Corrections Corporation of America, which operates four of the state's five private prisons, including three in Southern Colorado, is demanding that the Colorado Legislature give it a 5 percent hike in the per diem it receives to house about 4,000 state inmates, Rep. Bernie Buescher, D-Grand Junction, said Tuesday.

Buescher, chairman of the Legislature's Joint Budget Committee, said the Tennessee-based company is using its weight to try to force more money out of the state.

"We've got a negotiating disadvantage," he said. "The choice we've got to make is to give them a provider rate increase that is three times what we're giving to all other providers, or to build hundreds of millions of dollars in additional prisons. We don't have that hundreds of millions of dollars, and they know it. The decisions that have been made over the last 12 years (in using private prisons) have put us in a very difficult negotiating position."

Steve Owen, spokesman for the Nashville company, said CCA is simply trying to do what's best for its business. He said the company agreed to a lower per diem rate in 2001 when the state was suffering from a major budget shortfall.

Since then, however, the state hasn't made up the difference.

"We were basically asked to help with the burden of trying to ease some of those (budget) constraints, which we did," Owen said. "So, there's nothing Draconian at work here in terms at what has been presented to the state. We're just honestly trying to put options out there to help preserve this partnership with Colorado so we can continue to provide the services to the state and keep our folks employed out there."

In 2001, the state had been paying CCA a $53.33 per diem. That amount was lowered to less than $50 and has since risen to $52.69, still far less than what it would be receiving after seven years of inflation and cost increases.

Now the company is asking for $55.32 per inmate a day.

"We've actually had a real dollar decrease," Owen said. "That's compounded with another issue that the state has underutilized beds that we've made available. Between those two things, it makes for a difficult situation on a financially viable business operation."

Currently, the company - which operates private prisons in Bent, Huerfano, Crowley and Kit Carson counties - has about 460 open beds, and that doesn't count the 1,440 more that are expected to become available later this year because of expansions of the Bent and Kit Carson facilities, Owen said.

Owen said that if the state can't pony up more money, his company would consider consolidating all Colorado prisoners in three of its facilities. The fourth facility, which has not been determined, would be used for inmates from the federal prison system or other states, some of which pay anywhere from $10 to $15 a day more than Colorado.

Still, some lawmakers said they didn't like the idea of the company demanding a 5 percent hike at a time when the state can only afford to give other private providers, from health care to human services, less than 1 percent.

Rep. Buffie McFadyen, D-Pueblo West and a longtime critic of private prisons, said the state should call CCA's bluff and give them no increase.

"I don't like doing business when we're being held hostage, and that's exactly what this is," McFadyen said. "We saw it coming. We had a past governor (Bill Owens) who brought us private prisons without a bid process, now we're dealing with it. If they don't want to work with us, we don't have to play ball with them."

Sen. Ken Kester, however, said lawmakers shouldn't fly off the handle.

He said the situation isn't that bad, and the Legislature should acknowledge that the company did the state a favor when it accepted a pay cut during the recession.

"We've got 1,500 beds coming on line by CCA. They're stepping up to the plate doing what we feel Colorado needs to have done, and I admire them for doing that. It's saving up like $100 million in construction monies. I surely believe we can work something out to where they will not shut down Huerfano County (prison) or any other one."

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