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Re: E-M:/ state park bills

------------------------------------------------------------------------- Enviro-Mich message from Christopher Graham ------------------------------------------------------------------------- Mr. Gear --

As a member of the State Park Citizen's Advisory Committee, I can assure you that your suggestion was not only heard by staff and members of the Committee, but that we already were working on that idea and many other related ideas. 

I personally think the odds of designing and implementing a variable rate fee schedule are good.  The details of doing that are complicated, we are making progress at seeing how such an approach could best work.  You continue to have other good ideas, here mentioned, and we will put them in the hopper.

We are slowly but surely parting with old thinking in every possible way.  The process of actually working through ideas and concerns, then changing policy, takes time.  I join you in some impatience -- but governing just takes lots of time.

I suspect you and our audience are not completely aware of current circumstances.

It takes (with a lean operation) somewhere between $40M-$50M/per year to operate the State Parks and Recreation system, the current system in current dollars.

After implementing reasonable fee increases and many coming changes to every other item of income and expenditure in its budget, it is hoped that we can adequately pay for the system's entire operations out of income, on an ongoing basis.

We likely cannot do that if something happens to the source of money to the Parks system from royalties on gas and oil wells on public land in the State ($10M/year).  And in any case, we cannot cover major maintenance work, capital improvements and replacements, which reasonably totals an additional $90M over the next five years alone, from this income flow.

If I may, I will repeat this last statement:  We cannot cover major maintenance work, capital improvements and replacements, which reasonably totals an additional $90M over the next five years alone, from this income flow.

The Park system has never been able to do that, and was never expected to do that.  Since the precipitous ending of ALL General Fund support from the State a couple of years ago, there is NO direct flow of General Fund dollars to operations.  There is no regular and secure source for major maintenance and capital funds and there never has been -- though such a source has always been much needed.

Short of raising fees gigantically, there is no reasonable expectation maintenance and capital funds can come out of the regular Park system income stream, no matter how adroit we are at redesigning it.

As you may surmise from your own concerns here about lower income accessibility, we received very few kudos for raising fees this past year, and received MANY objections.  To think we can raise fees vastly more to cover all costs (operations and capital) out of income would not be realistic.

Similarly, to think that the people of Michigan would let us dramatically cut the size of our Park system to gain more balanced numbers is also completely out of the question.  We may be able to make some changes, such as transferring some parks to local government to operate.  But a process to make those decisions is still to be designed, final passage of the bills discussed below will make doing something slower and tougher.

From its very inception, the development of the State Parks and Recreation Areas in Michigan has been predicated on the assumption that acquiring them, developing them, and maintaining them in good condition is a core service of State government.  It was never thought there would be a private way to do this, or that any private way would economically work.  It was never thought that the elements of system should be available only to those who could directly afford the costs (all of them).  Though the record on this is quite far from perfect, there has generally been good support from the people of the State of Michigan via its General Fund and intermittent bond issues for its Park system, for better or for worse, through much of the last three quarters of a century.

The great majority of the people of Michigan do think Parks are a core service.  They do not yet know there is now zero General Fund support.

Were we to have assumed our Park system should pay for itself, from the beginning, we would never have the Park system we have today.  It has been one of the great systems in the United States.  It has been highly important to tourism in Michigan -- netting economic benefit to the people far more than its costs.  There would be huge opposition to dismantling much of it, now, to make it conform to its income flow.

Lost in a self-supporting assumption would be the long standing goal of protecting the great natural resource treasures of Michigan, as public assets for the people of Michigan.  Lost would be the whole point having parks:  broad public ownership and access to the places of great scenic beauty, recreational opportunity, and high biological and other natural resource value.  I think there are few among us who would now willingly forsake the original assumptions.

I salute your for your suggestions.  They are being worked on.  We are going about it at the normal (slow) pace of governing, which includes all due process.  We will want and we will hope for your support when we settle on a way to suggest to the people of Michigan how to solve the overall, long term funding issue in support of our Park system.

Comments here beyond the facts are, of course, my own opinion.  They do not necessarily represent the opinion of the MDNR, or other members of the Committee.


Chris.






At 07:54 AM 3/23/2006, jmgear wrote:
-------------------------------------------------------------------------
Enviro-Mich message from jmgear <jmgear@acd.net>
-------------------------------------------------------------------------

Here is a piece I wrote when I became frustrated by the assumption that the only thing we can do with parks is subsidize them or raise rates. Perhaps someone could suggest trying better management first, which would mean flexible pricing so that high-demand sites aren't given away for a pittance while plenty of perfectly decent sites sit empty.

I sent this to DNR using their "send us your ideas" suggestion link -- got an acknowledgment and was told "We'll get back to you." That was two months ago--no word since.

============================================


   Time to Park Old Thinking

Michigan residents who use ? or might someday like to use ? a state park should review the disturbing presentations and spreadsheets the Department of Natural Resources has on its Web site < http://www.mich.gov/dnr/0,1607,7-153-10366_36309-118492--,00.html >. They reveal a system at risk of falling into a death spiral: declining demand, budget pressures, maintenance backlog and very uneven usage.

The DNR?s 2006 $4-per-night "short-term fee hike" for the most in-demand parks is a half-step toward a solution. But what?s needed is a leap that leaves behind the old "first-come, first-served" reservations model. A fee hike, short-term or otherwise, not only fails to solve the park system?s problems, it keeps DNR doing what it does worst: setting fixed year-round prices for campsites whose value varies immensely throughout the year.

One DNR presentation is called "Revenue Enhancement Ideas < http://www.michigandnr.com/publications/pdfs/InsideDNR/CCSP/RevenueEnhancementIdeas.ppt >." Essentially, it offers only two main ideas: raise fees in the parks or find new money outside them (e.g., by diverting lottery money from schools, grabbing a slice of dedicated sales tax, borrowing ? as if that were a funding source ? or finding "other dedicated funding," such as from tobacco settlement revenue). The presentation does mention ? in a single line ? the only idea likely to work: using variable pricing to create more revenue by charging more for "utility hookups, prime sites, prime parks and prime seasons."

Despite obvious differences, hotels and public state parks actually have much in common, mainly because they face the same big problem: wildly uneven demand. Worse yet, hotel rooms and campsites can?t be saved when demand drops off, the way butter or milk can be stored. For that reason, hotels and state parks can?t recoup anything from empty rooms or campsites. Once that revenue is lost, it?s gone for good.

When hotels have excess vacancies, they cut prices to fill the empty rooms. At the same time, they raise prices for those rooms and suites that rent quickly, recognizing that those rooms have amenities that the guests value and will pay more to have. This lets the hotel gain more revenue from some guests, while still offering other rooms at lower rates. They constantly adjust their offerings to find the right mix of rates and amenities.

The DNR should learn from this and adopt variable pricing strategies as well. There?s a simple, highly-efficient way to do it: drop fixed-rate charges and auction off campsite reservations instead. Modern auction software lets people offer a minimum and a maximum bid online or over the phone. The software then "runs" the auction, starting at the opening bid and automatically raising bids to their maximum in steps until the high bidder wins.

The system would set the starting bid at half the current fixed rate for each site, with the minimum dropping if no one bids on the campsite as the reservation date approaches. Auctions would generate much greater revenue from high-demand parks (which are already booked solid). But auctions would also yield more revenue from current low-demand parks, because a discount rental still earns more than a vacancy. And auctions would clearly highlight those parks, if any, that don?t have much value as public campsites.

With auctions, instead of the DNR charging the same fixed price for an off-season reservation as it does for Memorial Day, the Fourth of July and Labor Day weekends, campers would determine the site and services they want and how much they are worth.

What about less well-off people? Will they be able to afford a campsite? Yes. Auctions bring prices to the right level. By cutting prices at our less-used parks, more sites will be more affordable and accessible than ever.

And we can also help people of modest means by giving them credit for past unsuccessful bids. Say that, every week, Joe and Jane Camper bid on a popular Lake Michigan park campsite. But, because of their tight budget, they haven?t ever won the auction. By adding a credit ? say, a dollar for every past auction where they bid at least today?s rental rate ? then Joe and Jane are more likely to win later auctions, while only paying the lower amount that they actually bid.

Ultimately, our parks must either raise revenues or cut costs by deferring maintenance or closing parks. We can only raise revenues in two ways: either we take more money from everyone in Michigan ? regardless of whether they use the parks ? or we have to get more money from park users, including our many out-of-state visitors.

Auctions are the most efficient way to find the exact right price, which is the one that optimizes both access and revenue, results in fewer vacancies, and generates more money for park preservation. The only hard part is that it requires new thinking. That?s why it?s time for the DNR to park its old thinking about setting prices for reservations in the park.

#####

John M. Gear is an attorney and an adjunct scholar with the Mackinac Center for Public Policy, a research and educational institute headquartered in Midland, Mich. Permission to reprint in whole or in part is hereby granted, provided that the author and the Center are properly cited.

============================================
LuAnne Kozma wrote:

-------------------------------------------------------------------------
Enviro-Mich message from LuAnne Kozma <luanne_kozma@yahoo.com>
-------------------------------------------------------------------------

Park bills pass out of senate

Thanks everyone who contacted senators at the last
minute  to press for better protections for state
parkland. Unfortunately, Senate Bills 971 and 972
passed on the floor of the Senate today. They now go
to the House. You can now view the contents of these
bills on the Michigan Legislature website.

--LuAnne



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==============================================================
ENVIRO-MICH:  Internet List and Forum for Michigan Environmental
and Conservation Issues and Michigan-based Citizen Action.   Archives at
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Postings to:  enviro-mich@great-lakes.net      For info, send email to
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Christopher L. Graham, ASLA
(734) 975-7800 (O)
email    grahamz@umich.edu =============================================================ENVIRO-MICH: Internet List and Forum for Michigan Environmental and Conservation Issues and Michigan-based Citizen Action. Archives at http://www.great-lakes.net/lists/enviro-mich/ Postings to: enviro-mich@great-lakes.net For info, send email to majordomo@great-lakes.net with a one-line message body of "info enviro-mich" =============================================================