Funding the National Park System

Improving Services and Accountability with User Fees

Executive Summary

In recent years, at all levels of government, user fees have provided an attractive alternative to general appropriations funding. “User fees,” also known as “impact fees,” differ from general taxes in that they are incurred only by those who benefit from the service provided, while taxes are collected on the entire population (or on particular subgroups, as determined in tax legislation and regulations). User fees ensure that those who use government services are primarily responsible for paying for those services, reducing tax dollars and allowing people more choice over how their money is spent. Since the purpose of the user fee is to ensure that government services are paid for by those who use them, user fees are most appropriate when services are clearly defined and can be directly connected to specific users/consumers. They also prevent the “free-rider” problem of some people using a service for free while others must pay for it whether they use it or not. User fees, furthermore, offer practical benefits including more flexible management and greater financial accountability.

Prompted by years of budget-cutting and the resultant deterioration of park facilities, in 1996 Congress granted the Park Service, Forest Service, Bureau of Land Management (BLM), and Fish and Wildlife Service (FWS)—collectively the “land management agencies”—additional powers to levy and increase user fees. This Recreational Fee Demonstration Program, signed into law as Public Law 104-134, applied to 100 of the nation’s 375 parks. Perhaps more importantly, the enacting legislation guaranteed that a substantial amount of the fees collected—80 percent—was spent within the area that collected them. The “Fee Demo Program” was established as a three-year pilot program and has been extended several times, most recently December 2004 with a 10-year extension.

Since 1996, the National Park Service, Forest Service, Bureau of Land Management, and Fish and Wildlife Service have used the Recreational Fee Demonstration Program to experiment with user fees and obtain needed funding for recreational site facilities and operations. Congress is considering making the Fee Demonstration Program permanent.

The Fee Demo Program has proven quite successful, allowing the land management agencies to collect over $1.1 billion in fees from FY 1996 through FY 2003. These fees have been used to complete numerous important projects, including deferred maintenance, trail, campground, and visitors’ center improvements, and educational programs. In fiscal year 2002 alone, the Fee Demo Program “allowed the National Park Service to complete 136 deferred maintenance projects, 80 of which related to natural resource protection, and to make some facilities accessible to the handicapped.”

Implementation of the Fee Demo Program has not scared off park visitors, either. According to the land management agencies, “Aggregate visitation to recreation sites participating in the Fee Demo Program continues to be unaffected in any significant way by fees.” In addition, the program appears to be rather efficient. The average cost of fee collection for Fee Demonstration projects as a percentage of fee revenue for the four land management agencies has remained stable over the past five fiscal years at approximately 20 percent.

Critics of the program point to an equitability issue: that making the national parks self-sufficient could result in increased fees, driving the poor out of the market, making recreation at the nation’s parks a pleasure of the rich only. This concern is largely overblown. Why? Because self-sufficient, user-fee parks would be much cheaper to operate. The inherent service-maximization/cost-minimization incentives and the reduction in bureaucracy necessary to administer funds would keep costs much lower than they are at present. Thus, self-sufficient, user-fee parks are already looking more affordable.

Another significant factor generally overlooked by user fee opponents is that it is travel costs—not user fees—that make parks unavailable to the poor (and many others). But what about the attitudes of the poor themselves on this matter? Numerous surveys have shown that the poor strongly support the use of fees, in some cases, more than all other income groups.

Another concern is that to please the public, parks will become “Disneyfied” and commercialized. Perhaps the strongest refutation of the commercialization argument, though, is recognition that market-based user fees provide the strongest incentives to preserve park resources. User fees will prevent overcrowding in the parks and overuse of natural resources; a tax-funded system will not. Self-sustaining parks also have stronger incentives to maintain and replenish natural resources than do tax-funded parks. If tax-funded parks allow facilities to deteriorate or resources to become depleted, they may be bailed out by Congress. Selfsufficient parks have an incentive to ensure that such funding is present, for if they allow the same to happen, they will be punished with a loss of revenue as people visit other parks instead. Park managers know that visitors want pristine wilderness in the parks they visit. Thus, self-sustaining parks are rewarded with higher revenues when they are kept in good condition.

The implementation of user fees alone will not solve all the problems faced by the nation’s parks. Park managers must have incentives to collect those fees and use them properly as well. To this end, 100 percent of park revenues collected should be maintained by the park responsible for collecting the fees so that, 1) parks have the greatest incentive to collect fees in an efficient manner, and 2) those funds may be reinvested where the parks’ patrons—the park visitors—will actually realize the benefits. In addition, park managers should have the flexibility to change user fees as visitor preferences and economic conditions change.

Changes may be required by the year, by the season, by the week, or even by the day, and regulatory hurdles should not prevent managers from responding accordingly.

The land management agencies responsible for implementing the Fee Demo Program have strongly endorsed it and have called upon Congress to make the program permanent. The agencies lauded the program in their FY 2003 Fee Demo Program “Progress Report to Congress.” In 2004 Congress extended the Fee Demo program again, declining to make it permanent as agencies have requested. There is still good reason to improve the program and move to make national parks more self-sufficient. Structuring the incentives so as to inspire a self-sufficient, market-based approach ensures the future of the National Park System and fosters both greater enjoyment and greater preservation of our nation’s natural wonders.

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