fees.” [Public Works Financing, March 2016; sub required]
 
23) WashingtonA pro-charter school lobbying campaign spent $1.9 million to influence the public and state lawmakers. “The money for the campaign came from local foundations and donors, including Microsoft co-founder Paul Allen, [Cynara Lilly, spokeswoman for the “Act Now for Washington Students”] said. The Washington State Charter Schools Association has also set up a political action committee called the Washington Charter Action PAC. They have reported donations totaling just over $250,000 in 2016. The two biggest donations of $125,000 each came from former Microsoft CEO Steve Ballmer and his wife, Connie Ballmer.”
 
24) Wisconsin: A Milwaukee charter school has abruptly closed down three grades on short notice and pushed out the students, but “will keep the state aid for the estimated 60 students who have been transferred from the school, even though they won’t finish the school year there. Most of them apparently are now enrolled in Milwaukee Public Schools, which won’t be compensated for teaching them. In fact, because of the way the state funds public schools, MPS likely won’t be compensated for teaching the former North Point Lighthouse students for another two years.”
 
25) International: Jerry Earle, president of Canada’s Newfoundland and Labrador Association of Public and Private Employees (NAPE), says efforts by the union to uncover contractual details about three private companies providing services for Eastern Health are being challenged by the companies.
 
26) International: New Zealand Labour Corrections spokesperson Kelvin Davis says “the government’s announcement that Serco will pay back some of the profits made from mismanaging our prisons is confirmation that National’s privatization experiment is a complete failure.” Davis declared that the minister “should confirm that she’s not going to carry on with National’s privatization agenda and place Mt. Eden Corrections Facility under government control.”
 
27) Think Tanks: In the Public Interest and the National Employment Law Project (NELP) release a policy brief on “the effect of under- and un-employment on the formerly incarcerated and how the expertise and structure of American trades unions could provide critical training programs inside and outside of prisons and jails.”
 
28) Upcoming Conference: The Network for Public Education is holding its annual conference next weekend in Raleigh. [Registration]

Legislative Issues
 
1) National: Color of Change ramps up a campaign to get the Congressional Black Caucus Political Action Committee (CBC PAC) to sever its ties with a lobbyist for the private prison industry. “Perhaps the most disturbing corporate funders of the CBC PAC are the lobbyists from the private prison industry. Ironically, both Democratic presidential candidates have shunned contributions from private prison lobbyists but the CBC PAC has taken thousands of dollars from Akin Gump, the lobbying firm that makes millions lobbying to protect their private prison client, Corrections Corporation of America, from increased regulation and transparency.”
 
2) NationalLarge private colleges may lose tax exemption on their bonds. “Rep. Tom Reed (R-NY), a member of the House Ways and Means committee, is currently tweaking a draft of the Reducing Excessive Debt and Unfair Costs of Education Act, which would require the 56 private colleges and universities with endowments over $1 billion to provide a portion of the profits earned from the investment of this money to students from working class families for tuition relief.” [Sub required]
 
3) National: As the Senate Environment and Works Committee holds a hearing on water infrastructure finance, the water industry moves to lift the caps on private activity bonds. “[Sen.] Inhofe also said he supports private investment in water and wastewater infrastructure, which Joe Gysel, president of EPCOR Water, Inc. and representing the National Association of Water Companies, later emphasized because of the significant financial capacity of the private sector. ‘WIFIA loans provide only 49% of project costs so where does the funding come form if the remaining 51% cannot be raised through municipal bonds?’ Inhofe asked the panel of witnesses.” [Sub required]
 
4) National: The powerful chair of the House Transportation Committee, Bill Shuster (R-PA) is facing a Republican primary opponent who is charging Shuster, a proponent of privatizing air traffic control, with being too close to industry lobbyists.
 
5) Connecticut: The budget bill passed the Democratic controlled Appropriations Committee last Wednesday. It includes the “governor’s plan to privatize 10 Department of Developmental Disabilities group homes and a proposal to privatize an additional 20 by fiscal year 2017.”

 

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