Out of Control Policy Blog

California's Prop 21: Tax Cars to Pay for Parks?

Proposition 21 on the California ballot would address state parks funding shortfalls by increasing vehicle registration taxes—sorry, "fees"—by $18 per vehicle per year. In exchange, most California vehicles would be granted free admission and parking at state parks and beaches. The surcharge is expected to cost a total of about $500 million a year. The nonpartisan Legislative Analyst's Office estimates that these revenues would be offset by a $50 million annual loss of day-use fee revenue (since parks admission and parking would now be "free") and up to $200 million that could be used to replace existing General Fund and special funds appropriations, resulting in a net increase in state parks and wildlife programs funding of $250 million a year.

California's state parks certainly have been struggling in recent years. A July 2009 Los Angeles Times article noted that only 13 of the 279 parks and beaches in the California State Park System generate enough revenue to be self-sustaining, and, despite minor user fee increases, the state was forced to partially close or reduce services in nearly 150 state parks due to budget cuts.

But what, you may ask, does personal transportation have to do with parks? Well, nothing, and that's the problem. Given California's ongoing infrastructure crisis, you'd think that any fees derived from transportation would be dedicated to transportation, not parks.

Rather than taxing everyone to pay for parks only used by a portion of the population, the state should instead be moving to a greater reliance on user fees to make parks financially self-sustaining. As Adam noted in a column last year,

In recent years, at all levels of government, user fees have provided an attractive alternative to general appropriations funding. User fees provide a fairer funding source since they ensure that those who actually use government services are primarily responsible for paying for those services, reducing tax dollars and giving people more choices.

User fees also offer practical benefits such as increased park management flexibility—allowing park managers to adjust to economic conditions or changes in park visitors’ recreational preferences—and greater financial accountability. States such as Vermont, New Hampshire and Texas have realized significant park services cost savings through user fees.

Opening up park management and maintenance services to a competitive bidding process, and turning these operations over to private-sector or non-profit groups, could further reduce costs and help to make the parks self-sufficient while addressing maintenance backlogs.

Though state parks serve a variety of purposes (ecological, preservation, etc.), perhaps the most visible and fundamental—and the one that generates the bulk of park system revenues—is the recreation enterprise. Users pay to enter parks and use camping and other facilities. Federal public land authorities like the U.S. Forest Service (USFS) and National Park System figured out years ago that while ecology and land preservation were core competencies, running recreation enterprises was not. As such, these agencies long ago began expanding their use of public-private partnerships (PPPs) through private-sector recreation management concessions.

PPPs are already fairly ubiquitous among park systems. These arrangements range from contracts with private firms to provide individual services, such as waste removal, administration, trails maintenance, or landscaping, to long-term concession contracts or conservancy arrangements with private or non-profit organizations.

A common type of parks concession involves having a private company run a retail store, food, or equipment rental operation within a government park. For example, private concessionaires currently operate the commercial activities (i.e., lodging, retail, food) in the "crown jewels" of the national parks, including the Grand Canyon, Yosemite, and Yellowstone, not to mention California state parks such as Old Town San Diego State Historic Park.

A "conservancy" model represents a hybrid alternative where a non-profit conservancy is responsible for park operation, and raises a predetermined percentage of money necessary to run the park. In return for this effort they receive matched funding from the city or state. In New York City the Bryant Park Corporation runs Bryant Street Park. and hosts events (such as film festivals or the Good Morning America concert series) to raise funds for the park. A similar conservancy agreement was signed for the operation of New York City’s Central Park. In Colorado the Colorado Fourteeners Initiative formed a partnership with the US Forest Service and is responsible for the management of the 54 "fourteeners" (mountain peaks approximately 14,000 feet high). Conservancy models are valuable in urban parks or high-traffic parks, and typically leverage residents' interest in volunteering within the parks.

In the "whole park" context, a concession would essentially be a long-term (10-20 year) lease of the entire operation of a park (or group of parks) under a performance-based contract with a private recreation management company. Agencies such as the U.S. Forest Service, Tennessee Valley Authority, California State Parks, and the Lower Colorado River Authority have made extensive use of concessionaires to operate and maintain complete parks and campgrounds. During the famous federal government shutdown during the Clinton administration, the only federal recreation facilities that remained open were those run by concessionaires under leases. In order to avoid situations where only the most popular and profitable parks are bid for, leaving the parks causing the biggest financial drains on the state, both money-losing and revenue-positive parks may be bundled together in concession contracts. Since private operators have advantages over public operators in areas such as personnel costs and greater economies of scale, many of these money-losing parks may be run profitably under private management.

Instead of imposing more general taxes (or "fees," call them what you will), California should be relying on user fees and PPPs to ensure that parks are financially self-supporting, and that people who do not enjoy the use of the state's parks are not forced to pay for those who do. As Harris summed it up in a previous post,

For a sustainable solution to the parks funding problem the state should rely on user fees in order to distribute revenue to the parks that need it—this would align revenues with operational and maintenance costs. Instead, Prop. 21 would funnel hundreds of millions of dollars into a centralized slush fund under the assumption that state bureaucrats could be able to predict shifts in seasonal demand for over 278 facilities with artificially low prices.

Be sure to check out the recent video from Reason.tv on Prop. 21 and parks concession arrangements with private operators in Arizona, California, and elsewhere. (The video runs about seven and a half minutes long.)

Related Research, Commentary, and Media:

» Reason.tv piece: Prop 21: Why Californians don't need a car tax to save their state parks

» "California's Prop. 21 Would Perpetuate the State's Parks Plight" by Harris Kenny

» "California Parks Need User Fees" by Adam Summers

» "Policy Stinker of the Day: Arizona Mulls Hiking Vehicle Fees to Fund State Parks" by Leonard Gilroy

» Reason policy study: Funding the National Park System: Improving Services and Accountability with User Fees by Adam Summers

Adam Summers is Senior Policy Analyst

Harris Kenny is Policy Analyst


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