LEGISLATIVE FISCAL ESTIMATE

[Second Reprint]

ASSEMBLY, No. 4077

STATE OF NEW JERSEY

222nd LEGISLATURE

 

DATED: JUNE 25, 2026

 

 

SUMMARY

 

Synopsis:

Imposes various taxes and fees on operators of private prisons to offset social costs of incarceration.

Type of Impact:

Annual State revenue increase.

Agencies Affected:

Department of the Treasury.

 

 

Office of Legislative Services Estimate

Fiscal Impact

 

Annual

 

State Revenue Increase

Up to $16.2 million

 

 

·         The Office of Legislative Services (OLS) estimates that by imposing taxes and fees on operators of private prisons, the State would generate up to $16.2 million in annual State revenue.

 

·         There are two private correctional facilities in the State that would be subject to the taxes and fees imposed by this bill: Elizabeth Detention Center, run by CoreCivic, Inc., and Delaney Hall Detention Facility, run by The Geo Group, Inc. The OLS estimates that under the bill, CoreCivic, Inc. would be subject to up to $3.9 million in annual taxes and fees and The Geo Group, Inc. would be subject to up to $12.3 million in annual taxes and fees.

 

 

BILL DESCRIPTION

 

      This bill establishes the Knowledge, Accountability, and Rights in Incarceration Markets Act, or the KARIM Act, and imposes additional taxes and fees on the operators of private prisons.

      Under the bill, a private prison operator who has entered into a contract with a public entity for the provision of correctional services is subject to a fee equal to eight percent of the value of the contract.

      Additionally, the bill imposes a monthly fee of $15 per inmate per day for each month an inmate is detained at the taxpayer’s private correctional facility, as well as a private prison surtax on corporate operators of private prisons.  The surtax is in addition to the corporation’s tax liability under the State’s Corporation Business Tax Act, in an amount equal to three percent of the corporation's allocated taxable net income for any privilege period in which it operates a private correctional facility in the State.

 

 

FISCAL ANALYSIS

 

EXECUTIVE BRANCH

 

      None received.

 

OFFICE OF LEGISLATIVE SERVICES

 

      The OLS estimates that by imposing taxes and fees on operators of private prisons, the State would generate up to $16.2 million in annual State revenue. 

      There are two private correctional facilities in the State that would be subject to the taxes and fees imposed by this bill: Elizabeth Detention Center, run by CoreCivic, Inc., and Delaney Hall Detention Facility, run by The Geo Group, Inc.  The OLS estimates that CoreCivic, Inc would be liable for up to $1.6 million due to the fee on the value of the Elizabeth Detention Center contract, up to $1.6 million for the fee on inmates, and up to $700,000 for the corporation business tax surcharge, for a total liability of $3.9 million.  The Geo Group, Inc. would be liable for up to $5.3 million on the value of the Delaney Hall Detention Facility contract, up to $5.5 million for the fee on inmates, and up to $1.5 million for the corporation business tax surcharge, for a total liability of $12.3 million.

      Per research conducted by the OLS, the value of the most recent contract between the U.S. Immigration and Customs Enforcement and the Elizabeth Detention Center equaled roughly $20 million per year, therefore an eight percent fee on the contract would equal $1.6 million.  The reported value of the contract between U.S. Immigration and Customs Enforcement and the Delaney Hall Detention Facility is $1 billion over 15 years, or roughly $66.7 million annually, therefore an eight percent fee on the contract would equal $5.3 million.

      Assuming each detention facility is at full capacity for a year, the Elizabeth Detention Center, with a 300-bed capacity, would be subject to an inmate fee of $1.6 million and the Delaney Hall Detention Facility, with a 1,000-bed capacity, would be subject to an inmate fee of $5.5 million.

      The bill also imposes a private prison surtax in addition to the corporation’s tax liability under the corporate business tax equal to three percent of the corporation’s allocated taxable net income for any privilege period in which it operates a private correctional facility in the State.  The OLS does not have access to the corporations’ allocated taxable net income.  The OLS assumes that the reported revenues of the detention facilities in the State may serve as a sufficient proxy, noting it is likely a slight overestimate.  In 2025, CoreCivic, Inc. reported $22.6 million in revenue for Elizabeth Detention Facility, therefore a three percent surtax would equal roughly $700,000.  The Geo Group went into contract with the federal government in 2025 and thus did not report revenues for Delaney Hall Detention Center.   However, Delaney Hall’s annual report indicates that the facility generates roughly $50,000 per bed annually, thus an estimate of a 1,000-bed facility would equal $50 million per year and a three percent surtax on such would equal $1.5 million annually.

Section:

Revenue, Finance and Appropriations

Analyst:

Humphrey Akujobi

Assistant Fiscal Analyst

Approved:

Thomas Koenig

Legislative Budget and Finance Officer

 

 

This legislative fiscal estimate has been produced by the Office of Legislative Services due to the failure of the Executive Branch to respond to our request for a fiscal note.

 

This fiscal estimate has been prepared pursuant to P.L.1980, c.67 (C.52:13B-6 et seq.).