State capitols around the country face unprecedented fiscal challenges in the years ahead, and California serves as a great example. The state’s nonpartisan Legislative Analyst’s Office (LAO) predicts that California will face annual budget deficits of about $20 billion each year through 2015-16.
The Los Angeles Times released a toolkit (available here) that allows anyone to practice balancing California’s budget by selecting from proposed spending cuts and tax increases. Areas for spending cuts include: K-12 schools, health and social services, colleges and universities, public safety and others.
While this toolkit is effective at displaying tradeoffs, it also has its limitations. In order to address the deficit, taxpayers and policymakers alike need to understand there are more than options than simply raising taxes and/or cutting services.
Some policy options that are missing from this toolkit include: reforming public pensions, eliminating public boards and commissions and realizing savings through privatization or public-private partnerships (PPPs.) It also fails to quantify instances where public officials postpone infrastructure projects and defer necessary maintenance in order to save money in the short run, though this ends up being more costly in the long run.
For example, there is an option to eliminate $130 million in state subsidies for parks. If this were done, then the system would rely exclusively (instead of partially) on user fees to fund parks. Depending on user-fees would be beneficial for parks because it would ensure sustainable funding that would align revenue with use. Basically, people that use parks would be the ones to pay for them (see my colleague Adam Summers’ analysis of user fees here.)
But there are two critical pieces of information missing from this option in the toolkit. First, relying on parks management concession agreements (a type of PPP) could reduce the cost of operating parks. Through parks management concession agreements, high-traffic parks could be bundled with low-traffic parks to ensure that all the parks are preserved regardless of size or popularity. And second, according to the California State Parks Foundation the California parks system faces over $1 billion in deferred maintenance, so even if one eliminated state subsidies the underlying maintenance issue still remains (and could get worse.)
Parks management concession agreements are already being used in California. Some examples include:
- The US Forest Service partners with CLM Services to operate entire campgrounds in Tahoe National Forest, Sierra national Forest, Sequoia National Forest San Bernardino National Forest, and others;
- CLM Services currently operates Tecopa Hot Springs Park & Campground in Inyo County; and
- The state parks department partnered with Recreation Resource Management to complete camping loop renovations for 24 cabins and other improvements totaling over $1 million at McArthur-Burney Falls Memorial State Park.
Given the successful use of parks management concession agreements already seen in California, policymakers should consider expanding similar efforts across the state as one way to reduce the deficit.
For more on parks management concession agreements in California see here, here and here; and for additional policy tools to balance state budgets, see the recently published State Budget Reform Toolkit.