Analysis of the 2008-09 Budget Bill: Resources

Department of Parks and Recreation (3790)

The Department of Parks and Recreation acquires, develops, and manages the natural, cultural, and recreational resources in the state park system and the off–highway vehicle trail system. In addition, the department administers state and federal grants to local entities that help provide parks and open–space areas throughout the state.

The state park system consists of 278 units, including 26 units administered by local and regional agencies. The system contains approximately 1.5 million acres, which includes 4,600 miles of trails, 300 miles of coastline, 970 miles of lake and river frontage, and about 14,800 campsites. The state park system includes parks and attractions that require entrance or use fees and other parks, beaches, and attractions that are free to enter. Almost 80 million visitors traveled to state parks in 2006–07, including more than 50 million visitors to free day–use sites.

The budget proposes $556 million in total expenditures for the department in 2008–09. This is an overall decrease of about $118 million below current–year estimates. This decrease reflects about $50 million in reduced capital outlay expenditures (mostly special funds), reduced federal funding (a decrease of $28  million), and about $13 million in General Fund budget–balancing reductions.

After accounting for the proposed budget balancing reductions, the budget proposes $405 million in departmental support, $45 million in local assistance, and $105 million in capital outlay expenditures. Of total departmental spending, $137 million comes from the General Fund, $122 million comes from the State Parks and Recreation Fund (primarily fee revenues), $115 million comes from bond funds, and $90 million comes from the Off–Highway Vehicle Trust Fund.

Major budget proposals include (1) a budget–balancing reduction of $13 million achieved largely by closing 48 state parks and beaches and (2) increases of $46 million in local assistance grants (bond funds and special funds); $20 million (special funds) and 84 positions to expand the Off–Highway Vehicle program; $17 million in bond funds for deferred maintenance and other park improvement projects; and $3 million General Fund to add 29 park ranger positions in order to improve fire prevention in state parks.

Governor’s Budget–Balancing Proposal Does Not Consider Opportunities to Increase User Fee Revenues

As part of its budget–balancing plan, the administration proposes to close 48 state parks and eliminate lifeguards at certain state beaches in order to save $13.3 million in General Fund support. Separate from the budget–balancing proposal, the department’s maintenance needs far exceed its maintenance budget, leading to a deferred maintenance backlog of approximately $1.2 billion. We find that user fees in the state park system are comparatively low and have not kept up with inflation over the last decade. We recommend the Legislature direct the department to increase total park fees by $25 million. Of this amount, we recommend using $13.3 million to offset the Governor’s proposed General Fund budget–balancing reduction and using the remaining $11.7 million to augment the department’s maintenance budget. (Increase Item 3790–001–0392 by $25 million.)

Governor’s Budget–Balancing Reduction

The Governor’s proposal to balance the state’s budget includes a General Fund budget–balancing reduction of $13.3 million. The administration proposes to cut $8.9 million from park operations and $4.4 million in related administrative costs. In order to achieve the savings in park operations, the administration proposes to eliminate 124 positions in park operations, closing 48 state parks, and reducing or eliminating lifeguards at state beaches in Orange, San Diego, and Santa Cruz Counties. While the proposed closures are projected to save $13.3 million in General Fund support, they would also reduce fee revenues generated by these parks by $3.7 million. (However, the budget does not propose to reduce the department’s expenditure authority from fee–based special funds by this amount.)

Ongoing and Deferred Maintenance at State Parks

The state park system includes 278 units, of which about 250 are directly managed by the department (the remainder are mainly managed by local governments). These park facilities vary from state beaches, to historic parks, to off–highway vehicle recreation areas. The department estimates that almost 80 million people visited the system in 2006–07. The size and breadth of the state park system, heavy usage by the public, and the fact that so much of the system’s infrastructure is exposed to the elements means that the department has a significant obligation to perform maintenance activities.

Based on its internal facility management program, the department estimates that its ongoing maintenance needs exceed its maintenance budget by almost $120 million per year. (This imbalance between ongoing maintenance funding and identified need has persisted for many years.) Over the years, the difference between ongoing maintenance needs and available funds has created a backlog of deferred maintenance projects—currently estimated at $1.2 billion. Typically, these projects encompass the replacement or rehabilitation of an existing asset that has not been adequately maintained—such as water or sewer systems. Given the current shortfall between the department’s maintenance budget and its estimated maintenance requirements, this backlog will likely continue to grow over time unless corrective action is taken.

The Governor’s budget proposal does include $12 million in bond funds for deferred maintenance projects and an additional $4 million in bond funds for projects which may address deferred maintenance projects (the department does not yet have project lists for these proposals). However, the budget proposal does not address the ongoing maintenance deficit of the state park system, as it proposes no additional funding for this purpose.

Fee Revenues at State Parks

State Park Fees. Fees charged for use of the state park system vary considerably. Some parks and state beaches have no entrance fees while other parks do charge a fee for use. (Typically, entrance fees are assessed on vehicles entering the park, rather than on individual visitors. At most state parks, visitors can walk in for free.) Entrance fees vary between $2 and $10 per vehicle, with most parks charging from $5 to $7 per vehicle. The department also charges fees for camping. Camping site fees vary from $9 to $200 per night, with most fees between $15 and $40 per night, depending on the demand for camping sites and/or the costs of operating them. While the bulk of the department’s fee revenues come from parking and camping fees, some parks charge for other services, such as tours or access to specific attractions. Also, it is important to note that the largest component of state park system attendance is unpaid—that is people visiting parks that do not charge entrance fees or walking into state parks.

(Throughout this section, we refer to attendance and fees as those collected at non–off–highway vehicle parks. The department’s off–highway vehicle program has separate funding sources from the rest of the department’s operations and is not included in this analysis.)

Fee Revenues Are Low and Not Keeping up With Inflation. Because fees vary by location, service provided, and time of year, it is difficult to compare specific fee levels over time. Rather, we use the average fee revenue generated per paid visitor to make comparisons across time. Figure 1 illustrates fee revenues per visitor over time as well as attendance at the state park system, broken out by free day use, paid day use, and camping use. In 2006–07, the last year for which data are available, fee revenue per paid visitor to the state park system was $2.83. (As was mentioned above, most park entrance fees are charged per vehicle or per campsite. Therefore the individual cost of using the park is typically much less than the posted fee level.) As is shown in Figure 1, fee reductions in the late 1990s led to declining fee revenues per visitor. To some extent, these previous fee reductions were reversed early in this decade, leading to rising fee revenues per visitor. However, they have now returned to previous levels. Once fee revenues are adjusted for inflation, we find that the real value of fee revenue per visitor has declined. If fee revenues were adjusted to

keep up with inflation over the last decade, fee revenue per visitor would be $3.81 per paid visit, rather than the actual revenue of $2.83 per paid visit. In 2006–07 year, total fee revenues were approximately $25 million lower than they would have been had fees kept up with inflation over the last decade.

Impact of Fees on Park Attendance. In the past, concerns have been raised about the effects of proposed fee increases on attendance at the state park system. We find that while park system attendance varies over time, paid attendance to the system does not seem to be very sensitive to changes in park fees, as shown in Figure 1. Specifically, the long–term trend of increasing paid attendance does not seem to change significantly due to increases in fees. As reflected in the figure, paid attendance has remained relatively stable during the period of fee increases that began around 2002–03 and continued in subsequent years. There are several reasons to believe that park visitors will not significantly reduce their use of state parks if fees are increased:

• Park fees represent only a portion of the total potential cost of attending a state park—including the costs for gasoline, lodging, food, and recreational equipment. A modest increase in park entrance fees is not likely to have a very significant impact on the total cost to the visitor of using state parks.
• Visiting a state park is a relatively low–cost (and often no–cost) entertainment option for California residents. Over the last decade, the cost to visit the state park system has remained essentially flat at about $2.85 per visitor. In comparison, the average cost of a movie ticket in the United States has increased from $4.42 to $6.55.
• The department has programs to provide discounted fees for certain senior citizen, low–income, and disabled veteran park visitors who may be more sensitive to price increases. These programs could work to offset the impact of increased fees on low–income park visitors.
• The department has the authority to adjust fees by park unit and service provided. This gives the department the ability to raise fees at parks where there is high demand, making a general decline in attendance less likely. Also, the department can target fee increases in such a way as to avoid large increases at parks that are visited by more low–income persons.

LAO Recommendations

Increase Park Fees to Keep up With Inflation. We recommend the department increase its fees to keep up with inflation over the last decade. Specifically, we recommend that the department increase its fee revenue projections for the budget year by $25 million, and that the department adopt updated fee schedules to achieve this revenue increase. As the department has done in the past, we recommend it target fee increases to high–demand parks to minimize any potential impact on attendance.

Fee Revenues Can Offset Budget–Balancing Reduction Amount, Thereby Avoiding State Park Closures. We believe that increasing fee revenues by the recommended amount will be sufficient to allow the department to avoid closures of any state parks or beaches. Our increased revenue projection would be sufficient to fully offset the Governor’s budget–balancing reduction of $13.3 million in General Fund, thereby avoiding park or beach closures and the potential loss of $3.7 million in fee revenues due to the closures.

Dedicate Remaining Revenue Increases to Ongoing Maintenance. In order to slow the growth in the department’s deferred maintenance, we recommend that the remaining revenue from the fee increase (about $11.7 million) be used for ongoing maintenance of the state park system. We also recommend that the budget bill provide the requisite increased expenditure authority for ongoing maintenance.

Improving Fire Prevention at State Parks

The administration proposes to augment the department’s budget by $3 million (General Fund) and 30 park ranger positions ostensibly to reduce the danger of wildland fires in state parks. We find that the proposed augmentation is not justified as a cost–effective means to improve fire prevention and therefore recommend that the proposal be rejected. (Reduce Item 3790–001–0001 by $3 million.)

Fire Protection in State Parks. The department operates and maintains about 170 park units that are located in rural areas and have potential wildland fire risk. In two of these parks, the department provides its own firefighting capability. In the remaining 168 parks, the department has a contract with the Department of Forestry and Fire Protection (CalFire) to provide wildland fire response. Throughout the state park system, the department is responsible for preventing wildland fires by reducing fuels through vegetation thinning and prescribed burns. The department does this by developing plans for vegetation removal and prescribed burns, based on the fire hazard and the natural resource characteristics of individual parks. These activities are then performed by department maintenance staff, CalFire, and other fire response agencies. Over the last decade, there have been about 100 fires of ten acres or more in state parks.

Budget Proposal. The Governor’s budget proposes $3 million General Fund for increased fire prevention in the state park system. The proposal would fund 30 new park ranger positions statewide and related equipment and vehicles. According to the department, the additional park ranger positions requested would not participate in fire prevention or in firefighting activities. Rather, the requested positions would be used to augment the department’s law enforcement presence in state parks—potentially deterring park visitors from accidentally or intentionally starting fires—and reporting fires to firefighting agencies.

Recommend Against Budget Proposal. The department’s primary responsibility with regard to wildland fire is prevention. Park rangers are not directly involved in prevention activities. We find that adding park ranger positions will not address the department’s primary responsibility with respect to wildfire—vegetation management and prescribed burns. In addition, while there may be general law enforcement benefits from adding park ranger positions, the department has not demonstrated that adding 30 park rangers across the entire park system will cost–effectively prevent human–caused fires in state parks. We therefore recommend the budget request be denied.

Concession Agreements

The budget includes proposals for four concession agreements requiring legislative approval. While we find three of the proposals warranted, we recommend the Legislature withhold approval of one of the proposals, pending delivery of a final economic feasibility study.

Under current law, the Legislature is required to review and approve any proposed or amended concession contract that involves total investment or annual gross sales over $500,000. Concessions are private businesses operating under contract in state parks to provide services such as food preparation that are not normally provided by the state. The Legislature is also required to approve most types of operating agreements, in which one governmental entity operates and maintains another entity’s facility. In some cases the department contracts with local government agencies to operate state park facilities while in other cases the department agrees to operate federal or local facilities. In past years, the Legislature has provided the required approvals in the Supplemental Report of the Budget Act.

As shown in Figure 2, the department has included four concession proposals in the budget that require legislative approval. While we find three of the proposals warranted, we recommend the Legislature withhold approval of one of the proposals that lacks sufficient detail.

One of Four Proposals Lacks Sufficient Detail. The department has not yet completed the final economic feasibility study for the Pacheco State Park wind turbine concession. Without this information, the Legislature is not able to determine whether this proposal is in the state’s interest. It would be premature for the Legislature to approve this proposal before all the pertinent information is available for consideration. Therefore, we recommend the Legislature withhold approval of the Pacheco State Park wind turbine concession proposal, until the department has provided a final economic feasibility study.