Private Operation Could Help Keep Washington’s State Parks Moving Toward Self-Sufficiency

August 24, 2012

Thanks to a budget proviso directing the Washington State Parks Commission to develop a report showing how the agency plans "to make the parks system self-supporting," the future of state parks has taken center stage in recent weeks.

One of the many interesting details in the State Parks Commission's report was this section:

Governmental "Costs of Doing Business"
State Parks needs to follow all the procurement rules, which meet a set of appropriate social objectives, equity concerns and ensure responsible use of public funds. Such governmental procedures come at a higher cost. State Parks is subject to merit system rules, collective bargaining agreements, statutory restrictions on replacement of state employees with volunteers, wage and benefit standards, and other employment practices which meet statutory requirements and increase staff costs relative to those of private sector competitors. As a public entity, decision-making processes must reflect inclusion of public sentiment with documentation, evaluation and ongoing direction provided by the Legislature and Governor. Communication with stakeholders is essential and valuable – and requires time and money.

One of the best resources for helping governmental entities change the "costs of doing business" is the Reason Foundation.

Since the Reason Foundation has written extensively on how to make state parks more self-sufficient I asked their experts to submit a guest blog post on the topic which is posted below:

Private Operation Could Help Keep Washington’s State Parks Moving Toward Self-Sufficiency
By Leonard Gilroy and Harris Kenny

The financial sustainability of Washington’s state parks has made headlines recently, with the State Parks Commission pushing back on the Legislature’s directive for the parks system to become self-sufficient, relying on fees and other revenues generated within the system itself, without further state appropriations of general fund dollars.

But contrary to skeptics—who apparently cannot envision a future in which state parks are self-sufficient—the self-sufficiency directive is a worthy aspiration. The Legislature is smart to challenge the parks agency to transform themselves to fit to a "new normal" in which state spending on parks will continue to face pressure as the costs of Medicaid, public safety, higher education, K-12 spending and corrections (to name a few) consume ever-larger shares of state spending.

New Hampshire, for example, has had an entirely self-funded state parks system for roughly 20 years, and its neighbor Vermont has come close, with user fees and other self-generated revenues covering the vast majority of their state park system's operating costs. More recently, South Carolina policymakers launched a parks self-sufficiency initiative this year, ending FY2012 at a level of 84% self-funding and aiming for full self-sufficiency next year. And the California State Senate passed a bill earlier this year that would create "innovation working groups" to develop revenue-generating proposals for state parks with the goal that the system "should become more self-sufficient and financially sustainable."

Parks advocates should welcome, not fear, this discussion in Washington State if they're really interested in keep parks open and viable for the long-term, because otherwise parks will remain a perennial budget football. And Medicaid, education, pension costs and other core priorities are always going to win out relative to amenities like parks in this game. Self-sufficiency will not be easy, will take some time, and will require the ongoing reinvention of the parks agency, to be sure, but the alternative is to let parks wither on the vine under an unsustainable status quo.

Park advocates may be anxious that this directive for self-sufficiency is a sign of things to come...which is exactly right. This is not a clandestine operation, or a Trojan horse. Legislators are clearly communicating that taxpayer money is hard to come by, and parks would be better served if they were inoculated from the cuts that are likely to come.

Washington State Parks deserves credit for its progress thus far, which includes adjusting fee structures to get them closer to market rates, expanding revenue-generating assets (e.g., new cabin construction), and increasing revenues from non-recreational leases (e.g., cell towers, etc.). Their recent State of State Parks 2012 report, which clearly sees self-sufficiency as a high hurdle and asks legislators for continued state appropriations, nonetheless contains a range of worthy recommendations for further ways to at least maximize the park system's self-generated revenues.

One of those merits a special mention: a call to "[e]ngage in partnerships with other governments, private non-profits and for-profit organizations to improve parks." In fact, outside partnerships are the primary strategy that California State Parks used this year to keep 69 of 70 parks open that were threatened for closure aims budget cuts. While most of these partnerships involved either outside donor contributions targeted at certain parks or short-term agreements with nonprofits or local governments to keep parks open in the near-term (or outside donations to keep specific parks open), California kept four of its parks open through the groundbreaking use of private concessions (leases) with for-profit firms to operate entire state parks.

To distinguish this model from the more discrete, "traditional" concession operations already prevalent in state and federal parks (e.g., food, retail, lodging, rentals, boat launches, etc.), the "whole park" concession model involves a commercial lease through which the state would retain ownership and control over the parks while contracting with a private recreation management company to operate them. But the state would not pay them. Instead, the private operator would be allowed to retain the park's user fee revenues (e.g., gate entry fees, camping fees, etc.), in return for paying a set percentage back to the state annually as a form of rent. Often, this presents an opportunity to turn a revenue-losing state park into a revenue-generating asset that can help fund non-revenue-producing activities in the state parks system.

The concession contract would spell out the government's expectations on operations, maintenance, fee structure and other key issues. The concessionaire would take on the costs of operations and maintenance (including labor), removing those huge costs from the state's books. From the state's perspective, the bottom line is that a "whole park" concession offers the opportunity to shed major operating costs from its balance sheet and leverage concession revenues to help keep the rest of the system afloat.

While this may sound like a fantasy, it's already happening all around Washington State. Private, for-profit recreation management companies currently operate over half of the U.S. Forest Service’s (USFS) thousands of developed recreation areas (e.g., campgrounds, day use areas) nationwide under “whole-park” concession agreements. Washington, California, Colorado and Oregon each already have over 100 USFS parks and campgrounds currently operated by private concessionaires, with hundreds more spread out across other Western states. This USFS program has been in place for over 25 years, prompted originally by fiscal pressures on the agency decades ago that led it to embrace user fees and "whole park" concessions to keep its numerous recreation areas open and self-sustaining. Sound familiar?

Despite such a long and successful track record, states had only tinkered with this parks management approach until California's recent moves, which represent a paradigm shift in state parks management (albeit a well-proven one).

A recommended resource list on this subject is presented below for further articles and videos detailing the concept. But don't take our word for it, do your own comparison. Go visit a privately-operated USFS day use area or campground—ironically, these self-sustaining parks are often located nearby struggling state parks—and compare the two. You will notice equal or higher quality operations and facilities in the USFS parks, and you would not see "Disneyfied" USFS parks or Golden Arches sitting at the entrance, as concession contracts require the private manager to operate parks according to the agency's—not their own—mission. In fact, private park concessionaires make their money by providing a recreation experience that the public expects at public parks, so their incentives are aligned.

The parks funding debate is likely to continue in Washington State, and the State Parks Commission should be applauded for their efforts thus far to create a financially sustainable system amid budget uncertainty. Nonetheless, they should look to the potential for "whole park" concessions and the USFS/California model as a powerful component of their transformation strategy that could keep parks open and thriving for the long-term.

leonard [dot] gilroy [at] reason [dot] org (Leonard Gilroy) is the director of government reform and Harris Kenny is a policy analyst at Reason Foundation.

Recommended Reading
Reason Foundation Annual Privatization Report 2011: State Government (see pages 37-43).
Reason Foundation: “California Issues RFP for Private Operation of 5 State Parks
Wall Street Journal, “Private Fix for Public Parks” (June 17, 2012)
Reason.tv video: Prop 21: Why Californians Don't Need a Car Tax to Save Their State Parks (video tours privately operated USFS recreation areas in Sedona, AZ)
Property & Environment Research Center: Funding Parks: Political versus Private Choices 
California Legislative Analyst’s 2012 report recommending “whole park” concessions
Reason Foundation: “Private Sector Can Rescue State Parks Headed for Closure
Reason Foundation: “Taking State Parks off the State's Books
Reason Foundation: “Taking State Parks off the State's Books, Part II
Reason Foundation: “Don't Close State Parks; Lease Them
ParkPrivatization.com (blog run by Warren Meyer, president of Recreation Resource Management)
USFS Campground Concession Desk Guide

Comments

Privatize State Parks

So, does this mean that the taxes that Washington state residents have been paying Wash state will be reimbursed so that the people can use it to pay to go to the parks? Or does it mean that the people will have to pay twice to visit lands they already own? The states are getting greedy while you have to live on less. Government needs to live on less just like the rest of us. I for one will not pay more to visit lands that already belong to me and everyone else. If that is the case, the I shall not introduce my children to anymore parks. What a shame, just when the government is telling everyone they are fat, they start charging to get outside.

Our government is greedy. Where will they get the money once they have taken it all from the private sector?