Sunday, October 26, 2008

Entrepreneurial Approach Helps Budget

The current economic challenges are causing all levels of government to rethink what they are doing and how they are doing it. With interest income down, cost of living up, and taxes from real estate and sales (primary sources for local government) down, the challenges to maintain a balanced budget are daunting.

The Northern Virginia Regional Park Authority (NVRPA) is a regional agency made up of three counties and three cities in Northern Virginia. We do not have any taxing authority, but we do receive some tax dollar support from our six member jurisdictions. With tax revenues down substantially at both a state and local level, NVRPA will be coping with a leaner budget as well.

In our FY'2010 budget just approved by our Board last week, we were able to keep our per person cost for our member jurisdictions at the same rate as 2007. This is three years without any cost of living adjustments during a period of time with substantial inflation. We did this by reducing our general fund by 10%. This is the part of our budget that supports our headquarters and central maintenance functions. We also put in place a full time hiring freeze, and greater controls on all spending to control costs.

NVRPA has long been one of the leanest and most efficient park agencies in the nation. We now generate 81.5% of our operating expenses through self generated revenues. In 2007 the Pioneer Institute gave us a national award for entrepreneurial service delivery. Since 1990 we have gone from over 30% taxpayer support of our operations to our current 18.5%.

We faced considerable economic challenges in 2003 & 2004 and responded proactively. In 2005 we went through a reorganization that substantially brought down our overhead, and increased our productivity at the same time. We also started reinvesting in our own facilities, and approached the marketing of our parks in a business like manner.

As a result of our business like approach to running parks, we have seen annual double digit increases in the use of our parks over the last few years. Our enterprise revenues have increased nearly 30% in the last three years, and our facilities have never looked better.

Even with this great success story, our budget for FY'2010 is just barely balanced. This is due to a number of external factors including:

  • 18% increase in energy costs

  • Substantial increases to retirement program due to the stock market crash

  • Local government appropriations that have not kept pace with inflation

  • Sharply declining interest income

These factors are not unique to NVRPA, organizations everywhere are facing these and other issues that will challenge and strain budgets over the next few years. Currently the residents of Northern Virginia pay less than $5 per person for combined capital and operating support for the Northern Virginia Regional Park Authority. For this modest investment they get a 10,000 acre park system with 100 miles of trails, five water parks, historic sites, campgrounds, botanical gardens, three golf courses, five marinas and much, much more. And all of this operated as one of the most efficient park agencies in the nation.

One example of the entrepreneurial approach NVRPA has become known for is the themeing of Pohick Bay pool in 2008 into Pirate's Cove Water park. The renovations and marketing resulted in a $125K improvement in financial performance, without an increase in rates. Another result was many more happy park patrons.

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