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Agency mergers can bring benefits

By John Hood

Contributing Columnist
Posted 5/10/17

RALEIGH — The past six years have brought significant change in North Carolina government and policy. Conservatives tend to like the budget restraint, tax cuts, school choice initiatives and other reforms that the Republican-led legislature …

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Agency mergers can bring benefits

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Posted
RALEIGH — The past six years have brought significant change in North Carolina government and policy. Conservatives tend to like the budget restraint, tax cuts, school choice initiatives and other reforms that the Republican-led legislature and former Republican Gov. Pat McCrory enacted. Progressives tend to dislike them.

When it comes to the organization of state government, however, I think there are good reasons for North Carolinians across the political spectrum to be pleased with recent developments.

During the administration of former Gov. Beverly Perdue, a Democrat, the state merged separate agencies and departments into a unified Department of Public Safety. The merger took effect in 2012. Three years later, the legislature moved nearly all of the state’s museums, parks, aquariums and the North Carolina Zoo into a newly renamed Department of Natural and Cultural Resources.

These were good ideas (and long advocated by my colleagues at the John Locke Foundation). While agency consolidations are hardly a panacea for all problems in government, and the cost savings they produce are sizable but not gigantic, their most-welcome effect is to improve the management of programs and provide clarity about their goals and outcomes.

A good example would be North Carolina’s system of state parks. Technically, it is a system of 75 state properties: parks, natural areas, recreational areas, trails, lakes and rivers. It offers a wonderful array of opportunities for state residents and visitors. But unlike many other attractions now housed within the Department of Natural and Cultural Resources, the state parks generate surprisingly little of their own revenue from admissions, services and donations.

In fact, according to the National Association of State Park Directors, few states derive as small a share of their park revenue from their users as North Carolina does. The most recent data, from the 2014-15 fiscal year, put North Carolina’s share of park-generated revenue at just over one-fifth. By comparison, park-generated revenue covers more than 40 percent of the cost of state parks in Tennessee, more than half in Virginia, more than 60 percent in Georgia and nearly all of the operating costs in South Carolina.

I recognize that different state systems have different compositions and structures. So it may not be appropriate to expect North Carolina to mirror South Carolina in this regard, for instance. But we are clearly far out of the mainstream when it comes to the financing of state parks. And it’s simply unreasonable to expect the vast majority of the cost of running parks to be covered by taxpayers who may rarely if ever set foot in one.

Whether it be parks, museums, aquariums or any other state attractions, policymakers do need to take steps to ensure that money raised from admission fees, services or donations aren’t siphoned away to the General Fund and used for something else. The operating principles behind federal parks and local utility enterprise funds are the right model here. Park managers need both the flexibility and the incentives to run their institutions efficiently.

Speaking of which, the previously mentioned National Association of State Park Directors tasked North Carolina State University professor Yu-Fai Leung and his former colleague Jonathan Smith, now at Utah State University, with assessing the technical efficiency of all state park systems — that is, how well the states “maximize public enjoyment of the resources they manage (i.e., maximize attendance) while minimizing costs associated with providing and managing those opportunities (i.e., minimizing operating expenditures),” as the scholars put it in their report for 2015.

How did North Carolina fare? Our park system ranked 29th in technical efficiency. South Carolina’s ranked 16th.

Whether it be the management of state attractions, the establishment of law and order or any other programs and services funded or delivered by state government, policymakers have an obligation to generate as much value as they can for every dollar expended. By housing like programs together in a smaller number of (larger) departments, North Carolina leaders of both parties have made this outcome more likely.

Good for them — and us.

John Hood is chairman of the John Locke Foundation and appears on the talk show “N.C. Spin.” Follow him on Twitter @JohnHoodNC.

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