2017 Revenue Retention

2017 Jurisdictional Scan: Revenue Retention
I have heard the concern that if you retain revenues from gate fees or other sources, government will eventually begin to reduce park program budgets and force park agencies to somehow increase revenues. The suggestion is that revenue retention won’t actually help to improve finances. Has your organization run into such problems?
JURISDICTIONREPLIEDYES/NOCONTACT NAME
B.C PARKSX  
ALBERTA PARKSNOScott Jones <Scott.Jones@gov.ab.ca>
Just under 40% of Alberta Parks’ operating budget in 2016/17 came from dedicated revenue (camping and other park revenues that Alberta parks is authorized to spend). Revenue therefore is a very important component of our operating budgets. I wouldn’t say that Alberta Parks operating budgets have been deliberately reduced by government with the expectation that revenue should replace most of government funding. However there has been a feeling by government that the business model for Alberta Parks can and should be more oriented toward cost recovery/user-pay/less subsidization/more financially self-supporting, particularly in its recreation programs and somewhat in its educational/interpretive programs. As well, to meet government budget reduction targets, Alberta Parks has used its revenue generation and retention capability to maintain program delivery by identifying program areas where government funding could be reduced because it could be replaced by increased fees.
SASKATCHEWAN PARKSNOBob McEachern <Bob.McEachern@gov.sk.ca>
Our experience has been that more times than not, revenue from fee increases have been added to the parks operating budget. From time to time, during tough fiscal periods the increased revenue has gone to the general revenue. A key advantage to dedicated revenue is the ability to spend surplus/extra revenue on park operations as expenses increase.
MANITOBA PARKSX  
ONTARIO PARKS?Michael Magnus <michael.magnus@ontario.ca>
COMMENTS: Ontario Parks cost recovery percentage continues to slowly increase year over year due to the reduction of government funding. This is due primarily to cost saving targets. The result is that Ontario Parks is very reliant on revenue and is constantly seeking new revenue streams in addition to being more cost effective. Note: Ontario Parks Capital Allocation is not funded from park revenues. The primary issue we experience is the ability to function like a business – nimble, flexible – while operating in the constructs of government. We are bound to directives that hamper our ability to function like a business. For example, our investigation into the possibility of sponsorships runs into issues with the procurement directive that requires ministries to be open, transparent and fair.
SEPAQ (QUEBEC)X  
NEWFOUNDLAND & LABRADOR PARKSX  
NOVA SCOTIA PARKSX  
PARKS NEW BRUNSWICKNOAndrew Foster <Andrew.Foster@gnb.ca>
COMMENTS: This has not been our experience in NB. Revenue retention is currently limited to two specific commercial entities (the Hopewell Rocks Provincial Park and the campground operations at Parlee Beach Provincial Park). These sites are operated as Special Operating Agencies and because they are fully funded through self-generated revenues, they do not receive any A-base funding. The remainder of our parks and attractions are operated as traditional government funded entities and are not impacted by the success/status of the SOAs.
P.E.I PARKSX  
GOVERNMENT OF NORTHWEST TERRITORIES PARKSX  
NUNAVUT PARKSX  
YUKON PARKSInquiring Jurisdiction Dan Paleczny Dan.Paleczny@gov.yk.ca
Colleagues,I’m trouble shooting potential concerns or perceptions associated with implementing a revenue retention mechanism. Since you have a mechanism, I’m hoping you can help me out with this information: 1. I have heard the concern that if you retain revenues from gate fees or other sources, government will eventually begin to reduce park program budgets and force park agencies to somehow increase revenues. The suggestion is that revenue retention won’t actually help to improve finances. Has your organization run into such problems? If so, can you describe the nature of the challenge and the strategies/solutions to address the concern? 2. Has revenue retention actually improved your financial situation, or are you not convinced that it is better? 3. Are there other questions/issues/perceptions that I should be ready to address? All advice is welcome. I would be please to chat on the phone if that’s better for you. Many thanks,
PARKS CANADANOMichael Nadler michael.nadler@pc.gc.ca
COMMENTS: It is true that revenue generation / retention figures into discussions with central agencies on new funding initiatives, but in my experience, it has not had an impact on A-base funding. The experience has mostly been that any new funding proposal has to include the role that revenues may or may not play in the initiative
Has revenue retention actually improved your financial situation, or are you not convinced that it is better?
JURISDICTIONCOMMENTS
ALBERTA PARKSThe ability to retain revenues has allowed Alberta Parks to maintain program delivery but not (yet) generated funds to significantly enhance program delivery. Some future possibilities for revenue generation (e.g. day use fees) may be able to generate enough revenue to improve/enhance our programs.
SASKATCHEWAN PARKSYes overall I believe parks are better managed when managers are accountable to both sides of the ledger. Each Sask park has an annual revenue target for which the manager is held accountable.
MANITOBA PARKSNone
ONTARIO PARKSMy perspective is that revenue retention, with its challenges of seeking Minister approval for fee changes, operational date changes, etc., still improves our financial situation. We have experienced two superb years of visitation resulting in a healthy SPA fund balance. This provides the program with the freedom to direct resources strategically. Conversely, there is increased risk of other programs downloading costs to Ontario Parks. For example, Emerald Ash Borer is a provincial issue and there is a real potential that executive may ask Ontario Parks to fund due the current state of the provinces financial outlook.
PARKS NEW BRUNSWICKThe SOA model has served to strengthen the two sites where it applies as profits are reinvested directly into those sites in the form of property/capital improvements. The limitation is that this arrangement only works where there is opportunity to generate net operating profits. Since the majority of our parks do not have this potential, the financial benefits are very limited.
PARKS CANADAIn aggregate, retained revenues represent roughly 20 percent of total Parks Canada budgets. So, at a national level, they are important, but not the majority of funding. That said, for individual initiatives, particularly at the park/site level, they can be very important. Revenues have financed a number of innovative new programs as well as shoulder and winter season offers.
Are there other questions/issues/perceptions that I should be ready to address? All advice is welcome.
JURISDICTIONCOMMENTS
ALBERTA PARKS Very helpful to any parks agency would be clear strategic targets supported by the public regarding the degree to which each of the park agency’s recreation, education/interpretation, protection, etc. programs (and various sub-programs) are to be government funded/subsidized or self-supporting. Clear targets would help the agency and the public understand what the agency’s program/service goals are, what those programs will cost, and how the costs will be addressed by government/taxpayers, and by users. In the absence of a strategic program plan and associated financial/business plan, fee and revenue proposals by staff and by government leaders are likely to be diverse rather than focused and coordinated.
ONTARIO PARKSCOMMENTS: Ultimate question I struggle with is the determination of correct ratio of revenue generation to support park users vs. government funding for non-revenue generating activities that are a benefit the general public. Ontario Parks is over 90% cost recoverable. Funding from park users (camping revenue) are allocated to areas that benefit all Ontarians and as such should be funded from government. i.e. Scientific Research.
PARKS NEW BRUNSWICKCOMMENTS: The adoption of revenue retention can be conveyed as a critical strength if the returns result in improved services to the public; however, the downside is that this approach leads to increased pressures to be self-sufficient and or profit oriented which will result in a user-fee model that will not be acceptable to everyone especially if there are strong sentiments that there be no financial barriers for accessibility.
PARKS CANADASometimes there is a perception that visitor fees generate significant revenues. This is true in that admission fees and camping represent over 60 percent of total revenues. However in the broader context of the Agency’s full budget, they represent less than 10 percent of our total spending. Moreover, visitor fees are not very elastic. A small increase can lead to dissatisfaction among clients at only a marginal gain for the Agency. Real-estate and other sources of revenue may have greater elasticity and greater potential impact on the bottom line.

Response Rate: 5/13 for 38%

Key Findings:

  • All respondents said that increased revenue did not lower government park budgets, however ON responded that they have had to increase revenue as a result of reduced budgets

Future Questions to Ask:

  • None

Links to Resources:

  • None