Welcome to the 2003 State Park Operations for State Park Managers Forum

1. Welcome to the 2003 State Park Operationsfor State Park Managers Forum • National Association of State Park Directors • West Virginia State Parks

2. The States’ Budget Crises: The Big Picture & How it Impacts State Parks • Daniel D. McLean, Ph.D., CPRP • Doug Milliken • Indiana State University

3. Purpose • To discuss the state of the US economy since 2000 • To depict the national and state views of state budgets and the impacts on state park operations

4. The World Turned Upside-Down!

5. Pre-Post September 11 • September 11 aggravated an already challenging situation • Economy went from a decline to a recession • Pre 9-11 over 15 states were already in a recession

6. The International Impacts of September 11 • International impact upon travel and tourism in the United States • Level of economic loss: >$76 billion • Europe, Asia, & Middle East showed greatest decline in visitors (in order) • Projected recovery by end of 2001 • This didn’t happen!

7. Indicators of Economic Vitality • Gross Domestic Product - The measure of the USA's output of goods and services is calculated by the Commerce Department using the following items: • Personal consumption • Government expenditures • Private investment • Inventory growth • Trade balance • Consumer Confidence

8. GDP Changes: 1988 - 2003

9. Consumer Confidence Univ. of Michigan Consumer Sentiment • Consumer spending accounts for 66% of US real GDP Conference Board Consumer Confidence

10. The States

11. State Economic Status on September 25, 2001 Expanding Economy (24) Near Recession (15) Recession (11) Source: National Association of State Budget Officers, September 25, 2001 “Fiscal Update: State Budgets Post-Attack

12. Understanding State Economics • States reactions to economic changes vary • Revenues decline 3 to 6 months following an economic decline • Revenues increase 18 to 36 months following economic recovery • States always lag the economy - while not immune, much slower to react

13. State Budget Realities: 1991-2004 % Budget Increases Revenue Change Source: The Fiscal Survey of States, National Governors Association & National Association of State Budget Officers

14. How Bad is it? Really! • States have cut between $20 and $40 billion in two years - no one really knows how much! • 2/3rd of states below revenue projections • $17.5 billion budget gap at start of last fiscal year • State debt rose from $101.7 billion in 1999 to $224.2 billion in 2003 • Taxes increase by $8 billion in last 12 months

15. How Bad is it? Really! • In FY2002, 37 states cut budgets by $12.5 billion • In FY2003, 37 states cut budgets by $14.5 billion • A record number of states and dollars • In 1992 - the last recession - 35 states cut $4.5 billion from their budgets

16. Balancing the Budget • Wide diversity in the ways states reacted to fiscal crises • Medicaid expenditures exceed inflation • Clearly education, social services, and medicaid hit the hardest • Legislatures created programs in the 1990s they now can’t pay for!

17. Balancing the Budget • Increase Fees - 10 states • Layoffs - 17 states • Furloughs - 10 states • Early Retirement - 8 states • Across the Board % Cuts - 28 states • Reduced local aid - 10 states • Rainy-day fund - 22 states • Other - 29 states • No actions - 8 states

18. Impacting State Park Operations

19. State Parks - FY2002 • State Parks represent 0.24% of state budget - that is 1/4 of 1% • $1.8 billion in FY2002 • 50% of operating funds come from the state General Fund - $917 million total • $667.7 million in park generated revenues

20. Fy2002 Sources of Operating Funds Other Park Revenue Dedicated Funds General Fund Federal Funds

21. 7 Years of State Park Expenditures General Fund Park Revenue Dedicated Funds In millions of dollars

22. Impacts of Inflation on Operating Expenditures Growth 1996 Dollars Had it Kept Pace In millions of dollars

23. 1992 - 1996 Comparison Growth Had it Kept Pace 1992 Dollars In millions of dollars

24. State Park Employment Change: 7 Years Seasonal & Part-Time Full-Time

25. How State Parksare Coping • Reduce permanent staff through attrition (24) • Reduce permanent staff through lay-off (7) • Cut seasonal hiring (32) • Cut travel expenditures (36) • Close whole parks (7) • Close parts of parks (13) • Cut large equipment purchases (34) / repairs (24) • Cut law enforcement services to visitors (11) • Cut employee training (21) • Cuts in publications, media, & marketing (20)

26. What the Experts Say! • States were not irresponsible in spending during the 1990’s • Decline in tax revenues continues • June 30, 2003 was $21.6 billion less than 2001 • State taxes as a share of economy are at a 30 year low • Consumption taxes on the increase ($9.9 billion) • Per-capita state spending 2% lower than in 2003 • The short term future bodes more below expectation revenue generation Source: Center on Budget and Policy Priorities - various reports during 2003

27. How are you adapting?