The city has reached an agreement in principle with the owner of a private prison to settle a legal dispute over the city’s charging a $1-a-day prisoner tax.
The 7th District Court of Appeals ruled against the tax in a decision last month that could have been appealed to the state Supreme Court. That prompted officials with the city and the Corrections Corporation of America, which runs the Northeast Ohio Correctional Center on the East Side, to settle the issue.
CCA, a for-profit company based in Nashville, Tenn., will pay $300,000 annually to the city beginning in January 2014.
“We made a decision to help both of us,” said Mayor Charles Sammarone. “We wanted to work something out. We’ve had a good relationship with them. I have no issue with CCA. They’ve been a good employer. I’m glad they agreed to pay $300,000.”
The city had enacted the $1-per-prisoner, per-day tax in December 2009 on private prisons. Northeast Ohio Correctional Center is the city’s only private prison, housing about 2,000 inmates. About 75 percent are illegal immigrants convicted of felonies and held here through a contract with the U.S. Bureau of Prisons, and the rest are U.S. Marshals Service prisoners being held pending trial.
CCA owed about $1.5 million to the city before the court of appeals dismissed the case, overturning a May 2012 decision by Judge R. Scott Krichbaum of Mahoning County Common Pleas Court that the city didn’t violate the state or federal constitutions or the city charter with the private-prison tax.
The court of appeals ruled that the inmate fee was an occupation tax, which violates the city charter.
City officials said Judge Krichbaum’s decision, even though it was overturned, played a key role in reaching a settlement.
The city would have received about $500,000 annually for the illegal-immigrant inmate population under the prisoner tax. It isn’t clear if the city would have collected the tax on the U.S. Marshals Service inmates.
“$300,000 a year isn’t an insignificant amount of money,” said city Law Director Anthony Farris. “The unfortunate part is because of the 7th District decision, we won’t collect those [four prior] years, so we don’t gain that” money.
This agreement, which needs city council approval, would put an end to the litigation between the city and CCA, repeal the ordinance requiring the fee, and would give the company permission from Youngstown to expand the space at the prison that is needed for it to house additional federal inmates once its bureau of prisons contract expires May 31, 2015.
The loss of the bureau contract would eliminate most of the 418 jobs at NEOCC, which has an annual payroll of $21.7 million, CCA officials said earlier this month.
CCA officials are concerned the bureau may consolidate the company’s current contract with one held by the Moshannon Valley Correctional Center in Phillipsburg, Pa. That contract for 1,820 inmates expires April 1, 2016.
The agreement between CCA and the city is good for as long as the company has a private prison in Youngstown.
“CCA has had productive communications with Youngstown officials, with the shared goal of an amicable resolution, and we are hopeful that a positive resolution, agreed to in principle, will be finalized soon,” said Steve Owen, company spokesman. “We are proud of the longstanding partnership CCA has with the community and appreciative of the many collaborative relationships we have with local leaders. We look forward to years of continued partnership in Youngstown.”
CCA officials said earlier this month that for the company to be competitive, the prison tax issue needed to be resolved.
“We’re putting the disagreement with CCA behind us to help them with a new federal contract,” Farris said. “We don’t want to have any signs of discord.”
Since 2005, NEOCC has paid almost $157 million in local payroll, almost $14 million on utilities and more than $10 million in local taxes, CCA officials said last month.