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Is it time for a divorce in Kentucky state parks?

By: Joel Peyton

A wise guy once said: “If your wife makes bad coffee then it is grounds for divorce.” Apply that to the Kentucky State Parks and the phrase should read: “If your government makes bad coffee, then it is grounds for divestiture!”

Stale coffee is not the only deficiency at our state parks. But the fact that state-run operations can endanger the reputation of the coffee industry’s most recognizable brand offers proof that government should divorce itself from services better run by the private sector.

Kentucky Parks Commissioner George Ward had good intentions when he decided to offer Starbucks Coffee at some state parks last year. He reasoned that offering the most popular coffee to visitors would be a good revenue-generator for the parks.

It should have been, but having worked at a state lodge for the past three summers, I observed that it was not. During my tenure, the coffee was rarely checked for freshness and customers were forced to wait for a new pot to be brewed and hand-carried to the lobby from the kitchen – a very inefficient process. As a result, customers became unhappy with the low quality coffee and poor service they received.

The fiasco with stale Starbucks Coffee offers an analogy of what happens when government insists on providing services that are more effectively run by the private sector. Even having the best merchandise does not change this principle. Starbucks is one of the finest products in the industry, but having it distributed and operated by government left a bad taste in a lot of visitors’ mouths.

Kentucky possesses the nation’s largest state park system with the potential of being one of the best. Like Starbucks Coffee, the problem lies not with the product but with the fact that a public entity is managing the product.

New and profitable Starbucks Coffee shops are constantly opening – a testament to the product itself and the incentives embedded in the private sector. But take the same product, replace its management with government control and – voila – out pops an unprofitable and inefficient venture!

Only one of the commonwealth’s 51 state parks generated a profit last year. According to Ward, the system currently is operating at a $29 million annual shortfall. For the parks to remain open, taxpayers must fill the funding gap.

Ward claims that improvements he is making will alleviate the system’s deficit. But if what I observed this past summer is any indication, the problems that have afflicted the park system are not getting much better. Business was down at the park in which I worked, and many of the new services and policies that were implemented proved to be unproductive because of ineffective implementation and uneven management.

At issue is a natural inability of a public employee to convey a private service. A sound public policy principle that explains this incapacity is: What belongs to someone tends to be taken care of. What belongs to no one or everyone tends to fall into disrepair. With ownership comes responsibility.

I am sure Ward is doing his level best to reform the Kentucky Parks system. But this entity will never be profitable unless – and until – it is divorced from the state’s control.

Other countries and states have shown that divesting government from the operation of state parks can reverse funding shortfalls and yield satisfied customers.

Since contracting out 100 percent of its maintenance and operations in 1992, British Columbia Parks have achieved nearly 20 percent savings annually. The system’s expenditures last year were $40 million less than what had been budgeted. Meanwhile, customer satisfaction has never been higher.

If free-market principles can effectively operate a state park in Canada, why would it not work in Kentucky?

Other state parks across the nation also are saving money by privatizing operations. These policies are even producing additional revenues for such important services as schools and roads.

Since opening in 1958, the revenues generated at State Mountain Park in Georgia had never exceeded its expenses. But now that the state has enlisted a private company to run the facility, Price Waterhouse Cooper estimates that Georgia will earn more than $1 billion during the 50-year life of the lease. Park visitors will enjoy their stay and taxpayers will benefit even more as their tax dollars will no longer subsidize a losing operation.

Ward should heed the example of Stone Mountain Park and implement a pilot program to contract out the operation and maintenance of at least one Kentucky state park. Policymakers and taxpayers could then effectively gauge additional opportunities to the degree that this approach works.

Privatization would likely mean fresher coffee and a bridle on the unbridled spirit of government spending. This could be one divorce that’s worth it.

– Joel Peyton is a senior economics major at Western Kentucky University and an intern at the Bluegrass Institute (www.bipps.org), Kentucky’s free-market think tank. He is the author of “Mousetraps and stale coffee: Making the case for privatizing Kentucky State Parks,” a soon-to-be-released Bluegrass Institute Policy Brief.

The Bluegrass Institute is an independent research and educational institution offering free-market solutions to Kentucky's most pressing problems.

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