Financing State Parks in Indiana

FINANCING STATE PARKS IN INDIANA 8

FinancingState Parks in Indiana

FinancingState Parks in Indiana

Inthe United States, state parks occupy approximately fourteen millionacres of land. State parks provide numerous economic and socialbenefits such as generation of income and recreational facilitiesamong others. According to Margret Walls (2013 p.1), the revenuesfrom state parks has been declining since early 1990s. This impliesthat funding state parks has become a difficult situation. The Stateof Indiana has approximately twenty four state parks among them, theBrown County, the City Falls state park, the Raccoon lake state parkand the Summit lake state park. It is estimated that state parks inIndiana encompasses, roughly, 59, 000 acres of land. Walls adds thatcost operations for state parks is covered from a combination ofsources which include, user fees and fees generated from parkentrance and annual passes, lodging and camping fees, contracts fromprivate organizations, philanthropy and public funds. This paperseeks to investigate the nature of state parks funding in the stateof Indiana and the challenges that face the funding strategy.

Firstly,the state government of Indiana provides for the creation andmaintenance of state parks within its jurisdiction. The stategovernment of Indiana provides 7% of its budget to housing, Seweragemanagement, and state parks. Hence, the Indiana state parks utilize aportion of this budget. The revenue is generated from primary sourcesof tax which include the individual income, the sales tax, gamingtaxes and corporate income taxes. The revenue is well channeled andaudited to ensure that they are well utilized. As Walls argues, Stateparks in the United States make use of the dedicated public revenuesources of funding. In an effective and efficient state governmentsuch as Indiana, the tax system allocates dedicated funds for variouspurposes (Walls, 2013). Indiana has developed a dedicated fund forstate parks. Walls argues that since the 1990s many states includingIndiana has moved towards dedicating funds for their state parks.Revenues generated from fishing and hunting fees, sales taxes,licenses, lottery proceeds, registration fees for motor vehicles,fees from real estate transfer and other taxes help to maintain thededicated tax.

Thereis evidence to show that the Indiana’s state government has notbeen able to properly finance its state parks. The budget of Indianastate government is as shown in the pie chart below, as perGovernor`s Fiscal Policy Advisory Council report (2011).

Figure1: Indiana State Budget for the year 2011

Thebudget allocation and distribution indicates the priority projectsfor the Indiana government. Parks fall in the 7% that takes care ofthe expenditure termed as others. The definition does not mean thatthey are not important. It merely indicates that they do not consumea big part of the budget. They are feasible projects within thisjurisdiction and are essential to the social lives of the peoplewithin this region. The state government carries out a census on allthe financial records of its departments and their budgets, ensuringthat funds are well utilized in the intended projects. Audits arerecorded and analyzed strategically. They intend to analyze thefiscal health of the departments and provide grants where necessary.These grants are derived from income tax money as paid to thegovernment by its citizens.

Anothersource of funding for Indiana state parks is user fees. According toWalls (2013) user fees range from parks entrance fees, lodging andcamping fees, activity fees such as horse riding and boating fees.For example, from January 2015 to December 2015, Indiana state parksare offering a $40 annual state park entrance permit to the Indianaresidents. According to Mother Nature’s Mercantile (2015), thefunds generated from the sale of the permit will be used to enhancethe operations and maintenance of outdoor recreation aspects that thestate of Indiana operates.

However,as Walls (2013 p.1) notes, even though user fees play an importantrole in state parks funding, the charging of prices in state parkscuts down on the use of the parks by the public thus is not a veryefficient strategy of financing. This implies that Indiana as well asother states has to be careful on how they impose the entry charges.As walls emphasizes, if there is no congestion of users in the parks,then charging will automatically ration on the use of the parks. Inthis regard, it is important for parks to be aware of the demand ofuse for the parks (p.7). In Indiana, as Walls observes,park-generated funds provide the largest source of financing stateparks (p.4)

Inaddition, Indiana state parks are funded through donations andgrants. On the one hand, donations derive from well wishers such asindividual persons as well as organizations. For example, IndianaDepartment of Natural Resources web page (n.d.) displays the processof donating to Indiana State Parks via the Indiana Natural ResourcesFoundation a non-profit organization. The donated funds are meant toimprove on the services provided by the state parks. On the otherhand, grants derive from organizations with a view of helping therevival and maintenance of state parks. For example, according toIndiana Dunes State Park (2014), the Indiana Department of NaturalResources was given a Great Lakes Restoration Initiative grant to beused in planting of trees in the campground of the Indiana DunesState Park. Many trees had died-off due to lack of tree age diversityin the park. The grant funds were used in reforesting the campground.The grant was gotten through the corroboration between Save the Dunesinitiative and the Indiana Department of Natural resources.

Anothersource of funding for state parks in Indiana derives fromprivatization and contracts. According to Walls (2013 p.1) theprivate sector has been operating in state parks for many years.Their participation derives mainly from concessionaire agreementswith the parks for them to operate several services in the stateparks. In some cases, private organizations take up the whole ofparks’ operations. Walls argues that engaging into contracts withprivate firms helps state parks to minimize on the costs related tomonitoring and enforcement of contracts. This is done especially whenit is deemed that the cost of doing so is lower when mandated toprivate firms than it would be when taken by the state governments.

InIndiana, for instance, RVBusiness (2012 August 29) reported that thecandidates for governor seat in Indiana were divided in the view thatstate parks should or should not be privatized. Mike Pence, a GOPcandidate, was of the view that some services such as the lodges andadditional inns as well as other recreational services within theparks should be given to private firms. Spence intended to do this byforming a public-private partnership with out-sourced developers.This was to ensure that taxpayers are not burdened in the financingof state parks. This was not something new in Indiana as theincumbent governor Mitch Daniels had already privatized the inns andcampgrounds reservation system while the property was still ran bystate employees.

However,as Blalock, Schifberg and Whitehead (2012 p.3) observe, the maindisadvantage with privatizing state parks through outsourcingrecreation and park service to private firms is the privatecontractors seek to make a profit in addition to their payingsalaries, labor and other benefits. In this regard, private firms andcontractor recoup costs via provision of services and goods for whichcustomer are chargeable. However, in the case of state parks, thesegoods or services may not have a place in the mission statements ofstate parks. The implication is that because profit making is not amission for state parks, the outsourced private contractors may tendto increase the cost of the services provided. Hence, theprivatization of state parks may realize short term benefits but itis uncertain as pertains to long term financial implications.

Theforegoing analysis shows that state parks in Indiana are funded froma combination of sources. They include the state government, parkgenerated revenue, donations, grants from organizations andprivatization of services in the park. Given this background, it ishard to tell which source is best for state parks. However, it seemsthat park generated revenues, despite the challenges identified, playa major role in financing state parks in Indiana. It seems rationalto conclude that given the important roles, both social and economic,that state parks play, they should be funded from a richerperspective than they are now. As much as the private contractors mayseek to make profits from the services provided, it seems that theycan finance the state parks better while state of Indiana stillretain the ownership of the parks. However, strict measures such asregular checks should be placed on the private contractors by thestate to ensure a favorable provision of services.

References

IndianaDunes State Park(2014). Indiana&nbspDunesState Park Receives Funding to Restore CampgroundRetrieved April 22 2015. Fromhttp://www.laportecountylife.com/community/parks/47227-indiana-dunes-state-park-receives-funding-to-restore-campground

MotherNature’s Mercantile (2015) 2015ANNUAL STATE PARK ENTRANCE PERMITretrieved april 22nd2015. Fromhttp://stores.innsgifts.com/2015-annual-state-park-entrance-permit/

IndianaDepartment of Natural Resources (n.d.) Donatingto indiana state parks and reservoirsRetrieved April 22nd2015. From http://www.in.gov/dnr/3190.htm

RVBusiness(2012 April 29) Gov.Candidate Considering Park Privatization.RVBusiness. Retrieved 22ndApril 2015 fromhttp://www.rvbusiness.com/2012/08/gov-candidate-considering-park-privatization/

Blalock,T., Schifberg, B., &amp Whitehead, C. (2012). Methodsof privatization: privatization in state parks, hospitals, andprisons.The Nelson A. Rockfeller Center AT Dartmouth College: The center forPublic Policy and the Social Sciences. Retrieved April 22nd2015. Fromhttp://rockefeller.dartmouth.edu/shop/prs_privatization_brief_final_062612.pdf

Walls,M. (2013). Paying state parks: Evaluating alternative approaches forthe 21stcentury. Resources for the Future. Retrieved April 22nd2015 from:http://www.rff.org/RFF/Documents/RFF-Rpt-Walls-FinancingStateParks.pdf